The U.S. government probed Hindenburg claims before $553 million Adani loan
05 Dec 2023
The U.S. government has dismissed the corporate fraud allegations made by short-seller Hindenburg Research against Indian billionaire Gautam Adani. The decision came just before extending a substantial financial backing of $553 million for a container terminal project in Sri Lanka led by Adani’s conglomerate.
A senior U.S. official revealed that the accusations from Hindenburg Research’s scathing report, which had earlier wiped around $100 billion from the Adani Group’s market value, were thoroughly examined during the due diligence investigation by the International Development Finance Corp. (DFC). The DFC, a U.S. agency, found the allegations inapplicable to Adani Ports & Special Economic Zone Ltd., the subsidiary overseeing the Sri Lanka project.
The unnamed DFC official emphasized the agency’s satisfaction with the investigation, countering Hindenburg’s claim that Adani was executing “the largest con in corporate history.” The official highlights the agency’s commitment to monitoring the Indian firm to prevent unintentional support for financial misconduct, emphasizing the need for a distinct approach to infrastructure projects compared to China.
The Sri Lankan port deal, backed by the U.S. government, stands as one of the largest infrastructure projects in Asia, aligning with America’s efforts to counter China’s growing influence in the region through the Belt and Road Initiative.
Adani Group, refuting the allegations featured in Hindenburg's report, including stock-price manipulation, has faced regulatory inquiries and court hearings in India without any evidence of wrongdoing. Adani stocks have rebounded recently, with Adani Ports and Special Economic Zone Ltd. gaining 7.4% in 2023.
The Adani Group sees the DFC’s investment as a vote of confidence amid controversies surrounding its Australian coal mine and perceived closeness with Indian Prime Minister Narendra Modi. Karan Adani, the tycoon’s son, and CEO at Adani Ports, expressed their perspective as a reaffirmation by the international community of their vision, capabilities, and governance during the announcement of the Sri Lankan port deal in Colombo.
