Gautam Adani Has Misused The System, But Modi Govt Is Silent. Even RBI & SBI Now Acting As Silent Operators Are Putting Country’s Financial Stability At Risk!
The Adani Group illegally inflated the value of its stock through manipulation and then raised money by pledging those shares. Indians need to realize how their hard-earned resources were used to pay for this. They are becoming increasingly aware of how the ascent of Modi's allies has aggravated the inequality issue. Will the RBI take steps to identify and manage risks to financial stability? The claims made by the American short-seller Hindenburg Research had "revealed" how the Modi government was running the nation.
Gautam Adani Has Misused The System, But Modi Govt Is Silent. Even RBI & SBI Now Acting As Silent Operators Are Putting Country’s Financial Stability At Risk!
The findings of the Hindenburg investigation on Adani are proving to be the proverbial first nail in the company’s coffin. Within a few days, the damning assessment erased $47 billion from the group’s valuation. That represents a rapid 23% reduction in just one month. As of April 2022, the company’s market cap was over $200 billion, making him the world’s third-wealthiest person. Built on heavily leveraged stocks and, of course, obscene debts, the valuation is allegedly exaggerated.
Banks like SBI may suffer significant losses in the event that share prices fall if, as is alleged, the Adani Group illegally inflated the value of its stock through manipulation and then raised money by pledging those shares. Indians need to realize how their hard-earned resources were used to pay for this. They are becoming increasingly aware of how the ascent of Modi’s allies has aggravated the inequality issue. Will the RBI take steps to identify and manage risks to financial stability?
The claims made by the American short-seller Hindenburg Research had “revealed” how the Modi government was running the nation.
A Huge Scam
If the administration doesn’t function democratically, people will get rid of it. At a news conference conducted at the Congress headquarters, Kharge posed ten questions to the administration on various subjects, such as the dispute concerning the company run by tycoon Gautam Adani and the deletion of some remarks made in Parliament.
He claimed that the Adani “scam” was a significant one involving public funds and questioned why the government was hesitant to request a joint parliamentary committee (JPC) investigation. In his statement to the Rajya Sabha, Kharge claimed he had just raised specific issues about the Adani situation and had not stated anything improper.
Why is there no joint parliamentary committee investigation into the claims against the Adani Group by the Modi government? He questioned, “Why won’t (Prime Minister Narendra) Modiji and his administration) even permit (anyone) to utter a word Adani in Parliament? Why are the CBI, the IT (department), the ED, the SEBI, the ED, the SFIO, and the corporate affairs ministry paralyzed? Why are they still keeping quiet when there have been so many scams? They don’t see him (Adani), only other individuals, claimed the Congress president.
Kharge later said in a Hindi tweet, “Modiji is now exploiting our Parliament like a washing machine to launder the scams of his friend.” He asserted that it is the opposition’s responsibility to question the government. He noted that because the country’s citizens choose their representatives, it is their duty to defend the rights and property of citizens, as well as to question the government about the effects of scams on common people.
However, they refused to authorize the creation of a JPC and would not permit us to bring the matter up in Parliament, which is why our populace is concerned.
In a parliamentary democracy, we will continue to question the administration. However, the government is threatening dictatorship and does not want to allow Parliament to run democratically. People will remove the government if it refuses to operate democratically and speaks of despotism and tyranny, according to the opposition leader in the Rajya Sabha.
Shouldn’t the LIC’s investments in Adani’s businesses be questioned, given their declining value? Shouldn’t inquiries be made over the Rs 82,000 crore loan the SBI and other banks provide to Adani? Shouldn’t inquiries be made into why the LIC and SBI invested Rs 525 crore in Adani’s FPO despite the company’s stock dropping by more than 32%? Shouldn’t the stock market’s decline in the value of LIC’s and SBI’s shares by more than Rs 1 lakh crore be investigated? Kharge enquired.
Is it true that Total Gas, a French corporation, has suspended a $50 billion investment in Adani’s business while an inquiry into Adani is ongoing? “Has the MSCI lowered the ranking of Adani’s companies? Has the world’s largest equity investor, Norway Sovereign Fund, sold all its 200 million USD worth of Adani shares? Have Credit Suisse, City Group, and Standard Chartered stopped making loans against Adani’s dollar-denominated bonds? He questioned, “Has Dow Jones taken Adani’s businesses out of the ‘Sustainability Indices’?
Modi government’s loud silence
Why is it that Modiji and his entire administration forbid even the mention of Adani in Parliament? Kharge posed the query and said that the nation wants an answer. The Leader of the Congress claimed he had written to the head of the Rajya Sabha regarding the removal of his comments. He continued that the claims made by people and the media will not be disproven by merely erasing his statements.
You can well guess what is happening in the name of democracy, Kharge stated in response to his statements from the Rajya Sabha and Gandhi’s from the Lok Sabha being omitted. He asserted that while serving as the Karnataka Assembly’s Leader and deputy leader for five years as well as the floor leader of the Lok Sabha, he had never witnessed phrases or words like “washing machine” being omitted.
“The whole opposition shares the call for a joint parliamentary committee investigation into the Adani problem. He said everyone agrees on this and wants to save the nation and the wealth of the poor.
Kharge responded when asked about the function of the Rajya Sabha chairman, “I don’t want to say anything; you have seen it for yourself. They will claim that I am challenging the chairman if I speak up. Because we favour parliamentary democracy, we are acting delicately. Jairam Ramesh, a Congress MP, claimed further that “Parliament TV blanks out whatever Opposition asks and does.”
“The Rajya Sabha Chairman reprimanded the Leader of the Opposition yesterday for not raising the level of the discussion. Naturally, he says nothing about how the Jagadguru of Jhoot utterly degraded it by taking cheap personal jabs at his rivals. Chanting “Modi Chalisa” does not make arguments more important, the former Union minister claimed on Twitter.
Even worse than the accusations of financial mismanagement is the possibility that the Modi administration exposed India’s financial system to systemic risks by allowing liberal investments in the Adani Group by important strategic state organizations like Life Insurance Corporation, State Bank of India, J&K Bank, and other public sector banks. Even though their private sector rivals have opted not to invest due to worries about corporate governance and debt, these institutions have generously funded the Adani Group.
The Enron and Adani scandals bear strong resemblances. Both had a close relationship with the head of state, were seen as vehicles for advancing a particular government agenda (liberalization of infrastructure), and experienced meteoric rises fueled by a convoluted web of offshore entities and round-tripping. A short seller finally called out both. At the same time, everyone else was content to make money, believed Adani was untouchable, or both. We are prone to repeating history when we forget it.
What were the regulators doing?
Hindenburg might be off base. If so, it will suffer an incalculable financial loss. However, accusing it of market manipulation and criticizing it for publishing its study report is foolish. If its research had not been reliable, there might have been a slight change in stock prices, which would have been quickly repaired, not a loss of $120 billion in market capitalization!
For a while, the signs were crystal clear. The Adani Group’s “ambitious growth drive has put a lot of stress on its financial parameters and cash flow,” according to a June 2022 statement from Fitch, and “in the worst-case outcome, this could escalate into a debt trap and ultimately a collapse.” As a result, a 2% share price drop occurred then. They had no ulterior motives, did they?
Sadly, it is reasonable to be sceptical of any probe given SEBI or RBI’s history in this case, which shows that they have been complicit in keeping silent. Why would they ultimately blame themselves since it was their fault for not raising the issues Hindenburg did? What steps has SEBI taken in the past, and what steps is it taking at present, to ensure that it properly fulfils its role? Has it accomplished the goals for which it was designed since its creation?
Due to its track record both in the past and today, it is possible to conclude that SEBI has failed horribly since its creation. The Government of India formed SEBI, a statutory regulatory authority, in 1992 to safeguard the interests of investors investing in securities and regulate the securities market. SEBI also oversees the operation of the stock market and mutual funds.
During this period, why wasn’t India’s Finance Minister doing anything? Where was SEBI? What is the job of SEBI if Hindenburg is doing their job? Where was the Ministry of Corporate Affairs? Why is public money at risk? It’s shocking that nobody seems to notice that one group accounted for approximately 80% of the expansion in market capitalization in 2022. None? Did it take a small firm in the US to expose it?
Why did LIC and SBI invest in Adani Group while the majority of private banks and MFs avoided it? What information did these two government agencies possess that the others lacked? What needs to be highlighted (again and again) is how the government not only permits but assists these cronies in expanding their businesses.
Since it is essential, the investors must bear the consequences and implications of its failure. However, the Hindenburg report has identified the perpetrator and the regulator after SEBI consistently failed in its duty, objective, functions, and purpose. According to history, specific significant scams have grown right under the nose of regulatory organizations, most notably SEBI, making India the financial capital of scams and frauds.
And now, it is the Adani Group—Gautam Adani, the man at the lead, and his close acquaintances, who are none other than his family members—that have shaken the markets and India’s reputation on the world stage due to one spectacular report—explosive Hidenberg’s all tell-all of the Adani family empire!
Although the prices of the Adani Group’s shares were clearly inflated, the specific allegations of fraud and market manipulation are alarming. Social media was rife with similar rumours last year, but nobody brought it up since the government never addressed it. Adani is merely one example; if a regulatory gap is not filled, other businesses can start to operate.
Edited by Prakriti Arora
