Against All Odds

As 2023 draws to an end, it’s time to reflect on the highlights of the year. For the Adani Group, the year started on a positive note. Never had the Group been so confident about its strength and growing prominence. The richest Indian, Asian and the third richest man in the world, Adani Group Chairman Gautam Adani was all set to launch the Adani Enterprises Ltd’s (AEL) follow-on public offer (FPO) on January 27. The much-awaited FPO was to the tune of ₹20,000 crore that could influence the AEL stock on markets and propel the Group even higher on the growth list.

However, it was not meant to be. Just days before the launch, U.S. short-seller Hindenburg Research came out with a report, intending to bring down the Rs 2.62 lakh crore conglomerate and earn profits through its short position. It came as a big setback to Mr Adani and his empire.    

The Hindenburg report accused the Adani Group of stock manipulation and regulatory failure. In a matter of few weeks, Adani lost over $100 billion.  Conspiracy theories began to proliferate. These were discussed and debated by activists and journalists, making news headlines.

The man, who rose from being a diamond sorter to becoming one of the richest men in the world, has faced his share of challenges and attacks on multiple fronts – his alleged close relations with Prime Minister Narendra Modi, mining operations, power projects and alleged violation of SEZ norms in Mundra. Each time he rose stronger and determined to keep building and expanding his business group and contribute to nation-building. The infrastructure behemoth is built on a very solid foundation. 

The FPO was called off. Within days, the billionaire’s wealth nosedived by over 60%. But Mr Adani is a man of mettle, never cowed down by hurdles and hardships. He did not waste time and started to consolidate by repaying debts; it was a smart decision to win back the confidence of retail investors. In the months following the attack, the Group took several measures to regain the trust of banks and global investors. Be it GQG Partners or IHC, Dubai, all reposed their trust in him and backed several Group businesses.

Even as the Group was trying to stabilize the situation, petitions were filed in the Supreme Court (SC) on the loss of investor wealth in the stock market due to the steep fall in Adani stocks. The SC formed a committee to probe the matter and directed the Securities and Exchange Board of India (SEBI) to investigate if there was a regulatory failure on part of the Group.

The months following that report witnessed a sort of courtroom drama unfolding before the public, ending in a clean chit given to the group by the SC panel. In its May report, the panel gave the Adani Group a clean chit. It stated that the conglomerate took the required actions to reassure individual investors following the release of the Hindenburg report and there was no regulatory failure on the part of SEBI and no pricing manipulation on the part of the Adani Group.

However, this did not go down well with some like Prashant Bhushan, who questioned the veracity of the panel’s decision. He also questioned SEBI’s role and that of the panel members.   

Bhushan, known for his propensity to file public interest litigations (PILs), found himself in a tight spot after accusing several members of the SC panel of conflict of interest. “Be careful as we are not giving any character certificates. We can’t make random allegations,” Chief Justice of India (CJI) D.Y. Chandrachud said while taking exception to the allegations made by the senior lawyer against the expert panel formed by the SC to find out if there were irregularities on the part of the Adani Group in its dealings.

The CJI slammed the lawyer, who petitioned the court for a probe into the allegations made by U.S. short-seller against the Adani Group and by the Organised Crime and Corruption Reporting Project (OCCRP). He also sought action against SEBI for missing its deadline for a report in the Hindenburg case.

Bhushan levelled specific accusations against Somasekhar Sundaresan, claiming that in 2006, the lawyer had represented Adani against SEBI. “Let’s be reasonable,” the CJI responded. “He was just playing the part of a lawyer. You’re saying that he worked for Adani in 2006. How can an incident that happened 17 years ago create a conflict of interest? There has to be some responsibility about the allegations you make.”

The CJI said SEBI did not select the members of the SC expert committee. “It’s unfair to the committee because if this continues, people will not want to work in SC committees,” he observed. On November 23, Sundaresan was named a judge of the Bombay High Court.

What went against the holier-than-thou PIL man was his conflict-of-interest allegations. They backfired when Solicitor General Tushar Mehta, appearing for SEBI, told the court that the OCCRP report that Bhushan cited in his plea was sent by him to OCCRP. “When we approached OCCRP for the report, they told us to get it from Bhushan,” Mehta told the court, stating that Bhushan got the report made and then appeared in the same case. Mehta said he did not disclose it earlier as it would have embarrassed Bhushan.

The SG told the court that the OCCRP directed them to an NGO linked to Bhushan. This, the SG termed, was a conflict of interest because “if we start looking into such self-serving reports, our regulation will become meaningless”.

The OCCRP is a non-profit organisation comprising a global network of investigative journalists that has funding from the likes of the United States Agency for International Development (USAID), Rockefeller Brothers Fund, the Ford Foundation, the International Center for Journalists (ICFJ), the United States Department of State, Swiss Confederation, Google Ideas, Open Society Foundations (OSF) and the Knight Foundation.

CJI Chandrachud cautioned the attorneys to exercise responsibility and limit their requests for reasonable relief in similar circumstances to those in which they have proof. “You lawyers should be responsible with what you’re asking for,” he said. “This isn’t your typical classroom argument. Without a single piece of proof, you are requesting that the Supreme Court launch an investigation into SEBI and LIC? Are you aware of the repercussions?”

“SEBI cannot be allowed to look into something based just on media reports,” the CJI told the lawyers. He pointed out that there was no evidence in the file to cast doubt on the validity of SEBI’s probe. Dismissing Bhushan’s claim that SEBI did not take any action in response to news that implicated Adani, he said media stories were not subject to the same scrutiny as SEBI’s investigations. The apex court then reserved its judgement in the case.