After days of falling stocks which have wiped US$92 billion from Adani Group’s market share following allegations of “brazen stock manipulation and accounting fraud” by Hindenburg Research, Adani Enterprises has cancelled its US$2.5 billion share issuance in a move which has shocked the market.
The Hindenburg report alleged a “vast labyrinth of offshore shell entities” ultimately owned by the Adani Group to launder money and manipulate stock prices.
On January 31st, Adani Enterprises announced its Follow on Public Offer (FPO) was a success.
The following day Adani announced it would cancel the FPO and return the money to its investors.
The cancellation announcement came after Forbes suggested Adani Enterprises could have used two of the same offshore shell companies exposed in the Hindenburg report to buy into its own $2.5 billion share offer.
Adani Enterprises was seeking to raise billions to pay debt and fund its pipeline of projects, including the Carmichael coal mine in Australia.
Adani is the world’s largest private developer of new coal mines, according to Global Energy Monitor.
The Australian corporate regulator ASIC is reportedly reviewing a series of suspicious transactions connected to Adani’s Australian business.
The allegations related to Adani’s Carmichael Coal Project which ASIC is reported to be reviewing include:
- “In 2013-2015, Carmichael Rail and Port Singapore Holdings Pte. Ltd, a Singaporean entity controlled solely by Vinod Adani, [Pg. 2] engaged in a series of 3 transactions that may have resulted in Adani Enterprises avoiding recognition of large asset impairment charges.”
- An entity owned by an Adani Private Family Trust in a Caribbean tax haven charged publicly listed Adani Enterprises a US $100 million upfront security deposit to use Adani’s NQXT (Abbot Point) coal terminal in Australia. “It is unclear why an Adani private entity is charging the Adani Group listed company for port handling services in yet another conflicted transaction, drawing capital out of the public company.”
- Hindenburg questions why Gautam Adani’s brother-in-law Samir Vora was promoted to the role Adani Australia Executive Director after being accused of being the ringleader of a diamond trading scam and of repeatedly making false statements to regulators.
The Government of Bangladesh is also reportedly seeking a revision to the agreement it signed with Adani Power to purchase electricity from its Godda coal station, over concerns it is being overcharged for coal from Adani’s Carmichael mine.
The Hindenburg Report lays out detailed evidence of “brazen accounting fraud, stock manipulation and money laundering” that they say accounts to “one of, if not the most egregious example of corporate fraud in history.”
Some of the report’s most damning findings include evidence of:
- Stock manipulation and money laundering: “Vinod Adani, through several close associates, manages a vast labyrinth of offshore shell entities… The Vinod-Adani shells seem to serve several functions, including stock parking / stock manipulation and laundering money through Adani’s private companies onto the listed companies’ balance sheets in order to maintain the appearance of financial health and solvency.”
- Fraud: “The Adani Group has previously been the focus of 4 major government fraud investigations which have alleged money laundering, theft of taxpayer funds and corruption, totaling an estimated US$17 billion.”
- Accounting irregularities and bogus audits: “Adani Group’s obvious accounting irregularities and sketchy dealings seem to be enabled by virtually non-existent financial controls…The independent auditor for Adani Enterprises and Adani Total Gas is a tiny firm called Shah Dhandharia. Shah Dhandharia seems to have no current website. Historical archives of its website show that it had only 4 partners and 11 employees…Shah Dhandharia hardly seems capable of complex audit work. Adani Enterprises alone has 156 subsidiaries and many more joint ventures and affiliates, for example.”