Hindenburg Fires Latest Salvo at Adani With Swiss Probe Claims

(Bloomberg) — Hindenburg Research is taking another swing at Adani Group with claims that Swiss prosecutors have been investigating the Indian conglomerate for money laundering.

The short seller said in a post on X on Thursday that Swiss authorities had frozen more than $310 million as part of the years-long probe, referencing court records and a Swiss media website. The allegations involve “an Adani frontman” and funds located in the British Virgin Islands, Mauritius and Bermuda, according to Hindenburg.

Swiss prosecutors are investigating suspicions that an unidentified person served as a frontman for an unnamed company, according to a court decision referenced by Hindenburg. The arrangement was allegedly used to skirt Indian rules for ownership of public companies, according to the ruling from the Federal Criminal Court, which included documents that outline the case. 

Adani Group denied what it called “baseless allegations” that the Indian conglomerate was the unnamed firm that benefited from the alleged scheme. 

“The Adani Group has no involvement in any Swiss court proceedings, nor have any of our company accounts been subject to sequestration by any authority,” the company said in an emailed statement.

The Geneva Prosecutor’s Office, which first opened the investigation in 2021 and the Swiss Federal Prosecutor’s Office that took over the case in mid-2023, both declined to comment.

Public Companies

Adani’s sprawling empire has been under fire from Hindenburg since early last year when Nate Anderson’s firm claimed the Indian company manipulated its stock price and committed accounting fraud. The Indian conglomerate has vigorously denied those allegations and Adani firms’ shares have climbed back from their initial plunge. 

Concern about the Adani Group’s legal situation remains.

The conglomerate is facing a US probe into whether the company may have engaged in bribery, people familiar with the matter said earlier this year. Adani Group said at the time that it hadn’t received any notice from the Department of Justice and “as a business group that operates with the highest standards of governance, we are subject to and fully compliant with anti-corruption and anti-bribery laws in India and other countries.”

The Swiss court ruling referenced by Hindenburg on Thursday doesn’t mention Adani Group by name, or identify the person alleged to have helped funnel money through the unidentified company. Meanwhile, it did suggest that authorities were looking into whether the alleged acts were designed to avoid Indian stock market rules. 

Indian securities regulations say company founders can’t hold more than a 75% stake in units that trade publicly under a minimum float requirement.

“Such actions could prevent it from being apparent that the promoters of the various listed companies in the group actually held more than 75% of the shares in said companies,” in contravention of Indian stock market rules, according to the court’s account of what the prosecutors are investigating.

Suspicious Activity Reports

Prosecutors said money flows through a company were first flagged as suspicious by a bank to Switzerland’s Money Laundering Reporting Office in December 2021. Swiss authorities froze those funds and Geneva prosecutors started investigating, according to the court’s ruling. 

Three more suspicious activity reports were filed by the bank to Swiss authorities over the course of 2022 and 2023, the court said.

In its ruling, the court rejected the alleged firm’s request to unfreeze the $311 million that had accumulated and then been frozen by authorities. Swiss prosecutors are investigating whether the origin of those funds was intentionally being hidden. 

A lawyer for the firm that allegedly served as the front company didn’t respond to a message seeking comment.

In its statement on Thursday, Adani Group said allegations that it was the unidentified company meant to benefit were “preposterous, irrational, and absurd.”

“We have no hesitation in stating that this is yet another orchestrated and egregious attempt by the same cohorts acting in unison to inflict irreversible damage on our group’s reputation and market value,” the company said. 

–With assistance from P R Sanjai, Bhuma Shrivastava and Erik Larson.

©2024 Bloomberg L.P.