New Delhi: India’s market regulator, Securities and Exchange Board of India (SEBI), is investigating a possible violation of ‘related party’ transaction rules in the Adani Group’s dealings with at least three offshore entities. These entities have links to the brother of the conglomerate’s founder, Vinod Adani, sources “with direct knowledge of the matter” have told Reuters.
The Wall Street Journal in its investigation recently termed Vinod Adani as the “elusive” brother in their reports on his possible role in at least eight deals.
The three entities have allegedly “entered into several investment transactions with unlisted units of the ports-to-power conglomerate founded by billionaire Gautam Adani over the last 13 years, said the sources”, according to the news agency.
SEBI is said to be probing if lack of disclosure on the part of the Adani Group “violated ‘related party transaction’ rules.” Under Indian law, direct relatives, promoter groups, and subsidiaries of listed companies are considered related parties. Transactions between such entities have to be formally disclosed in regulatory and public filings and often, need shareholder approval.
SEBI has not responded to questions about if a probe has been ordered and its chairperson Madhabi Puri Buch refused to comment when asked about the Adani investigations last week at a press conference.
Gautam Adani and Vinod Adani’s business ties have been the subject of discussion and after distancing himself from his elder brother initially, the Adani Group declared last month, that “the Adani Group and Vinod Adani should be seen as one“. The Wire analysed how this might have a bearing on the free-float status of some companies in the Adani Group.
In a 413-page rebuttal to the Hindenburg Research report, the Adani Group has denied allegations of fraud or stock manipulation. The Group then said it had disclosed all related-party transactions, including involving overseas companies, as required by law.
A recent report by Forbes has charted “Gautam and Vinod Adani’s controversial conglomerate” and “why it may be too politically connected to fail.” It writes that “Adani is defensive about the notion that he has Modi to thank for his success”. Forbes details investigations and regulatory actions starting from 2007 by SEBI, in 2014-15 by the Directorate of Revenue Intelligence (DRI) but concludes that “none of this slowed business.” On the Supreme Court-led committee and on SEBI’s investigation, “Gautam is confident—not surprising, given his track record,” writes Forbes. “It will bring finality in a timebound manner,” Gautam said on Twitter last month. “Truth will prevail.”