Demystify Open Society Foundation report on Adani Group

Topic- Demystify Open Society Foundation report on Adani Group

Author- Nandan Rathi, student at Hidayatullah National Law University

INTRODUCTION-

Adani Group headed by Business tycoon Gautam Adani found itself in hot water once again after George Soros’s backed Open Society Foundation made fresh allegations against the group for manipulating and unfair business practices. This year has been very volatile for the multi-sector conglomerate, after they faced severe accusations from Hindenburg Research, another report on its performance has raised serious concerns on the outlook of the company.

GEORGE SOROS & OCCRP

Born in 1930, Soros a Jew who survived Holocaust during WW-II, a Billionaire Hedge Fund Manager; has often been linked to regime changes that he and his Open Society Foundation accused of being totalitarian. Soros has built the reputation of being an “agent of chaos & disruption” after his influence on various political and financial crises. From failed attempts to topple the Russian government, instability in EU, Arab Spring movement, Asian Financial Crisis of 1997 and destabilized Bank of England, Soros and his Group are always in the center of controversy.

The Organized Crime and Corruption Reporting Project {OCCRP}, a global network of investigative journalists has one objective- “Expose crime & corruption so the public can hold power to account”. George Soros Open Society Foundation has been one of its active donors.

The OCCRP report on Adani shed light on the fact that Adani Group is channeling investments into publicly traded stocks via ‘Opaque’ Mauritius funds and its investors are buying its share from offshore accounts in tax havens. This fund worked as a shield to protect the long-time involvement of business partners from the Adani Family. This report was published in The Guardian and Financial Times.

Even the report by Hindenburg was supported by George Soros, which accused Adani Group for “engaged in brazen stock manipulation and accounting fraud scheme over the course of years” and the Company has taken huge loans more than company total valuation, which can be dangerous if a company fails to perform. Also, companies of Adani are interlinked, meaning if one fall, all others will fall.

Stock Manipulation can be understood with this example. In March 2020 the share price of one Adani Enterprise was Rs. 130 & the same price jumped to more than 4000 in November 2022, which is not a normal thing. The report said this was achieved with the help of artificial demand created by the group by shell companies. LIC and SBI spend huge amounts of money to buy its shares.

Open Society Foundation was established in 1984 by Soros, having advanced values of democracy, justice, and human rights in more than 120 countries. Soros has been vocal on various issues and been very critical on growing nationalism and blasted several world leaders including PM Modi. His foundation has proved to be chaotic for many countries. The society has spent more than $18 billion on its activities. Even in the USA, Soros has made many enemies.   

After the Hindenburg report published in January this year, Soros raised a strong attack on the PM, saying he needs to answer the people about Adani Group. He asserts that Narendra Modi and Gautam Adani maintains close friendship which has benefitted the Adani Group tremendously. It is not denied that in the last five years Adani Group has quickly risen to the top, so much that Adani has become Asia’s Richest Man for the time being.

IMPACT OF REPORT ON ADANI GROUP-

Short selling Hindenburg Report was the destructor of worlds for Adani Group. As soon as report made public, The Valuation of the group nosedived, its stock which were on a bull run bled and crashed, major auditing firm Deloitte left the company, Credit Suisse has given Zero Ratings to its bonds, meaning loan lending would be stopped. Also, the personal wealth of Adani suffered massive reduction. Apart from the group, the Indian Stock market also came down drastically, affecting the economy. It is not just restricted to financial loss, but even cases can be initiated against the company.  

More importantly, the public who have invested in the company will face loss and will have a huge impact on them.

 Adani Group maintains that these are nothing but ‘recycled allegation’ put on the firm to tarnish its reputation and are based on closed cases from decades ago and labelled the accusation as suspicious, malicious.

This also raises the concern about the role of regulators like SEBI to identify and stop such practices which come under corporate fraud. The role of government is also essential when there is involvement in FDI, investments in business and other areas.

CONCLUSION

The Hindenburg and OCCRP Report have caused a massive stir in the Indian Stock Market and also in the Indian Economy. Whether the accusations are completely true only the company knows, but amidst all this a common man should not suffer.