Ongoing Timeline
20 Jan 2023 - Red Herring Prospectus
The Adani group releases its Red Herring prosepectus for a FPO on the SEBI site. Pages 333 to 350 listed its management, promotors, promoter groups and group companies
24 Jan 2023 - Hindenburg Report
Market Researcher and short-seller Hindenburg publishes a report that alleges, among other things, that the Adani group of companies had committed accounting fraud, manipulated its stock prices and failed to disclose transactions with related parties. It is called: Adani Group: How the World’s 3rd Richest Man Is Pulling the Largest Con in Corporate History
Understanding the Bottomline Charge:
Publicly listed companies in India that trade on stock markets are required to have 25 % of their shares tradiging as free-float for the public. That is, 25% of their shares should not be held by owners, promoters, or institutions that are influences by owners and promoters.
The reason is simple:
Why do companies trade on the stock markets to begin with? To Raise money from the public (as equity). The other option, is to take a loan from banks (debt).
For an informed choice, the public investor needs information. That's the price of raising money from the bourses - information disclosure
Corporate information that the public is required to know is not a one-time thing. Contracts, investment decisions, sales, profits, losses, mergers & acquisitions occur on a daily and minute-to-minute basis. It then becomes the job of the media to keep the public updated on publicly listed companies.
Public investors holding a company's share, express their confidence in a company, or lack thereof, by holding on to their shares, buying more, or selling them.
This causes a company's share price to stay the same, rise or fall.
That's the stock market mechanism.
The market mechanism protects the small investor from making bad choices.
But more importantly, trusting that this market mechanism works, local and international banks extend loans and letters of credit to publicly traded companies, who are then able to bid for large projects and tenders across the globe, for which the company doesn't actually have the cash, but for which they can be assured of banking support.
This fuels economic growth and development.
BUT - for the market mechanism to work, two things are important.
The information able to investors should be transparent
The proportion of shares with free-float investors should be statistically significant to enable their choices to signal the market.
In India, that proportion of free-float shares (those not held by the company's promoters, owners, or investors and institutions influenced by them) - is set at 25%.
Objectively speaking, given Indian conditions, that's a fair proportion.
The Major Hindenburg Charge
The Adani group's free-float is far short of 25%; it has set up several undeclared related-party companies (RPCs), whose only job is to invest in Adani stocks and therefore manipulate its stock market price. This not only has a spillover effect in the reading of the Indian stock market in general, but effects how easy it becomes for the Adani group to get loans and do business in the world.
Hindenburg says the Kingpin of the Related Party transactions is Gautam Adani's brother Vinod Adani who left the country in 1998.
29 Jan 2023 - Adani Denial
The Adanis deny all charges strenuously in their own report, which is, however, higher on emotion than on facts.
29-30 Jan 2023 - Hindenburg response
Within hours, the research agency hit back, pointing out that the 413-page Adani response had not answered 62 of their 88 questions. The most important one - where does Vinod Adani, brother of Gautam Adani and one of the largest 'related party' shareholders, get his money from?
It went further and shorted stocks of the group's companies, saying it was putting its money where its mouth was.
6 Feb 2023 - Art 32 Writs in SC
Two writs under Art 32 of the constitution are filed in the Supreme court by Vishal Tiwari and ML Sharma against the Union of India, "expressing concerns over the loss of investor wealth in the securities’ market over the past several weeks and the portents for the future". It sought a "review of existing regulatory mechanisms in the financial sector to ensure that they are duly strengthened."
Tiwari files a Civil Writ - WP 162 of 2023, while ML Sharma files a criminal writ, W.P.(Crl) No.39/2023. (Here)
2 Mar 2023 - SC Sets up Expert Committee
The Supreme Court of India sets up an expert committee headed by retired supreme court judge AM Sapre, to review and strengthen India's financial regulatory mechanisms. Members included Nandan Nilekani, KV Kamath, OP Bhatt, Somasekhar Sundareshan and Justice JP Devadhar.
15 Mar 2023 - Vinod Adani owns up to ACC & Ambuja Cements
The Adani group clarifies to CNBC TV18 that Vinod Adani's Endeavour Trade and Investment," own Ambuja Cements and ACC
"We would like to submit that Mr. Gautam Adani and Mr. Rajesh Adani are individual promoters of various listed entities within the Adani group and Mr. Vinod Adani is an immediate relative of the individual promoters " it said
Accordingly, as per the applicable Indian regulations, Vinod Adani is part of the ‘promoter group’ of various listed entities within the Adani group.
This clarifies that the Adani Group and Vinod Adani should be seen as one.
4 April 2023 - SEBI asks SC for more time
SEBI seeks extra time from the Supreme Court to submit its report (IA 89799/2023)
10 May 2023 - Anamika Jaiswal Petition in Response to More Time
A Permission Application is filed in response to SEBI's extra time and was taken on record on May 11, 2023. This was Anamika Jaiswal's affidavit. IA (9947/2023)
15 May 2023 - SEBI denies it's been investigating any Adani company since 2016
SEBI denies that it had been investigating the any company of the Adani group since 2016. It says even its investigation on the issuing of Global Depository Receipts (GDRs) of 51 companies had no listed Adani group. This is response to IA 9447 of 2023.
This could be technically true. All SEBI investigations against the Adanis look like they had been closed, adjudicated or settled. The last order on the role of IIL in the trading of Adani Exports stocks in the Ketan Parekh scam on May 27, 2019, exonerated IIL and nothing more seemed to be pending.
17 May 2023 - SC Expert committee's clean chit
The Supreme court Expert Committee Report finds 'no coherent pattern of abuse', 'no regulatory failure' and 'no systemic risk'. The Hindenburg report was simply wrong. (Here in the SC) (Here in the Media) (Here is the Report)
Report Highlights
Market Manipulation - SEBI's own market surveillance software threw up close to 850 alerts on Adani stocks.
10 July 2023 - Anamika Jaiswal PIL Impleaded in the case
Anamika Jaiswal's PIL is impleaded into the main case, WP 162 of 2023. The other notable PI litigators in the case is ML Sharma and Jaya Thakur (IA 128820/2023)
11 July 2023 - SEBI Responds
SEBI files its response to the Expert Committee report and to Jaiswal's IA. A hearing is set for August 29th. One unverified response to Jaiswal Affidavit is floating around and can be found here
14 August 2023 - Deloitte Extends as Adani Ports Auditor
Adani Ports auditor Deloitte exits after raising concerns, while SEBI (Securities & Exchange Board of India), tells the Supreme Court it has finished investigation in all 24 matters referred to it.
25 August 2023 - SEBI files its Own status Report
SEBI's files it's Own Status Report with the Supreme Court said it had examined 24 matters in compliance with court's order, of which 22 investigations were final, 1 was interim and 1 was ongoing. The Court was now expected to hold a hearing on September 15.
31 August 2023 - Global Reporters against Organized Crime & Corruption file a report
The Global anti-corruption consortium OCCRP (Organized Crime and Corruption Reporting Project), says new documents reveal that
Two men treated as FPIs (or Foreign Private Investors) - Nasser Ali Shaban Ahli and Chang Chung-Ling - who traded hundreds of millions of dollars’ worth of Adani Group stock, were in fact, directors and shareholders of affiliated companies.
They said they had documented records that showed that the investment funds Ali and Chang used to trade in Adani stock received instructions from a company controlled by a senior member of the Adani family.
The source of Ali & Chang's funds are unknown.
OCCRP shared these documents with the Guardian and Financial Times
OCCRP stories begin appearing in Indian and International papers notably the National Herald, Financial Times & The Guardian.
11 September 2023 - Anamika Jaiswal's Affidavit leaks
Anamika Jaiswal's affidavit was leaked to the press. It contained several serious allegations:
In 2014 while investigating an over-invoicing case into the Adani group DG Najeeb Shah of the Directorate of Revenue Intelligence (DRI) had sent a letter to the then SEBI chairperson UK Sinha alerting him that the group may be committing stock market manipulation. According to that letter, money allegedly siphoned off from the over-valuation of imported power equipment was being offshored to Mauritius and being reinvested in Adani
The DRI letter dated Jan 31, 2014 was accompanied by a CD containing evidence of siphoning off Rs 2,323 crore and two notes on the case being investigated by the DRI
The affidavit claimed more documents may be obtained from the Mumbai Zonal Unit of the DRI.
There is also a conflict of interest in SEBI conducting the Adani investigation.
The SEBI chairman UK Sinha who closed the Adani investigation in 2014 is now working as non-executive independent director-chairperson' of NDTV, which has been acquired by the Adani group in 2022.
Cyril Shroff Managing (partner atCyril Amarchand Mangaldas) who has been a member of SEBI's Committee on Corporate Governance, that looks at offences like insider trading , is related to Gautam Adani. His daughter is married to Gautam Adani's son, Karan Adani.
The Affidavit also pointed out conflict of interest in the Court Appointed Panel
OP Bhatt, who is listed as Ex-SBI chairman, is also Chairman of Greenko which has dealings with Adani . And Bhatt is the sole contact on GREENKO ENERGY HOLDINGS which is registered in Mauritius , which in February this reating was moved down from a BB+ in 2016 to a Fitch Rating of BB- (Long Term Issuer Default)
On September 15 SEBI is expected to file its final report in court.
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