Gautam Adani: Asia’s richest man and ‘the largest con in corporate history’

Indian billionaire Gautam Adani was until last week topping global rich lists alongside Elon Musk, Jeff Bezos and Bernard Arnault.

But on 24 January, the 60-year-old industrialist was accused by a New York-based firm of running “the largest con in corporate history”.

Hindenburg Research, which specialises in activist short-selling, claimed Adani and his family had engaged in “brazen stock manipulation and accounting fraud” over decades. The allegations prompted a near $70bn drop in the value of Adani Group.

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Adani has denied the allegations and swiftly published a 400-page rebuttal, “draping himself in the Indian flag” and claiming the attack on him was an attack on India, said The Times.

However, many questions remain about the businessman who rose “from relative obscurity as a commodities trader in Gujarat to head a sprawling business empire spanning airports, mining, energy, cement and ports”.

Who is Gautam Adani?

Adani was born in Ahmedabad in the Indian state of Gujarat in 1962 into a middle-class family of Jains, a religion that preaches asceticism and strict vegetarianism. He was one of eight children, and his father ran a small textile business.

After dropping out of school, the young Adani moved to Mumbai and went into the diamond industry, first as a sorter and then as a trader, said Insider. He then helped his brother to run a plastics company, before moving on to commodities trading.

In 1998, Adani was kidnapped along with an associate and reportedly released for a multimillion-dollar ransom. In 2008 he was at the Taj Mahal Hotel in Mumbai during a series of terrorist attacks that killed 175 people in all, including nine attackers.

Adani is not one for flashy cars or famous mansions. “He dresses in forgettable dark suits and white shirts, and describes himself as an introvert who does not enjoy attending parties,” said The Economist.

Adani’s links to Modi

In the late 1990s, Adani – “who has always deftly navigated Indian bureaucracy”, according to The Economist – won the government contract to run the massive Mundra port in Gujarat. Mundra, along with a massive coal-fired power plant nearby, were the basis of the tycoon’s empire, which has included buying up rail and water rights, land and natural resources, clean power and data centres.

Adani’s stratospheric rise came alongside that of Narendra Modi, India’s now prime minister, who began his 13-year tenure as Gujarat’s chief minister in 2001. Modi’s administration reportedly leased land to Adani at “knock-down prices”, and it was Adani’s private jet Modi used to fly to Delhi in 2014 after winning the general election.

Adani strongly denies that his success has been due to any preferential treatment. The foundations of his business, he claims, “were laid in the 1980s, when the Indian government relaxed trade restrictions”, said The New York Times.

The Hindenburg allegations

In essence, Hindenburg says that the Adani Group “used offshore entities in tax havens to inflate artificially the share prices of its listed companies, allowing them to take on more debt and ‘putting the entire group on a precarious financial footing’”, said the Financial Times (FT).

The “startling” accusations mean “offshore shareholding entities based in Mauritius and elsewhere are not independent shareholders but are instead fronts for the Adani family”, said The Economist.

These entities, according to the Hindenburg report, account for much of the trading in the group’s shares, pumping up the prices of Adani’s seven listed companies to “stratospheric levels”.

Hindenburg’s report came just days before Adani Enterprises, the magnate’s flagship group, was seeking to launch the country’s biggest secondary public offering. It was aiming to raise about $2.4bn. The share sale, which many saw as a “test of investor faith” according to the FT, was completed.

Abu Dhabi’s International Holding Company backed Adani on Monday when it said it would invest $400m. However, brokers said the kinds of bids coming in, and the number of them from wealthy Indian investors, suggested many were from “high-net-worth people Adani reached out to for support”.

The Adani Group accused Hindenburg, which stood to make a lot of money by shorting Adani shares following the publication of its report, of publishing a “malicious combination of selective misinformation and stale, baseless and discredited allegations”, said The Guardian.