Friday, July 19, 2024

Challenging the Supreme Court: A Deep Dive into the Adani-Hindenburg Controversy and the Pursuit of Financial Transparency


Adani-Hindenburg Saga: Review Petition Challenges Supreme Court’s Ruling

A significant challenge has been placed before the Supreme Court of India through a review petition that aims to overturn a previous ruling regarding the allegations against the Adani Group, brought to light by Hindenburg Research. This petition, spearheaded by lawyer Anamika Jaiswal, points to what it claims are critical oversights and errors in the Court’s decision dated January 3. Central to this challenge are newly unearthed documents presumed to underscore significant regulatory oversights and potentially illicit financial activities.

The crux of the petition rests on a series of email correspondences which, the petitioner argues, unveil concrete violations of Rule 19A of the Securities Contracts (Regulation) Rules, 1957, by Adani Group entities. This assertion directly challenges the Supreme Court’s initial finding which suggested that there was no significant regulatory failure on the part of the Securities and Exchange Board of India (Sebi).

Furthermore, Jaiswal’s petition takes issue with the regulatory body’s amendments in 2018 and 2019 concerning foreign portfolio investors (FPI). It criticizes the change in terminology from ‘ultimate beneficial owner’ to ‘beneficial owner’ and the removal of references to ‘opaque structure’ as measures that potentially obscured the financial traceability.

The accusations extend to the Securities and Exchange Board of India (Sebi) for its alleged failure to adequately identify and action upon all “economic interest shareholders” and “ultimate beneficial owners” of suspicious overseas entities linked to Adani Group companies.

Another poignant allegation made in the petition is Sebi’s purported inaction in face of a letter from the Directorate of Revenue Intelligence, which hinted at the siphoning of funds through over and under-invoicing practices involving tax havens. These funds were allegedly redirected and invested in Adani Group stocks within India.

It’s pertinent to note that the Supreme Court had earlier placed its confidence in Sebi’s oversight and dismissed multiple petitions demanding a separate probe into the accusations levied by Hindenburg Research against Adani Group. This dismissal also extended to the Court discrediting various third-party reports and news articles as substantial evidence of any wrongdoing.

The foundation of this legal challenge is the report by Hindenburg Research published on January 24, 2023, which accused Adani Group companies of a gamut of malpractices. This report had a drastic impact on the conglomerate’s market standing and led to the cancellation of a substantial $2.4-billion share sale by the group’s flagship entity. The Adani Group has vehemently denied these allegations in a detailed 413-page document.

In response to these unfolding events, public interest litigations were initiated in the Supreme Court by a cohort of advocates and activists, leading to the formation of an investigative committee. Chaired by former Supreme Court judge Justice A.M. Sapre, the committee also featured distinguished members such as former State Bank of India chairman O.P. Bhatt, and notable industry stalwarts. This committee’s deliberations drew attention to the 2018 and 2019 amendments by Sebi, which had notably relaxed restrictions on FPIs with an “opaque structure”.

The ongoing legal contestation through the review petition seeks to not only challenge the Supreme Court’s previous verdict but also aims to catalyze a deeper investigation into the allegations against the Adani Group, highlighting overarching concerns about regulatory oversight and the integrity of corporate conduct within India’s financial landscape.

Jordan Clark
Jordan Clark
Jordan Clark brings a dynamic and investigative approach to business reporting. Holding a degree in Business Administration and a certification in Data Analysis, Jordan has an eye for detail and a knack for uncovering the stories behind the numbers. His career began in the bustling world of Silicon Valley startups, giving him firsthand experience in tech entrepreneurship and venture capital. Jordan's reports often focus on technology's impact on business, startup culture, and emerging

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