Hindenburg case: SEBI clears Gautam Adani, group companies; rules allegations ‘not established’

The Securities and Exchange Board of India (SEBI) on Thursday disposed of proceedings against Adani group companies and key executives, including Gautam Adani and Rajesh Adani, in connection with transactions flagged in the damning report by now-defunct US short seller Hindenburg Research, holding that the allegations could not be established.

“I find that the allegations made against Noticees in the SCN are not established. Considering the above, the question of devolvement of any liability on Noticees does not arise and hence the question of determination of quantum of penalty also does not require any deliberation,” SEBI Whole Time Member Kamlesh C. Varshney said in two separate orders published on the regulator's website.

“I…hereby dispose of the instant proceedings against Noticees without any direction,” he wrote.

The Hindenburg report, released in January 2023, had alleged that obscure entities such as Adicorp, Milestone and Rehvar were used to route funds within the ports-to-power conglomerate.

The Adani Group repeatedly denied the allegations, describing the report as “malicious” and “a calculated attack on India.”

SEBI’s probe looked into whether the transactions amounted to undisclosed related-party transactions under its listing and disclosure rules and whether Adani companies misled shareholders by omitting them from annual reports.

"There is no violation of the provisions of the LODR Regulations as the impugned transactions do not qualify as “related party transactions” for the reasons discussed in detail in the earlier part of the order," the final orders read.

It also noted that the loans were repaid with interest, no funds were siphoned off, and hence there was no fraud or unfair trade practice.

Accordingly, all proceedings against the Adani Group have been dropped.

Adani reacted to the clean chit by calling for an apology by those who spread false narratives using Hindenburg Research's "fraudulent and motivated" report.

In a post on X accompanied by the national tricolour, Adani said the Sebi clean chit has reaffirmed what his group has always maintained -- "that the Hindenburg claims were baseless".

"Transparency and integrity have always defined the Adani Group," the Adani Group Chairman said. "We deeply feel the pain of the investors who lost money because of this fraudulent and motivated report. Those who spread false narratives owe the nation an apology," he said.