India's Adani Group has engaged in a brazen stock manipulation and accounting fraud scheme over the course of decades, with its founder pocketing over $100 billion in merely three years, a new research shows.
Gautam Adani, also the group's chairman, amassed a net worth of roughly $120 billion, adding over $100 billion in the past three years largely through stock price appreciation in the group's seven key listed companies, which have spiked an average of 819% in that period.
The findings came during a two-year investigation, according to a report published by Hindenberg Research on Tuesday.
The $218 billion India conglomerate is the second largest of its kind in the country. Gautam is currently the third richest man on earth.
The report was prepared upon interviewing dozens of individuals, including former senior executives of the group, reviewing thousands of documents, and conducting diligence site visits in almost half a dozen countries.
Considering financials of Adani Group at face value, its seven key listed companies have 85% downside purely on a fundamental basis owing to sky-high valuations.
Key listed Adani companies have also taken on substantial debt, including pledging shares of their inflated stock for loans, putting the entire group on precarious financial footing. Five of seven key listed companies have reported ‘current ratios' below 1, indicating near-term liquidity pressure.
The group's very top ranks and eight of 22 key leaders are Adani family members, a dynamic that places control of the group's financials and key decisions in the hands of a few. A former executive described the Adani Group as “a family business.”
Adani Group has previously been the focus of four major government fraud investigations which have alleged money laundering, theft of taxpayer funds and corruption, totaling an estimated $17 billion.
Adani family members allegedly cooperated to create offshore shell entities in tax-haven jurisdictions like Mauritius, the UAE, and Caribbean Islands, generating forged import/export documentation in an apparent effort to generate fake or illegitimate turnover and to siphon money from the listed companies.
Gautam's younger brother, Rajesh Adani, was accused of playing a central role in a diamond trading import/export scheme around 2004-2005.
Gautam's brother-in-law, Samir Vora, was accused of being a ringleader of the same diamond trading scam and of repeatedly making false statements to regulators. He was subsequently promoted to Executive Director of the critical Adani Australia division.
Gautam's elder brother, Vinod Adani, has been described by media as “an elusive figure”. He has regularly been found at the center of the government's investigations into Adani for his alleged role in managing a network of offshore entities used to facilitate fraud.
The research, which included downloading and cataloguing the entire Mauritius corporate registry, has uncovered that Vinod Adani, through several close associates, manages a vast labyrinth of offshore shell entities.
The research indicates that offshore shells and funds tied to the Adani Group comprise many of the largest “public” holders of Adani stock, an issue that would subject the Adani companies to delisting, were Indian securities regulator SEBI's rules enforced.