Adani-Hindenburg Row: Probe Must To Protect India's Economy, Congress's Manish Tewari Writes To SEBI Chief

Manish Tewari said that a proper investigation is crucial to establish the veracity of the claims made in the Hindenburg report and is a litmus test of India's financial oversight paradigm.

Manish Tewari said that a proper investigation is crucial to establish the veracity of the claims made in the Hindenburg report and is a litmus test of India's financial oversight paradigm.

Congress leader Manish Tewari on Monday wrote to markets regulator Securities and Exchange Board of India (SEBI) chief, Madhabi Puri Buch, seeking an investigation into the allegations against the Adani group made by US-based short-seller, Hindenburg Research. 

Tewari said that a proper investigation is crucial to establish the veracity of the claims made in the report and is a litmus test of India's financial oversight paradigm. The recent developments regarding Adani group stocks, which have seen a meltdown on stock exchanges in the wake of the Hindenburg charges, have impacted the stock market negatively and could have adverse effects on the country's economy, he said.

The controversy around the Adani Group started when a report by a US-based Hindenburg Research surfaced on January 24, claiming that the conglomerate had weak business fundamentals and was involved in stock manipulation and accounting fraud.

Tewari emphasized that a proper inquiry into the matter is crucial for restoring the trust and confidence of foreign and domestic investors in the Indian markets. He also stated that it has come to his notice that SEBI has conducted investigations into the Adani Group and the Directorate of Revenue Intelligence (DRI) has begun investigating certain entities belonging to the Adani Group. 

Tewari also urged the SEBI to make the status and findings of the investigation public. "It would, perhaps, be appropriate if the status of the SEBI investigation and its findings could be made public...,” he said.

His letter comes amid nationwide protests by the Congress, demanding the seizure of Gautam Adani's passport to prevent him from fleeing the country. The Congress said it was protesting to draw attention to claims that investments in the Adani group by government-run financial institutions, such as the SBI and LIC, threatened lakhs of Indians' savings.

The Hindenburg Report alleged stock price manipulation and accounting fraud by the Adani Group and claimed that many of the funds invested in the listed Adani companies' universe concealed their ultimate beneficial ownership with nominee directors. Tewari noted that the SEBI had asked Designated Depository Participants (DDPs) to update the beneficial ownership details of foreign portfolio investors by September 30, but believes the time frame is too remote and should be advanced to an earlier date to restore investor confidence.

The Congress MP said the Hindenburg Report alleged that many of the funds invested in the listed Adani companies' universe concealed their ultimate beneficial ownership with nominee directors. Noting that SEBI has asked Designated Depository Participants (DDPs) operating within Indian banks to update the beneficial ownership details of the foreign portfolio investors on-boarded as their clients by September 30, he said the time frame given till September 30 seems too remote and must be advanced to an earlier date to ensure a timely disclosure to restore investor confidence.

"I would, therefore, respectfully urge you to act imminently and take appropriate and urgent steps to stem the slide and restore investor confidence in the oversight and regulatory mechanisms of our capital markets," Tewari's letter read.