Questions on collusion

Many a time, mere background material can bring about clarity and restore sensibility in matters involving brutal legal dispute and confrontation. Thus, to begin this clinical analysis and dissection of the burning issue of the allegations of financial wrongdoing being levelled against the Adani Group, here’s a primer and a contextual backdrop. It should also be considered that the matter is sub judice, being fought in various courts and under investigation by some of India’s leading regulatory bodies.

“Why must we take foreign reports as the gospel truth? We are not rejecting the report, but we need proof. What proof do you have against the Adani Group,” the Hon’ble Supreme Court (SC) asked the petitioners just last week. The country’s Apex Court made these observations in response to arguments by lawyer Prashant Bhushan, who was relying on claims made in an Organized Crime and Corruption Reporting Project (OCCRP) report that was looking into the matter. The SC’s observations have brought into the spotlight one of India’s most debated political and Corporate battles and raised serious questions against the petitioners in the George Soros-backed group action that has got the Adani Group in its cross-hairs.

The SC’s latest observations also throw a spanner in the works of the NGOs, lawyers, activists and Corporate investigators involved, since questions are being raised over the modus operandi being employed in this case. It is up to the ‘claimants’ to come good on their accusations with cohesive backup—proof that stands up before the SC and regulators like the Securities and Exchange Board of India (SEBI). The country’s Solicitor General, Tushar Mehta, has all but negated the petitioners’ arguments supporting foreign reports as ‘matter of fact’, observing that some of the petitioners are “activists and public-spirited persons”.

With this backdrop in place, let’s move on to brass-tacks.

‘Economical with facts’

The SC Bench has recently heard the matter under the stewardship of Chief Justice DY Chandrachud and underscored the mention of old ‘Reports of Inquiries’ initiated by the Directorate of Revenue Intelligence (DRI) against the Adanis. While lawyer Prashant Bhushan claimed that SEBI took no action on the DRI alert, Solicitor General Tushar Mehta rejected this and said Bhushan was being “economical with facts”. Mehta maintained: “While DRI had initiated a few investigations against the Adani Group in 2013 and alerted SEBI about it, it is wrong to say the regulator just sat tight over it.”

The allegations against the Adani Group and the international media coverage on the matter have been under doubt since Solicitor General Tushar Mehta highlighted new facts regarding the report by the OCCRP. With the SG claiming that Prashant Bhushan was relying completely on the OCCRP report, which was “unfounded” and suspect in its motivation. Mehta has alleged that when SEBI wrote to the OCCRP seeking details and documents relied upon by the organization while making the allegations in its August 31 report, OCCRP did not share the same, saying instead that these could be obtained from an NGO based in India, which had provided it the information. As per the SG, the NGO in question is run by Bhushan himself. That is a serious accusation and needs immediate looking into for corroboration and affirmation.

Conflict of interest

If substantiated and proven true, the Bhushan-NGO association betrays a clear conflict of interest and is tantamount to an attempt to influence the judiciary by supplying information to third parties and foreign entities. This, in turn, strengthens the Adani Group’s stand that certain Indian and foreign parties are collectively working concertedly to make malicious and baseless allegations against the group with malicious intent. The Adani Group has rejected the OCCRP allegations on earlier occasions too, terming the latter’s report as “a concerted bid by Soros-funded interests, supported by a section of the foreign media, to revive the meritless Hindenburg Report”.

It was Hindenburg Research that raised the contentious allegations when it claimed in a report that Adani Group engaged in stock manipulation and accounting fraud. Adani Group’s listed entities lost millions upon millions of dollars based on the Hindenburg Report and international media coverage on the matter. Today, as Adani Group bounces back after over a year of legal calisthenics, opinions are divergent on whether investors took the right call on the basis of a single, unproven report.

Over the course of its probe, the DRI’s adjudicating authority and an appellate tribunal had confirmed that there was no over-valuation in the concerned cases and that the transactions were in accordance with applicable law. The matter attained some finality in March 2023 when the Hon’ble SC ruled in favour of the Adani Group in this matter, observing during the hearing that if there was no over-valuation, “how can there be any relevance or foundation for these allegations on the transfer of funds?”

As things stand, if the Adani camp’s contention is proven right, that many of the claims in the OCCRP report are from cases that were closed a decade ago—when the DRI probed allegations of over-invoicing, transfer of funds abroad, related party transactions and investments through FPIs—there will be little left to pursue in the said case, especially with no concrete proof points being provided to the court and other regulatory bodies thus far.

What do the experts say?

Before we delve into that fragile zone, it is pertinent to mention that there has been enough in the way of accusations and assertations in this matter from both sides. The fact that the matter has been covered extensively by sections of the international media; and that it has become a political football in the Indian scheme of things has only blown the issue out of proportion. With SEBI and DRI both on the case for long now, the issue should have been already laid to rest.

As for industry insiders, they are smelling something that doesn’t belong in this kitchen. “These are like attempts by detractors to throw a spanner in the works of India’s development, a fact that Adani Group has repeatedly highlighted.” While rejecting the OCCRP’s allegations, the Adanis have also termed the report as yet another concerted bid by Soros-funded interests supported by a section of the foreign media to malign not just the Group, but India itself, especially as the country gallops from financial strength to strength on key indices, while much of the erstwhile flourishing world teeters and totters.

The SC too has expressed concerns over the reliance placed by petitioners in the Hindenburg allegations and media reports against the Adanis and India’s regulatory system. The court has observed that a regulator like SEBI cannot be expected to follow newspaper reports to arrive at its findings. That is a valid point, and given the way sections of the Indian media have been fraternizing over the last few years, most cases would be done and dusted even before reaching the courts if the media were allowed to play judge, jury and executioner, and not necessarily in that order.

Clearly, things should move ahead as per the tenet and verbiage of the law. This is a legal case and the petitioners have made their claims and accusations; in turn, the Adani Group has tabled its submissions and declarations not just of innocence, but of being a victim in a vicious legal and media trial, and that subterfuge and malice have been thrown in by the petitioners for good effect.

The matter has gone on long enough and it is time for this chapter to be closed so that India’s business juggernaut can move ahead on an even keel again. In today’s shrinking Global Village, there are enough Corporate edifices crumbling, many of which are perhaps not liking the sunset with an Indian ship riding high on the otherwise choppy waters.

Views expressed are personal