Hindenburg short seller accuses billionaire Gautam Adani of ‘biggest scam in corporate history’

Gautam Adani, Asia’s richest man, is pulling off the “biggest scam in corporate history” through his India-based conglomerate Adani Group, according to scathing accusations published this week by powerful short seller Hindenburg Research.

Hindenburg, whose previous targets included electric truck makers Nikola and Lordstown Motors, said in a research note late Tuesday that he took a short position in the Adani Group and claimed that Adani’s rise in wealth was due to various illegal misdeeds.

“We have uncovered evidence of blatant accounting fraud, securities fraud and money laundering in Adany that has been going on for decades,” Hindenburg said in a note.

Adani, 60, had amassed a fortune that Forbes estimated at $125.5 billion before the Ginderburg report was published, running a sprawling network of companies with assets in several industries, including control of major ports and airports, energy, real estate and cement.

“Adani has accomplished this mammoth feat with the help of government aides and home-based businesses from international companies that are facilitating this activity,” the firm added.

He was second only to French luxury magnate Bernard Arnault and Tesla CEO Elon Musk on Wednesday, according to Forbes. But Adani lost about $6.5 billion in the day following the Hindenburg report, dropping him to fourth place behind Amazon founder Jeff Bezos.

The firm noted that the Adani Group “was previously the focus of 4 major government fraud investigations” alleging money laundering, corruption and theft of taxpayer money.

Hindenburg said it had conducted a two-year investigation into Adani’s business empire, which included dozens of interviews, including with former company executives, as well as internal document reviews and due diligence visits to businesses controlled by the company.

The report claimed that Adani, several family members and other company executives controlled a network of offshore shell companies located in tax havens in Mauritius, the United Arab Emirates and the Caribbean.

Hindenberg claimed that some of the shell companies appeared to have been hastily put together, with websites “only showing stock photos, with no real employee names and listing the same set of nonsensical services.”

Public shares linked to the Adani Group lost a total value equivalent to approximately $12 billion on Wednesday following the Hindenburg memo, according to Bloomberg. However, over the past year, the value of companies associated with the company has grown by more than $50 billion.

Adani Group CFO Jugeshindar Singh said the company was “shocked” by Hindenburg’s allegations and issued a firm denial.

“The report is a malicious combination of selective misinformation and outdated, baseless and discredited claims that have been tested and rejected by India’s highest courts,” Singh said.

“The timing of the release of the report clearly betrays a brazen, unscrupulous intent to undermine the reputation of the Adani Group,” Singh added.

Hindenburg claimed that many shell companies were reportedly run by Adani’s older brother, Vinod, or “close associates” of his.

“Vinoda-Adani shells appear to perform several functions, including (1) holding/manipulating shares (2) and laundering money through Adani’s private companies onto the balance sheets of listed companies in order to maintain a semblance of financial health and solvency. Hindenburg said.

Hindenburg included a list of 88 questions about the company’s activities, which “we hope the Adani Group will be happy to answer.”

“Even if you ignore the results of our investigation and take the Adani Group financials at face value, the 7 key listed companies have an 85 percent loss potential purely on a fundamental basis due to sky-high valuations,” Hindenburg said.

The short seller emphasized that his report “represents our opinion and commentary on the investigation” and encouraged readers to draw their own conclusions about the Adani Group.

A well-known activist investment company, Hindenburg rose to national prominence after releasing a report in 2020 detailing abuses at electric vehicle company Nikola Corp.

Hindenburg said Nikola was involved in a “complex scam,” including one in which the company faked a video showing one of its electric trucks driving down a highway. In fact, the company “just filmed him rolling down the hill.”

Nikola founder Trevor Milton was later found guilty of securities fraud after Hindenburg’s allegations prompted an investigation.