New Delhi: A batch of petitions concerning the Adani-Hindenburg matter is yet to be listed. It has been over two months since the matter was scheduled to be heard on August 28.According to LiveLaw, advocate Prashant Bhushan, appearing for one of the petitioners, expressed concerns about the repeated deferrals in listing the case in the Supreme Court.
“The matter was to be listed on August 28, but it has been deferred, deferred, deferred,” Bhushan said.“I will ask the registry to look into this,” Chief Justice of India D.Y. Chandrachud said.
Backstory
On January 24, US-based short seller Hindenburg Research published a report accusing the Adani Group of financial fraud and accounting malpractices.
The Adani Group has denied the allegations.
The Supreme Court appointed an expert committee to look into the regulatory failure, especially of SEBI, the stock market regulator.Meanwhile, SEBI is also carrying out its own investigation. It was expected to submit its report to the panel on August 14, but had been given more time to complete its probe.
SEBI submitted its status report on August 25. But the Supreme Court hearing on SEBI’s status report has been deferred. The status report said that 22 out of 24 investigations are final.
The Supreme Court-led expert committee has submitted its report on the matter.In May, the expert panel concluded that it would be difficult to point to a regulatory failure on the part of SEBI.However, it raised concerns on the allegation of violation of minimum public shareholding.
Minimum public shareholding or free float refers to the shares of a company that can be publicly traded and are not restricted (i.e., held by insiders). According to SEBI rules, listed companies are required to maintain a minimum public holding (or free float) of 25%. This allows a company to raise money from the market.
Fulfilling this criteria is required to stay listed on the exchanges.The expert committee report expressed concerns over SEBI’s inability to get adequate data on offshore funds because of repealed provisions.
These offshore funds, whose ultimate beneficiary is unknown, because of the countries’ tax haven status, have immensely contributed to the growth of Adani Group companies. Bloomberg columnist Andy Mukherjee had in September 2022 written about these “silent soldiers”, or “Adani’s fortune drivers”, and that “they deserve some scrutiny”.
The top court panel report said that these provisions of requiring FPIs to disclose “ultimate natural person” were done away with in 2018.The report said that “in 2018, the provision of dealing with an ‘opaque structure’ and requiring an FPI to disclose every ultimate natural person at the end of the chain of every owner of economic interest with the FPI was done away with.”
The markets regulator had even approached the Organized Crime and Corruption Reporting Project (OCCRP) for “key documents”, the Economic Times had reported.One of the key documents showed that SEBI was warned by the Directorate of Revenue Intelligence in 2014 about alleged stock manipulation.
The January 2014 DRI alert was sent to former SEBI chairman U.K. Sinha that the Adani Group was allegedly siphoning money by overvaluing power equipment imports and investing them in listed companies via entities located in Mauritius and Dubai.
The network of investigative reporters, however, refused SEBI’s request, saying that the sources of information are accessible through official channels.OCCRP told SEBI that its long-standing policy is not to provide any documents beyond what is published.
