ASIC reviewing short-seller report on Adani
Australia’s corporate regulator is understood to be reviewing a short-seller report that accused Indian conglomerate Adani of stock manipulation and accounting fraud, causing tens of billions of dollars to be wiped from the value of its listed companies.
The report by US-based Hindenburg Research, titled “Adani Group: How The World’s 3rd Richest Man Is Pulling The Largest Con In Corporate History”, was released a week ago, and since has wiped $US74 billion ($105 billion) from the value of Adani’s listed companies.
Hindenburg’s founder, Nate Anderson, in the report and in a subsequent statement, has made allegations that Adani failed to disclose related-party transactions, and the source of funds for “suspect” transactions between Adani Group entities, founded by Gautam Adani, and his brother Vinod Adani-associated entities.
“This information is critical to the integrity of Adani’s business, as it indicates whether the company is round-tripping turnover, laundering illicit funds, or using cash to manipulate its stock,” Anderson wrote.
Adani, which owns half a dozen major companies with interests ranging from energy to transportation and infrastructure development across the globe, including in Australia, issued its own 431-page response describing Hindenburg’s claims as a lie and malicious, and threatened legal action.
The Australian Securities & Investments Commission declined to confirm if it was looking at the Hindenburg report, but sources, who were unable to be identified, confirmed to this masthead that the regulator was reviewing it.
The Australian Tax Office was also contacted for comment on whether it was also reviewing the Australian-related transactions raised in the Hidenburg report, but it declined to comment.
A report in Indian financial newspaper Mint said Adani was planning to hire a large accounting firm to assess its corporate governance and audit practices following the Hidenburg allegations.
The Hindenburg report, while focused on the global network of Adani companies, and related family companies in a number of tax havens, also zeroed in on several transactions by the conglomerate in Australia.
Adani operates the Carmichael coal mine in central Queensland, under the name Bravus Mining & Resources, and holds a 99-year lease from the Queensland government for the Abbot Point coal port, also known as the North Queensland Export Terminal.
Adani paid $1.8 billion for the port leasehold in 2011. A year earlier, it had acquired the Carmichael mine in a cash and royalty deal worth $2.7 billion, making it the largest single mine investment by an Indian firm into Australia.
The Carmichael mine only began exporting coal last year, and is ramping up to export 10 million tonnes a year.
The Hidenburg report claimed that an entity owned by an Adani private family trust in a Caribbean tax haven charged the publicly listed Adani Enterprises a 7.83 billion Indian rupees ($136 million) security deposit to use the North Queensland Export Terminal. The disclosure was made in Adani Enterprises’ 2022 annual report.
“It is unclear why an Adani private entity is charging the Adani Group listed company for port handling services in yet another conflicted transaction, drawing capital out of the public company,” the Hidenburg report said.
The report also questioned the appointment of Gautam Adani’s brother-in-law, Samir Vora, to the Australian operations. Last year, Vora became Adani Australia chief executive and country head, replacing Lucas Dow, a former BHP executive.
The report noted that Vora had been accused by India’s Directorate of Revenue Intelligence of being involved in a diamond trading scam, and making false statements to regulators.
Hidenburg also alleged that between 2013 and 2015, Carmichael Rail and Port Singapore Holdings Pte Ltd, the latter a Singaporean entity controlled solely by Vinod Adani, engaged in three transactions that may have resulted in Adani Enterprises avoiding recognition of large asset impairment charges.
“In short, Carmichael Rail: acquired assets from publicly listed Adani Enterprises (without disclosure by the listed entity), with loans funded by Adani Enterprises (without disclosure by the listed entity), then almost immediately wrote down the value of the assets in the same year, enabling Adani Enterprises to potentially avoid a significant loss.”
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Source: Thanks smh.com