Shares in the flagship of embattled Indian tycoon Gautam Adani were repeatedly suspended on Friday as a wave of accounting fraud allegations deepened. Adani Enterprises fell 10 percent at the open, while Adani Power, Adani Green Energy, Adani Total Gas in which French giant TotalEnergies has a 37.4 percent stake and Adani Transmission were also suspended as they hit their trading stops.
Adani Enterprises later resumed trading, only for them to immediately fall another five percent, prompting another halt. The conglomerate’s combined market capitalization has fallen by more than $100 billion since US short seller Hindenburg Research – which makes money by betting on falling stocks.
Adani himself has seen his fortune plummet by tens of billions of dollars, knocking him out of the top 10 of Forbes’ real-time rich list and depriving him of the title of Asia’s richest man. Adani late on Wednesday canceled a $2.5 billion share sale that was meant to help reduce debt levels – a long-standing problem – restore confidence and broaden its shareholder base.
Major banks including Credit Suisse and Citigroup have stopped accepting Adani bonds as collateral for loans to private clients. That has fueled concerns about how Adani will raise fresh funding, with Adani’s dollar bonds trading at troubled levels and signs of contagion mounting in Indian markets.
According to Hindenburg Research, Adani artificially inflated the share prices of its units by funneling money into the shares through offshore tax havens. This “brazen system of stock manipulation and accounting fraud” is “the biggest fraud in corporate history,” Hindenburg said.
Adani said it had been the victim of a “viciously malicious” reputational attack and issued a 413-page statement on Sunday saying Hindenburg’s claims were “nothing but lies”.
In response, Hindenburg said Adani had failed to answer most of the questions raised in its report. Critics say Adani’s closeness to Prime Minister Narendra Modi, also from the state of Gujarat, has helped him win business and avoid proper oversight.
