India’s second-richest man Gautam Adani is at the center of a new corruption scandal, with the accusations coming from a familiar source.
On Monday, investment firm Hindenburg Research released excerpts of what it described as whistleblower documents it says prove that the head of India’s market regulator had undisclosed investments in an offshore fund used by Adani Group associates for fraudulent purposes, the Globely News reported.
Adani is the founder and chairman of the Adani Group.
Hindenburg alleges that Madhabi Puri Buch, the chairperson of the Securities and Exchange Board of India (SEBI), and her husband had “hidden stakes” in “obscure offshore Bermuda and Mauritius funds” that were used by Vinod Adani — Gautam’s elder brother — for illicit purposes, including the over-invoicing of imported power equipment.
The two entities in question are the IPE Plus Fund and Global Dynamic Opportunities Fund (GDOF).
The Adani Group has been tied to a vast network of nested offshore entities that investigators allege it has used to manipulate its stock price and inflate the cost of imported material for its coal power plants — costs that are ultimately borne by Indian consumers and taxpayers.
A report last year by Hindenburg described the Adani Group’s stock manipulation scheme as “the largest con in corporate history.” The Financial Times and other entities have also published damning investigative reports detailing fraudulent activity by the Adani Group.
The accusations against Buch raise further scrutiny over the unwillingness of the SEBI to probe fraudulent activity by Adani Group entities, principals, and associates. But they also increase the risk of the bet Washington and other powers are making on Adani.
The U.S. government sees the Adani Group as a strategic partner in balancing China and its Belt and Road Initiative in Eurasia. It is financing the Adani Group’s port project in Colombo, Sri Lanka. The Adani Group’s defense and logistics arms are also tied to Israel and the United Arab Emirates, which, along with India and the U.S., are part of a “minilateral” partnership group known as the I2U2.
Yet the U.S. Department of Justice is also currently investigating Adani for bribery. Adani is the face of India’s crony capitalism today. His net worth surged by over 1700 percent during Prime Minister Narendra Modi’s first eight years in office, and, according to Bloomberg, now exceeds $100 billion.
Washington has rightly called out Beijing for the graft and lack of transparency associated with its flagship connectivity project, the Belt and Road Initiative. But it weakens its own moral argument when it is allying with one of India’s most corrupt oligarchs to develop an alternative to Beijing’s network of overseas ports.
