Swiss authorities freeze $310 million of Adani Group for money laundering, securities forgery investigation: Report
Hindenburg Research cited a news report based off of newly released Swiss court records showing $310 million belonging to the Adani Group has been frozen
US-based activist short seller Hindenburg Research LLC said that Swiss authorities have frozen over $310 million in funds across multiple Swiss bank accounts as part of an investigation into the Adani group on a post on X (Formerly Twitter) on September 12, 2024, citing a news report by Swiss media outlet Gotham City. HT couldn't independently verify the information contained in the report.
What are the Swiss authorities allegedly investigating the Adani group for?
The Swiss authorities have been allegedly conducting a money laundering and securities forgery investigation of the Adani Group since 2021, well before the first Hindenburg report on Adani titled, ‘Adani Group: How The World’s 3rd Richest Man Is Pulling The Largest Con In Corporate History,’ came out in January 24, 2023, according to the Gotham City report, which cited a Swiss Federal Criminal Court (FCC) ruling.
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The Adani Group in its media statement, denied all the allegations in the news report.
"The Adani Group has no involvement in any Swiss court proceedings, nor have any of our company accounts been subject to sequestration by any authority," the group's spokesperson stated, calling the allegations “preposterous, irrational, and absurd.”
"We have no hesitation in stating that this is yet another orchestrated and egregious attempt by the same cohorts acting in unison to inflict irreversible damage on our group's reputation and market value," the statement read.
“Furthermore, even in the alleged order, the Swiss court has neither mentioned our group companies, nor have we received any requests for clarification or information from any such authority or regulatory body. We reiterate that our overseas holding structure is transparent, fully disclosed, and compliant with all relevant laws.”
What are the details of the alleged case?
A frontman representing Adani invested in opaque funds located in British Virgin Islands/Mauritius, and Bermuda, all of which almost exclusively owned Adani stocks, Hindenburg quoted the news report as saying.
The report further stated that more than $310 million of the frontman had been kept in six Swiss banks, which have all been frozen now.
What was the second Hindenburg report regarding the Adani Group about?
Hindenburg's post on X regarding the news report comes just a month after the short seller published a report (On August 10, 2024) with conflict of interest allegations against Madhabi Puri Buch, the chairperson of India's market regulator Securities and Exchange Board of India (Sebi).
The report alleged that Buch owned stakes in offshore entities related to the Adani Group, along with her husband Dhaval Buch, which was used as part of a money siphoning scandal.
Madhabi Puri Buch and Dhaval Buch jointly denied all the allegations contained in the report.
What was the first Hindenburg report regarding the Adani Group about?
In its first report, Hindenburg Research alleged that the Adani Group had “engaged in a brazen stock manipulation and accounting fraud scheme over the course of decades.”
The report went on to accuse the Adani family members of creating offshore shell entities in tax havens like Mauritius, the UAE, and Caribbean Islands, using forged import-export documentation to show fake revenue, and siphoning money from their listed public companies.
The Adani group denied all the allegations in the report.
Who is Hindenburg Research?
Hindenburg Research LLC was founded in 2017 by Nathan Anderson. It is a US-based investment research and short selling firm that publishes reports, exposing frauds or corruption in companies, after taking a short position on the company's stocks.
What does short selling or taking a short position mean?
Short selling is when an investor foresees a fall in the value of a company's share and therefore, enters into a short selling arrangement with a broker.
The arrangement is such that the investor borrows shares of the company and sells it at the prevailing market prices, then buys shares of the same company after the share price falls and returns the shares to whomever they borrowed it from, thereby pocketing a profit out of the difference in the initial market price and the future lower price.
How did Adani Group shares perform?
Adani Enterprises Ltd shares closed at ₹2,991.40 on the Bombay Stock Exchange (BSE) after the trading session on Thursday, September 12, 2024. This was a gain of 1.84% or 54.05 points.
Hindenburg's post on X came at 9:50 pm IST on the same day, while the Gotham City news report was published on Wednesday, September 11, 2024.
Adani Ports and Special Economic Zone Ltd shares closed at ₹1,472.25, a gain of 2.94% or 42.05 points.
Adani Green Energy Ltd closed at ₹1,809.00, a drop of 0.30% or 5.40 points.
Adani Power Ltd closed at ₹651.35, a gain of 3.92% or 24.55 points.
Ambuja Cements Ltd closed at ₹628.95, a gain of 1.04% or 6.50 points.
Adani Total Gas Ltd closed at ₹805.40, a drop of 0.06% or 0.45 points.
Adani Wilmar Ltd closed at ₹362.20, a gain of 1.43% or 5.10 points.
ACC Ltd shares closed at ₹2,467.05 gain of 1.18% or 28.75 points.
New Delhi Television Ltd closed at ₹192.40, a drop of 0.57% or 1.10 points.
The Indian stock market as a whole rallied today, with the benchmark BSE Sensex closing at 82,962.71, a gain of 1.77% or 1439.55 points, and the NSE Nifty closing at 25,388.90, a gain of 1.89% or 470.45 points.
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