Bribery Accusations: Adani Group Under Investigation

Let’s understand all the negative events happening on the Adani Group. Firstly, we will talk about Hindenburg report and then the Bribery Accusation

Hindenburg Report

The Hindenburg Report on the Adani Group, which released on 24th January 2023, took the global markets to a storm and started a major controversy.

Key Allegations:

1. Hindenburg Firm has alleged that the Adani Group has created shell companies and through these shell companies they have manipulated their stocks by buying them to increase the share prices.
2. They also did the accounting fraud by inflating the profits and had committed corruption on the same to deceive the investors.
3. There are several related-party transactions that did not get disclosed which raised the trust worthiness of the executives
4. Due to strong political ties, they got many contracts without any merit

Response from Adani Group and further actions:

1. Adani Group claimed that the allegations were baseless
2. Government came into the picture and ordered Securities and Exchange Board of India (SEBI), an enquiry on the report
3. SEBI conducted the enquiry and finally made that the allegations are invalid, which concluded the allegation
4. Later, Hindenburg made an allegation on the SEBI chief Madhabi Puri Buch of the conflict of interest that she and her husband has stakes in a shell company which is tied to Adani Group of Companies, for which SEBI chief did not respond

Bribery Probe

This is the third attack now on the Adani Group for alleged bribery involving renewable energy projects.

The Allegation

1. The U.S. Department of Justice (DOJ) found Adani Group guilty of getting the project contracts by bribing the officials
2. The DOJ is involved since they have a jurisdiction

Details

1. This started with a miniratna PSU – Solar Energy Corporation of India (SECI). Before we begin, lets first understand the business model of SECI in simple language. SECI holds a trading license, which will act a mediator between energy developers and consumers. It will buy the solar energy from the developers and sells it to the power distribution companies.
2. Now coming to the current controversy, SECI has awarded a power contract to Adani wherein they have to produce certain solar energy and give it to SECI. SECI then has to sell it to Power Discoms, but there are no buyers for this due to high prices.
3. This is where the Adani group had made a bribery deal with a Discom from south and asked them to purchase the energy

Outcome

1. Kenya Government has cancelled the airport deal with Adani Group
2. All Adani Group company Stock prices plunge around 20%

The Group’s Response

1. Again, the Adani Group had denied the allegations

Potential Implications

1. Normal retail investors like you and me will lose the trust in this already allegation hit company