Adani-Hindenburg row: Can we expect a fair probe?

The ‘greatest con in corporate history’ as coined by the US-based short-seller Hindenburg Research in its report against the Adani Group, is actually ‘a collection of many smaller cons,’ such as the group’s alleged involvement, along with two other companies, in a coal import scam that may have cost the State of Tamil Nadu at least US $730 million.

Chennai-based NGO A rappor Iyakkam claimed that Adani’s Singapore-based subsidiary Adani Global Pte Ltd may have illegally earned more than US $363 million by supplying substandard coal at inflated prices in collusion with the state electricity utility TANGEDCO between 2012 and 2016. The NGO’s allegations of irregularities are borne out by a 2017 report by the Indian government’s Comptroller and Auditor General (CAG).

Again, as recently as in early February 2023, the Directorate of Revenue Intelligence (DRI) of the Ministry of Finance moved the Supreme Court against an Appellate Tribunal’s order quashing DRI’s case alleging over-invoicing of coal supplies procured by three Adani Group companies. Regulatory feet-dragging suggests that the reluctance to investigate scams relating to Adani extends beyond the Union government to state-level watchdogs, as proved by the fact that repeated attempts by Arappor to motivate the DVAC under the present government have also reportedly failed to evoke a response.

India’s Supreme Court, in response to the petitions before it, decided to create a committee of experts, headed by a former judge of the country’s apex court, to analyse and recommend ways to strengthen the regulatory framework in India’s securities market. But the question remains if an independent and fair investigation can be expectecd into allegations of corporate fraud by the Adani Group.

The Expert Committee consists of a former Supreme Court Justice, A M Sapre, as its chairman and five other members; former Chairman of India’s largest nationalised bank State Bank of India (SBI) O P Bhatt, former Bombay High Court judge and presiding officer of the Securities Appellate Tribunal J P Devadhar, former chief of the New Development Bank of BRICS countries K V Kamath, co-founder of Infosys Limited Nandan Nilekani, and corporate lawyer Somasekharan Sundaresan. However, some members of the committee are themselves under the scanner of India’s investigating agencies.

K V Kamath, who was the chairman of ICICI Bank from 1996 to 2009, figured in a First Information Report (FIR), a written document prepared by the police when they receive information about the commission of a possible offense, in theICICI Bank Fraud case, as reported in the Indian Express.O P Bhatt, the former Chairman of SBI bank, was examined by the CBI in March 2018 in a case of alleged wrongdoing in disbursing loans to the former liquor baron and fugitive economic offender Vijay Mallya.

The Apex Court collegium recommended corporate lawyer Somasekhar Sundaresan as a judge in the High Court of Maharashtra, he is now a member of the SC committee. Interestingly, the Modi government had objected to Sundaresan’s candidature on the grounds that he had expressed his views on several matters pending before courts, says ‘LiveLaw.’