Central Idea

Following a Supreme Court directive in March 2023, the Securities and Exchange Board of India (SEBI) was tasked with investigating allegations related to the Adani-Hindenburg matter.
The Organized Crime and Corruption Reporting Project (OCCRP) has recently unveiled new allegations against the Adani Group, adding to the scrutiny.

OCCRP’s allegations against Adani Group

OCCRP’s report alleges stock manipulation by the Adani Group.
The report cites exclusive documents indicating that investors connected to the Adani family influenced Adani companies’ stock prices.
The Adani Group has strongly denied these allegations, attributing them to “Soros-funded interests.”

The Organized Crime and Corruption Reporting Project (OCCRP) is a global network of investigative reporters.
Founded by Drew Sullivan and Paul Radu in 2006, OCCRP focuses on investigating organized crime and systemic corruption.
OCCRP has grown to over 150 journalists in 30 countries and collaborates with regional partners and organizations like the Global Investigative Journalism Network.

OCCRP’s investigative efforts have led to numerous official investigations, arrests, resignations, and substantial fines.
It played a pivotal role in high-profile probes, including investigations on Russia’s oligarchs and the Panama Papers project.
The organization has been nominated for the Nobel Peace Prize for its contributions in unmasking political corruption and organized crime.

SEBI was directed by the Supreme Court to investigate Rule 19A violations, non-disclosure of related party transactions, and stock price manipulation.
The OCCRP investigation alleges that Mauritius-based funds, connected to the Adani family, invested in Adani companies’ stocks.
A UAE-based firm, linked to Adani, purportedly received advisory fees from the investment funds.
The OCCRP’s evidence, along with the Hindenburg report, suggests potential regulatory breaches and contraventions by the Adani Group.

Rule 19A is a significant provision of the Securities Contracts (Regulation) Rules, 1957.
It mandates that any company listed on the Indian stock market must maintain a minimum of 25 per cent public shareholding.
“Public” in this context refers to individuals other than the “promoter and promoter group.” These terms encompass immediate family members and subsidiaries or associates of the company.
This rule ensures that a sufficient number of a listed company’s shares are available for trading, promoting price discovery.

SEBI is conducting investigations into Adani-Hindenburg matters, with some investigations still ongoing.
The Expert Committee has reported regulatory loopholes facilitating the concealment of “ultimate beneficiary ownership” and transactions with “related parties.”
SEBI’s handling of alerts generated in relation to Adani stocks and its evaluation of suspected FPIs have raised questions about its role.

OCCRP’s investigation provides further allegations against the Adani Group, accentuating regulatory concerns.
The complex web of potential regulatory violations and economic crimes warrants a thorough forensic audit by an independent auditor.
SEBI’s role in the investigation, regulatory amendments, and handling of alerts requires scrutiny to ensure transparency and accountability.