The apex court had on March 2 asked the Securities and Exchange Board of India (SEBI)to probe within two months these allegations and had also set up a panel to look at providing protection to Indian investors after a damning report by US short-seller Hindenburg wiped out more than $140 billion of the Indian conglomerate’s market value.
In an application moved before the court, SEBI has submitted it needs six more months for ascertaining possible violations related to “misrepresentation of financials, circumvention of regulations and/or fraudulent nature of transactions”.
“Pass an order extending the time to conclude the investigation as directed by this Court by the common order dated March 2 by a period of 6 months or such other period as this court may deem fit and necessary in the facts and circumstances of the present case,” the SEBI plea said.
On February 10, the top court had said the interest of Indian investors needs to be protected against market volatility in the backdrop of the rout of the Adani Group stocks and asked the Centre to consider setting up a panel of domain experts headed by a former judge to look at strengthening the regulatory mechanism. The Centre had agreed to the apex court’s proposal.
With India’s Prime Minister Narendra Modi largely silent on the controversy despite attacks from opposition parties, these investigations are the most significant way India can signal to the investors that it is willing to scrutinize its largest firms and align them closer to global standards of corporate governance.
The January 24 Hindenburg report detailed a byzantine web of Adani-family controlled offshore shell entities in tax havens, from the Caribbean, Mauritius and the United Arab Emirates, that it alleged were used to facilitate corruption, money laundering, stock price manipulation and taxpayer theft.Even though the Adani Group has repeatedly refuted these claims, the ensuing market selldown has wiped $100 billion off the market value of its listed entities.
One area highlighted by Hindenburg that’s received attention is how parties like Gautam Adani’s little-known elder brother, Vinod Adani, is a director of several overseas firms which are either investors in or transact with Adani’s empire. The US shortseller characterized this as “a vast labyrinth of offshore shell entities” that moved billions of dollars into Adani firms without disclosure “of the related party nature of the deals.”