Adani-Hindenburg Allegations: SC-Appointed Panel Submits Report in a Sealed Cover

The matter has now reportedly been listed for hearing in front of Chief Justice of India D.Y. Chandrachud on May 12.

New Delhi: The six-member expert panel that the Supreme Court had set up to probe the allegations against the Adani Group levelled by US-based short-seller Hindenburg Research has submitted its report in a sealed cover to the apex court on May 8, Economic Times reported.

According to the newspaper, the matter has now been listed for hearing in front of Chief Justice of India D.Y. Chandrachud on May 12. “It is not known whether the committee has completed its investigation into all the issues pointed out by the top court in its March 2 order, or whether it has also sought further time to conclude its findings,” Economic Times reported.

On February 17, the apex court had rejected the names suggested by the Union government (also in a sealed cover) as members of the committee, and announced the formation of its won expert committee. The apex court panel is headed by former Supreme Court judge A.M. Sapre, and comprises former bankers K.V. Kamath and O.P. Bhatt, Infosys cofounder Nandan Nilekani, securities lawyer Somasekhar Sundaresan and retired high court judge J.P. Devadhar.

On April 2 and April 26, the chairperson of the Securities and Exchange Board of India (SEBI) had briefed the expert committee on the matter.

The court had asked both SEBI and the expert committee to complete their probes within two months. On April 29, SEBI asked the Supreme Court for a six-month extension to conclude its investigations.

The allegations

Reuters reported over the weekend that 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, people aware of the matter told the news agency.

Earlier, the group had declared, as per CNBCTV18, 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.

Publicly traded companies are required to have at least 25% of their shares held by non-promoters – be it retail investors, mutual funds, foreign portfolio investors (FPIs), and insurance companies – to stay listed on exchanges.

Data from Trendlyne shows in the case of Adani Group, a few offshore investment funds (or FPIs) hold most of the free float.

An analysis by The Wire said if the offshore funds are to be accounted for having links to the Adani family, then the free float would slip to just under 25%, or even less than that.

The Morning Context wrote an investigative piece on Adani’s offshore firms and said, “if you remove these [offshore] funds, the effective [public] shareholding in Adani Enterprises comes down to only 10%.” In Adani Transmission, the “effective public float is about 7-8%”.

However, the ownership of these funds is unknown because Mauritius is a tax haven. And this concern was raised by SEBI in July 2021. It had asked the custodians of the FPIs who own shares in Adani’s listed firms to disclose the ‘ultimate beneficiary’.

A year later, in September 2022, Bloomberg columnist Andy Mukherjee had written about these “silent soldiers”, or “Adani’s fortune drivers”, and that “they deserve some scrutiny”.

Interestingly, in this piece, observe how the rest of the FPIs, whose details are not available online, keeps on increasing year on year.