SEBI clears Adani of Hindenburg allegations; he wants apology

In what must count as the least surprising regulatory announcement of the year, the Securities and Exchange Board of India (SEBI) has officially exonerated Gautam Adani and his conglomerate of the stock manipulation allegations first levelled by the now-defunct US short-seller Hindenburg Research.

The regulator, in two wordy orders, concluded that the fund transfers Hindenburg had flagged — money sloshing around Adani Ports, Adicorp Enterprises, Milestone Tradelinks, Rehvar Infrastructure, Adani Power and Adani Enterprises — were nothing more than straightforward loans, neatly repaid with interest. No market manipulation. No insider trading. No disclosure breaches. No problem.

Hindenburg’s January 2023 report had accused the Adani empire of using proxies to channel funds between its own listed companies, thereby evading disclosure rules. The fallout wiped a staggering $150 billion from Adani stocks at their lowest point, a rout that briefly made the tycoon the poster boy for regulatory scrutiny.

SEBI, however, found that the alleged conduits did not meet the definition of related parties during the period under investigation — a detail helpfully explained away by the fact that the rules were only broadened after April 2022. In other words: yesterday’s loophole is today’s compliance.

As a result, SEBI could only shrug and say that Adani’s financial gymnastics did not actually break any rules in force at the time. All charges were dropped against Adani Ports, Adani Power, Adani Enterprises, the three alleged conduits, as well as Gautam Adani himself, his brother Rajesh, and CFO Jugeshinder Singh.

Never one to miss a victory lap, Gautam Adani took to X to denounce Hindenburg’s “fraudulent and motivated” report and demand an apology from those who dared to question him. The post came complete with the national flag, a sprinkling of lofty phrases about “transparency and integrity,” and a rousing sign-off: “Satyamev Jayate! JAI HIND!”

Investors who watched billions in market value evaporate last year might be forgiven for rolling their eyes. Indeed, the comments underneath the post make for instructive reading. Besides, as critics have noted, if transparency really defined the group, it would not require Supreme Court-appointed panels and years of SEBI probes to coax out that truth.

This “clean chit” echoes what a Supreme Court-appointed expert panel had already hinted last year — that no prima facie wrongdoing could be established. The apex court itself had subsequently decided no further probes were needed. SEBI’s announcement, then, feels less like a revelation than a formal rubber stamp.

The regulator, after all, did not dispute that the transactions took place exactly as Hindenburg described. Its argument was simply that because they were structured as loans, repaid with interest, and the rules weren’t explicit until after 2022, there was no violation. That’s the sort of exoneration that reassures lawyers, if not necessarily the public.

Of course, this is not the end of Adani’s legal headaches. Across the Atlantic, the US Department of Justice last year charged the group’s chairman and close aides in a $265 million bribery scheme. For all the chest-thumping about vindication, those allegations remain very much alive.

And then there is the credibility problem closer home: each time SEBI absolves a politically connected tycoon with breathtaking speed, it erodes the very confidence it is meant to bolster. The regulator may insist it conducted a “detailed investigation” covering five financial years, but the optics of a watchdog handing the leash back to its master are hard to ignore.

In the end, SEBI’s orders are less about what they found than about what they declined to see. Yes, the loans were repaid. Yes, the law only caught up in 2022. But for critics, the image of funds bouncing merrily between Adani companies through friendly conduits remains uncomfortably close to the textbook definition of related-party transactions.

Hindenburg may have vanished, but its report achieved one lasting effect: it pulled back the curtain, if only briefly, on how India’s richest tycoon operates. SEBI’s clearance, delivered with predictable solemnity, will soothe investors in the short term. But for the wider public, it lands less as an acquittal than as confirmation of a long-standing suspicion — that when it comes to Gautam Adani, the rules are written in pencil, and the erasers are always close at hand.

With PTI inputs