Gautam Adani is a self-made Indian billionaire. We've seen him buy up asset
after asset across the country. Ports, airports, power plants. Whenever he speaks about his group,
he always says that his conglomerate's goals are aligned to India's goals. It is the belief in the India
growth story that keeps the Adani Group going. As recently as just a few months ago, he was the second-richest person
in the world. To his critics, however,
he's a more complicated figure. Political observers think
Gautam Adani is very close to Prime Minister
Narendra Modi. This is one of the hot topics
when Narendra Modi came to power. On the morning of January 24,
about a couple of hours after sunrise in Mumbai, journalists across
the country were greeted with a large 100-page document from Hindenburg
Research, in which it accused this empire of essentially stock
manipulation and accounting fraud. There was an instant market reaction. In Adani companies, we’re are looking at
losses of north of $130 billion. The last thing Modi wants
is to be involved in any of this muck. There is no doubt that the government of India needs empire
builders like Adani. But underlying all of that,
there was a sentiment that if Adani fails,
what happens to India's own ambitions? If you are living in or visiting this country, you really cannot be independent of an Adani asset. Coal mined from Adani
coal mines is transported through Adani-run ports and railroads
into power plants that Adani owns. The electricity generated
from these power plants then runs through Adani-owned grids
into homes built with Adani cement. He keeps a very, very low profile. We have not seen him
splashing money, buying luxurious cars or buying yachts or holidaying
in luxurious destinations. The relationship
between Adani and Modi goes back decades, even before Modi
was prime minister. Both of them hail from
the same state of Gujarat, renowned for sending out entrepreneurs
around the world. Adani has grown so big, so fast. Adani is aligning the business goals
of the Adani conglomerate with the goals of Prime Minister Modi. If you want to grow a country,
you need to build your airports. You need to build your infrastructure, such as electricity grids
and power plants. It's very natural that he will lean
toward big businessmen, big conglomerates, big business groups
to develop such kind of stuff. If Modi has come to the world stage
as a political leader who understands the needs of business,
Adani has been a big contributor to building this image. There’s another level of questioning about whether Adani
is actually funding Prime Minister Modi. For instance, Prime Minister Modi,
when he was campaigning for his first term in office,
he very publicly flew in an Adani plane. The party claims that they paid the Adani Group rent
for use of this plane. India's political funding
was always opaque, but since Modi has come to power,
there's an added level of opaqueness. The Adani Group has repeatedly denied
financial improprieties or receiving favors from the government. Hindenburg Research is a firm incorporated in New York City. It was registered by Nathan Anderson, who is what
we would call a short seller. He exposes discrepancies in accounting with the intention,
of course, of driving down stock prices. It was a very strongly worded allegation
because it said it's the biggest con in India's
corporate history. It wiped off more than $100 billion
itself. One report and a few trading
sessions has taken Gautam Adani from the top list of the world’s
richest men. There were many allegations
in the Hindenburg report against Adani. The main allegation was that people close to Gautam
Adani used offshore shell companies to pump up the prices of stock
in Adani's listed firms. He then, according to these allegations,
used these pumped up share prices as collateral
to borrow more money from banks. Bloomberg has investigated
some of the funds. These are all Mauritius entities,
a country known as a tax haven that have little or no information on
who are the beneficial owners of these funds – essentially,
where the money trail leads to. Billionaire Gautam Adani
has published a lengthy rebuttal to allegations of fraud
by a short seller, Hindenburg Research. The report is a malicious combination of selective misinformation, stale, baseless and discredited allegations. The fundamentals of our company
are very strong. Our balance sheet is healthy and assets robust. When the Hindenburg report came out,
there were several people in India, nationalists of course
being among the forefront of these, who said that this was just an attempt
to malign the image of India. Gautam Adani's conglomerate
saying that any attack towards Adani Group is an attack towards
India's goals. They were trying to reiterate to us
that they never defaulted any payments in their history and they always made a number
of conservative cash management tactics. So what does Hindenburg Research’s
allegation done to Adani? The aggressive expansion
has been slowed down. The capex has been slowed down. You will not see Gautam Adani as the as the busiest dealmaker
in 2023, unlike in 2022. They are continuing with this process of prepaying
and repaying a whole lot of debt. That seems to be a very big part of how they're trying to portray themselves as this very
good corporate citizen, as the opposite, basically, of what Hindenburg
had alleged. There’s good debt and there’s bad debt. Of course, you have to have debt, but
what is the level of debt you can keep? That is a key question. The critical lesson
learned in this entire episode is how robust is your regulatory framework? How robust is your judiciary framework? And how good is the Indian landscape
to do business? As India looks to tap Western capital
more frequently, it will necessarily have to adapt
to Western ways of doing business. India will have to open up
its accounting books to Western eyes. The answer to the question
of whether the Adani Group is too big
to fail is a trickier one. It can survive the Hindenburg
Research allegations because it is built on strong
fundamentals and it never defaulted. Next year, Modi,
of course, has re-elections. This is something that Modi will pull no stops to get at, his party wants that
third term in office. And, once it gets that third term in office,
Modi then needs to cement his legacy. And for that, he needs billionaires
like Gautam Adani.
