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Congress targets Centre over Hindenburg report on Adani Group; seeks probe

ByAnish Yande
Jan 27, 2023 01:35 PM IST

The Congress accused the BJP government at the Centre of favouritism towards Adani group and sought serious investigations by the Reserve Bank of India (RBI) and the Securities and Exchange Board of India (SEBI) into the allegations against the company

Following the release of the Hindenburg research report which sent Adani stocks plummeting on Friday, the Congress launched an offensive against Prime Minister Narendra Modi and the Bharatiya Janata Party (BJP)-led government at the Centre over their alleged close connections with the business group and sought serious investigations into the matter by the Reserve Bank of India (RBI) and the Securities and Exchange Board of India (SEBI).

Congress general secretary in charge of communications, Jairam Ramesh. (File Photo)
Congress general secretary in charge of communications, Jairam Ramesh. (File Photo)

“For all its posturing about black money, has the Modi government chosen to turn a blind eye towards illicit activities by its favourite business group? Is there a quid pro quo? Will SEBI investigate these allegations to the fullest and not just in name, ” said Congress general secretary in charge of communications, Jairam Ramesh.

Adani Group companies lost over 80,000 crore in market capitalisation on Wednesday after New York-based investor research firm Hindenburg Research accused industrialist Gautam Adani’s companies of “brazen stock manipulation and accounting fraud scheme over the course of decades”. The Adani Group has rejected the report saying that it is examining legal options to take “punitive action” against Hindenburg Research for its “reckless” attempt to sabotage a mega share sale at the conglomerate’s flagship firm.

Jairam Ramesh said, “The allegations of financial malfeasance would be bad enough, but what is worse is that the Modi government may have exposed India’s financial system to systemic risks through the liberal investments in the Adani Group made by strategic state entities like LIC (Life Insurance Corporation), SBI (State Bank of India) and other public sector banks. These institutions have liberally financed the Adani Group even as their private sector counterparts have chosen to avoid investing because of concerns over corporate governance and indebtedness,” he said.

The Congress alleged that as much as 8% of LIC’s equity assets under management, amounting to a sum of 74,000 crore, are in Adani companies and comprise its second-largest holding. The grand old party’s accusations come after reports last December that the LIC has significantly increased its shareholding in four out of seven listed companies of the Adani Group since September 2020. The total value of the public sector undertaking’s shareholding in seven of Adani Group’s companies currently stands at 74,142 crore.

The Congress urged SEBI and RBI to play their roles as stewards of the financial system and for investigating allegations in the wider public interest.

“The high exposure of financial institutions such as the LIC and SBI to the Adani Group has implications for financial stability and for the crores of Indians whose savings are stewarded by these pillars of the financial system. It is worth noting that earlier reports had described the Adani Group as “deeply over leveraged. The allegations require serious investigation by those who are responsible for the stability and security of the Indian financial system, viz. the RBI and SEBI,” Ramesh added.

Raising caution over the allegations made in the Hindenburg report, Ramesh said that it could lead to heavy losses in banks such as SBI, saying, “If, as alleged, the Adani Group has artificially inflated the value of its stock through manipulation, and then raised funds by pledging those shares, banks such as SBI could face heavy losses in the event of a fall in those share prices. Indians are increasingly aware of how the rise of Modi’s cronies has exacerbated the problem of inequality, but need to understand how this has been financed by their own hard-earned savings. Will the RBI ensure that risks to financial stability are investigated and contained”? Ramesh said.

“The Modi Sarkar can try and impose censorship. But in an era of globalisation of Indian businesses and financial markets can Hindenburg-type reports that focus on corporate misgovernance be simply brushed aside and dismissed as being “malicious”?” Ramesh added.

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