Tuesday, March 21, 2023

Hindenburg ignores Indian legal processes: Adani Group on the company’s allegations

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  • Adani group multiple false stories are created in the accusations of Hindenburg Research.
  • Hindenburg is deliberately ignoring Indian legal processes and regulations in their insinuations against us, Adani Group said.
  • The company claimed to be in compliance with all applicable laws and regulations.

Citing allegations from Hindenburg Research, the Adani Group said on Sunday that multiple false stories are being created regarding certain allegations related to diamond exports, all of which have been closed in their favor by the Appeals Tribunal (CESTAT).

This decision has further been upheld twice by the Supreme Court itself, a fact deliberately ignored and concealed in the Hindenburg Report (which contemptuously raises questions about the competence of the Appellate Tribunal with baseless claims that it ignored evidence).

An example of where the report exposes its motives is the question around “complicated structures” and a multitude of subsidiaries, while failing to understand that in the infrastructure sector, especially in a vast region like India, most major companies operate in a similar way because projects are housed in separate SPVs and these must be ring-fenced from a lender’s perspective for project financing with limited recourse and in many cases due to specific regulatory requirements, Adani Group said.

For example, transmission projects in India are awarded on the basis of competitive bidding based on tariffs. In such a bid, the successful bidder must acquire the SPV executing the project. Therefore, it is a legal requirement as part of the Electricity Act 2003 and Central Electricity Regulatory Commission regulations to run projects in different SPVs.

Hindenburg is deliberately ignoring Indian legal processes and regulations in their insinuations against us, Adani Group said.

For example, they have asked several questions about Adani Green Energy Ltd’s sales offer in 2019 while maliciously ignoring the fact that in India the process for OFS is a regulated process, implemented through an automated order book matching process on the platform. of the fair. This is not an entity controlled process and the buyers are not visible to anyone on the platform.

Adani Group said on Sunday it is in compliance with all applicable laws and regulations.

“We are committed to the highest level of governance to protect the interests of all our stakeholders,” a statement said.

The Adani Portfolio also has very strong internal controls and audit controls. All Adani Portfolio listed companies have a robust governance framework. The Audit Committee of each of the listed companies consists of 100 percent Independent Directors and is chaired by an Independent Director. The statutory auditors are only appointed upon recommendation of the audit committee to the board of directors. Adani Portfolio companies follow a pronounced policy of having global big 6 or regional leaders as statutory auditors. The focus of the Adani portfolio and Adani verticals is to contribute to nation building and bring India to the world.

“We will exercise our rights to seek legal remedies to protect our stakeholders before all competent authorities and we reserve the right to comment further on the allegations or contents of the Hindenburg Report or to supplement this statement,” it said. Adani Group.

Adani Group said in a statement that it was shocked and deeply disturbed to read the report published on January 24, 2023 by the “Madoffs of Manhattan” – Hindenburg Research “which is nothing but a lie”.

“The document is a malicious combination of selective disinformation and concealment of facts regarding baseless and discredited allegations to create an ulterior motive,” said Adani Group.

This is rife with conflicts of interest and is only designed to create a false market for securities to allow Hindenburg, a recognized short seller, to illegally make huge financial gains at the expense of countless investors.

“It is deeply concerning that the statements made by an entity thousands of miles away, lacking credibility or ethics, have had serious and unprecedented adverse consequences for our investors. The mala fide intent underlying the report is evident given the timing when Adani Enterprises Ltd. conducting what would be India’s largest ever public offering of shares in India. This is not just an unwarranted attack on a specific company, but a calculated attack on India, the independence, integrity and quality of Indian institutions, and India’s growth story and ambition,” Adani Group said.

There are three main themes from the Hindenburg Report: (i) Selective and manipulative presentation of matters already in the public domain to create a false narrative (ii) Complete ignorance or willful disregard of applicable legal and accounting standards, as well as industry practice, (iii) Contempt for the Indian institutions, including the regulators and judiciary, Adani Group said.

The report was released with Hindenburg’s admitted intent (holding short positions in several listed companies of the Adani portfolio through US-traded bonds and non-Indian-traded derivatives, along with other non-Indian-traded reference securities) to take advantage of the costs of our shareholders and public investors. Hindenburg did not publish this report for altruistic reasons, but purely out of selfish motives and in flagrant violation of applicable securities and foreign exchange laws, it said.

“The truth is that Hindenburg is an unethical short-seller. A short-seller on the books of the securities market benefits from the subsequent drop in stock prices. Hindenburg took ‘short positions’ and then, to avoid a downward spiral of the stock price and make an ill-gotten profit, Hindenburg published a document to manipulate and depress the price of stocks and create a false market.The allegations and innuendo, presented as facts, spread like fire, with much of the investor’s wealth was wiped out and the net was made a profit for Hindenburg The net result is that public investors lose and Hindenburg makes a windfall.

“The report is thus neither ‘independent’, nor ‘objective’, nor ‘well researched’. The report claims to have conducted a ‘2 year investigation’ and ‘discovered evidence’, but contains nothing but selective and incomplete excerpts of publicly disclosed information that has been in the public domain for years, if not decades, attempts to highlight allegations that have since been found false by the court, tells as fact what is attributed to hearsay, spreads rumors and gossip by unnamed sources such as “a former trader” or “touts” of a “close relationship,” questions the independence of the nation’s judicial processes and regulators and selectively takes statements out of context and without knowledge of Indian law or industry practice,” Adani Group said.

Significantly, none of the allegations are the result of independent or journalistic fact-finding. The allegations and insinuations in the Hindenburg Report are deliberately false.

Hindenburg’s conduct is nothing short of a calculated securities fraud under applicable law, Adani Group said.

Ironically, for an organization seeking transparency and openness, not much is known about Hindenburg, his employees, or his investors. The website claims the organization has an experience that “spans decades” and yet appears to have been founded only in 2017. its own funding, who is behind it, the illegitimacy underlying the synthetic structures they use to take such positions, or the profits it made by holding such positions in our securities, Adani Group said.

None of these 88 questions are based on independent or journalistic fact-finding. They are simply selective regurgitation of public disclosure or rhetorical innuendo that color rumor as fact. The report seeks answers to ’88 questions’ – 65 of which relate to matters duly disclosed by Adani Portfolio companies in their annual reports available on their websites, offering memorandums, financial statements and stock exchange information from time to time. Of the remaining 23 questions, 18 relate to public shareholders and third parties (and not the Adani portfolio companies), while the remaining 5 are baseless allegations based on imaginary patterns of fact.


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