The Tale of Two Investigations.

 

 

The Adani group was hit by allegations of serious fraud and account manipulation on 24th January 2023.

The international research group that investigates such frauds and goes short on companies that are perpetrating such frauds released a report and went short on Adani shares.

They predicted an 87% downside to the Adani shares and their word came almost true. Many of the Adani Group companies valuations fell between 50% to 85% before knights in shining armor, like the LIC and SBI came for the resuce, both prompted by the Government of India, led by Narendra Modi.

As is the pattern adopted by Narendra Modi and his colleagues, they went in to damage control. To do this, they somehow got the Supreme Court to take suo-moto cognizance of this fall in share prices. The SC has no business to take such notices as there is an independent authority, the SEBI, which is the market regulator. The SC, led by DY Chandrachud, decided in its own wisdom to come to the ‘rescue’ of Indian Investors. It is pertinent to note that almost 75% to 85% shares were held by Adani and his front companies. So, the biggest impact was on Adani.

This is the Modus Operandi of Narendra Modi Government. When ever it is faced with a problem, it gets the SC to intervene. It did this during the controversy that erupted in the Judge Loya case, it did this in the Zakia Jafri review petition and it did this in the case of crash of Adani Shares. What it does is that it gets the SC to institute an inquiry into the case and then manages to get a favorable verdict. In the Judge Loya case, then CJI Dipak Misra, took over all cases filed anywhere in the country and decided to hear the case himself. He later accepted the oral testimony of four judges who were present with Judge Loya on the night of his death and disregarded all other information that was available in public domain.

In the Adani case too, the SC appointed a six member investigation team, comprising of a retired judge and five prominent businessmen.

This inquiry returned a clean chit for Adani. SEBI, which was also part of the case, then issued a clean chit on its own and said that Adani had not done anything wrong.

It would be interesting to get the transcripts and details of both these investigations.

As Adani had accessed funds from the US Stock Markets, the SEC (Securities and Exchange Commission) started a parallel investigation based on the allegations of Hindenburg Research’s report.

Along with FBI, it raided the director of Adani Green Energy, Sagar Adani, the nephew of Gautam Adani and confiscated damning evidence that suggested that the company that had raised money in the US had paid almost 250 Million US Dollars to government officials in India as bribes for getting Power Purchase Agreements signed. These PPA would have given the group bumper profits of 2 Billion USD over the agreement period.

The four governments named are the Government of Andhra Pradesh, then led by Jagan Mohan Reddy of YRS Congress, Government of Odisha, then led by Naveen Patnaik, the Government of Tamil Nadu, led by DMK, the Government of Chattisgarh, led by Bhupen Bhagel of Congress and J&K, led by the Governor, who was an appointee of the BJP.

In a press conference, Sambit Patra, the BJP Spokesperson pointed this out and said that no BJP State Government was paid.

What people need to understand is that when Adani is Modi’s man and when no CM in any BJP ruled state is an independent CM, all are puppets of Modi, there was no need to pay anyone in those states. The money would have been already paid to BJP anyway.

The US Department of Justice has now indicted seven people, including Gautam Adani and Sagar Adani and issued arrest warrants for all of them. If prosecuted, everyone faces a 20 year jail term for wire fraud and corruption charges.

There is an option available for the Adani group to accept the wrong doing and settle the mater with SEC. Many companies have done this in the past. I am sure that Adani will take that route rather than face jail. The SEC will impose penalties and give guidelines that can’t be violated. The amount of penalty is usually made public.

If Adani takes that route, then one thing will become clear, that he has accepted his guilt.

What the US DOJ investigation done along with FBI shows is that the investigation done in India was a sham. That the special team was completely compromised, that the SEBI, led by Madhabi Puri Buch was totally compromised and the SC accepted the reports at face value, thus it can’t escape blame for allowing such a fraud from going undetected.

This is the tale of two investigations, one done as a sham and the other done diligently.

The members of the expert committee included former chairman of the State Bank of India O.P. Bhatt, retired Bombay High Court judge Justice J.P. Devadhar, former chief of the New Development Bank of BRIC countries K.V. Kamath, co-founder of Infosys Nandan Nilekani and securities expert and lawyer Somasekhar Sundaresan.

The members of this expert committee should be questioned as to why they were not able to find anything amiss? Madhabi Puri Buch needs to be sacked right away and the records of SEBI investigation should be sought and made public.

Finally, this is another blot of the legacy of former CJI D.Y. Chandrachaud. Not the first, neither the last. As time goes by, more such blots will appear on his legacy.