Indian entrepreneur Gautam Adani was considered the second richest Indian. A few years ago, his net worth was estimated at up to $90 billion. In 2023, US short-seller Hindenburg Research accused Adani of stock manipulation and fraud. On Nov 20, the U.S. DOJ and the SEC announced legal actions against Adani. The shares of his Adani Group imploded and massively reduced his net worth.
Adani’s Early Career
Gautam Adani, born on June 24, 1962, is a prominent Indian industrialist and the founder and chairman of the Adani Group, a multinational conglomerate with diversified interests spanning ports, logistics, energy, and more.
In 1988, he established Adani Enterprises, initially focusing on commodity trading. Over the years, the company expanded into various sectors, including coal mining, power generation, and infrastructure development. Under his leadership, the Adani Group became a significant player in India’s economic landscape, notably operating the country’s largest private port, Mundra Port, and diversifying into airports, renewable energy, and agribusiness.
Hindenburg Research Allegations
In January 2023, Hindenburg Research, a U.S.-based investment research firm known for activist short-selling, published a report accusing the Adani Group of engaging in “a brazen stock manipulation and accounting fraud scheme over the course of decades.”
The report alleged that the conglomerate used offshore shell companies to inflate stock prices and obscure the extent of its debt. These revelations led to a significant decline in the market value of Adani Group companies, with losses exceeding $150 billion. Adani’s personal net worth also suffered, dropping from being the world’s third-richest individual to a lower position within a month of the report’s publication.
Following the Hindenburg Research allegations, the Organised Crime and Corruption Reporting Project (OCCRP) reported in August 2023 that it had documents that prove how the Adani Group used individuals and front companies to buy and sell Adani stocks, thus bypassing Indian securities laws that seek to prevent share price manipulation.
DOJ Indictment and SEC Complaint
The Hindenburg report’s allegations prompted scrutiny from various regulatory bodies, including the U.S. Department of Justice (DOJ) and the U.S. Securities and Exchange Commission (SEC). In November 2024, the DOJ unsealed a five-count criminal indictment in federal court in Brooklyn, charging Gautam Adani and seven other senior executives with conspiracies to commit securities and wire fraud, as well as substantive securities fraud.
On the same day, the SEC announced a complaint charging Gautam Adani and Sagar Adani, executives of Adani Green Energy Ltd., and Cyril Cabanes, an executive of Azure Power Global Ltd., for conduct arising out of a massive bribery scheme.
The indictment alleges that between 2020 and 2024, the defendants orchestrated a scheme to pay over $250 million in bribes to Indian government officials to secure lucrative solar energy supply contracts. These contracts were projected to generate more than $2 billion in profits over approximately 20 years. The indictment also accuses the defendants of misleading U.S. investors and international financial institutions to obtain financing for these projects, including two U.S. dollar-denominated syndicate loans totaling more than $2 billion and two Rule 144A bond offerings exceeding $1 billion.
Impact on Net Worth
The combined effect of the Hindenburg Research report and several legal actions has had a profound impact on Adani’s financial standing. The shares of his Adani Group slumped sharply on Thursday after the DOJ announced the unsealing of the indictment.
Before these events, Adani’s net worth was estimated at over $100 billion, placing him among the world’s top billionaires. Following the Hindenburg allegations, his net worth declined sharply, and the DOJ indictment further exacerbated this downturn. As of November 21, 2024, Adani’s net worth is estimated at $58.5 billion, ranking him as the 25th richest person globally.
Despite the drop, the Indian billionaire remains the second richest Asian on the Forbes list, behind his countryman Mukesh Ambani.
Conclusion
Gautam Adani’s rise from a college dropout to a global business magnate is a remarkable story of ambition and strategic expansion. However, the recent allegations and legal challenges have cast a shadow over his empire, leading to significant financial and reputational repercussions. The unfolding legal proceedings will likely have lasting implications for Adani and the conglomerate he built, as well as for investor confidence in emerging markets.
