Not just Adani, SEBI too under a shadow

It’s strange that journalists are able to find and analyse allegations against the Adani Group but SEBI isn’t.

Some recent revelations about the Adani Group have again raised questions about the financial dealings of the group and the handling of the charges against it by the Securities and Exchange Board of India (SEBI). The revelations, which have come into the public domain as a result of media investigations, should be seen as a follow-up of the disclosures made by the US-based Hindenburg Research earlier this year. An investigation conducted by the Organised Crime and Corruption Reporting Project (OCCRP), a consortium of journalists, found that Mauritius-based funds with investments from two persons, Nasser Ali Shaban Ahli of the UAE and Chang Chung-Ling of Taiwan, have invested and traded in Adani companies’ shares. The two have been revealed to be associates of Gautam Adani’s brother Vinod Adani. There are also reports of other shell companies abroad investing in Adani companies. These would violate the rules about promoters’ shareholding in companies and other regulations. Other reports said that some companies in tax havens had benefited from short-selling Adani shares and had not made disclosures to tax authorities.

These and other revelations have pointed to serious violations of stock market rules and regulations. The Adani Group has denied them and said that they are only recycled allegations from the Hindenburg report. But the rejoinder is not convincing, and the fresh charges actually support many of the charges of irregularities made by Hindenburg. Stock market regulator SEBI has much to answer because the charges show laxity on its part in investigating the alleged irregularities and in taking action on their basis. They show that SEBI had knowledge of manipulation of the share market. The report also claimed that SEBI had been alerted as early as in 2014 about the Adani Group routing funds into its own stocks. 

These are serious charges which indict not only the Adani Group but also SEBI, whose responsibility it is to ensure that the stock market rules are observed, to enforce them if they are not, and to punish violations. SEBI, which was expected to investigate the charges against the Adani Group on orders from the Supreme Court, has told the court that it has completed the probe into all but two allegations, and is awaiting information on foreign investments. If the media reports are correct, SEBI has suppressed information and resorted to misrepresentation, and is liable to perjury. It will also be considered complicit in the alleged irregularities. There is the need for an explanation as to why it failed to get the information which journalists have managed to find and analyse. What comes through all this is the Adani Group’s political backing, without which SEBI could not have acted the way that it did.