Adani chairman’s wealth plunges by $US19bn after fraud claim

Trading in the business empire of Asia’s richest man, Gautam Adani, was halted after its shares tumbled on allegations of corporate fraud.

Chairman of Indian conglomerate Adani Group, Gautam Adani. Picture: Indranil Mukherjee/ AFP.

Trading in the business empire of Asia’s richest man, Gautam Adani, was halted on Friday following a 15 per cent plunge in its share price, days after a US investment firm claimed it had committed “brazen” corporate fraud.

Flagship Adani Enterprises tumbled to 508.45 rupees ($US6.23) in Mumbai, triggering an automatic 105-minute trading halt, while subsidiary Adani Total Gas also halted after it tanked 20 per cent.

Hindenburg Research this week alleged in a research report that Adani Group had used undisclosed related-party transactions and earnings manipulation to “maintain the appearance of financial health and solvency” of its listed business units.

Mr Adani, 60, was the world’s third-richest person on Wednesday, but on Friday fell to seventh place on Forbes’ billionaires tracker after losing $US19bn when trading resumed in India following a Republic Day holiday.

Adani’s sprawling interests range from Australian coal mines to India’s biggest ports and the combined market cap of its seven listed companies exceeded $US218bn at the start of the week.

The conglomerate said on Thursday it was the victim of a “maliciously mischievous” reputational attack by Hindenburg just as it was preparing for a major fundraising round.

Legal chief Jatin Jalundhwala said in a statement that Hindenburg’s short-sell position in the firm, announced in the report’s release, was proof the company had a vested interest in driving down Adani stocks.

Adani was exploring its punitive action against the research advisory in US and Indian courts, he added.

Hindenburg responded that Adani had ducked the issues its research had raised and instead resorted to “bluster and threats”.

“If Adani is serious, it should also file suit in the US,” the firm said in a statement. “We have a long list of documents we would demand in a legal discovery process.”

Shares in Adani business units have soared as much as 2,000 per cent in the past three years, adding more than $US100bn to its founder’s net worth and vaulting him up the ranks of the world’s richest people.

Mr Adani — who now has an estimated fortune of around $US120bn — is considered a close supporter of Indian Prime Minister Narendra Modi.

Hindenburg’s report accused Adani Group of engaging in a “brazen stock manipulation and accounting fraud scheme over the course of decades”.

It claimed Mr Adani’s elder brother Vinod Adani managed “a vast labyrinth of offshore shell entities” in tax havens including Mauritius, Cyprus and several Caribbean islands.

The report said a pattern of “government leniency towards the group” stretching back decades had left investors, journalists, citizens and politicians unwilling to challenge the group’s conduct “for fear of reprisal”.

Its allegations come as an ambitious $US2.5bn follow-on public offer — India’s biggest-ever — opened for bids on Friday, aimed at bolstering the business empire’s balance sheet.

The Mumbai stock exchange’s NIFTY benchmark closed Friday down 2.1 per cent after the Adani halt.

Originally published as Adani chairman’s wealth plunges by $US19bn after fraud claim