New Delhi: The Ministry of Finance Monday reiterated that it stands by its previous statement that the Securities and Exchange Board of India (SEBI) has been investigating some Adani group companies on their compliance with regulations. This came soon after the market regulator told the Supreme Court that allegations that it had been investigating Adani companies since 2016 were “factually baseless”.
“The government stands by its reply in the Lok Sabha on 19th July 2021 to Q. No. 72, which was based on due diligence and inputs from all concerned agencies,” the Finance Ministry’s tweet stated.
The ministry’s tweet came in response to one by Congress’ Jairam Ramesh, in which he wrote: “Which is worse — misleading Parliament, or being fast asleep as lakhs of investors are duped by alleged money-laundering and round-tripping using offshore shell companies?”
In July 2012, responding to a Parliament query, the Minister of State for Finance, Pankaj Chaudhary, had said: “SEBI is investigating some Adani group companies with regards to compliance with SEBI regulations. The Directorate of Revenue Intelligence is investigating certain entities belonging to the Adani Group of Companies.”
Petitioners — who had moved the SC demanding a probe into US short-seller Hindenburg Research’s allegations that the Adani Group had “engaged in brazen stock manipulation and accounting fraud scheme over the course of decades” — had asserted that SEBI had been investigating the Adani Group since 2016.
In a rejoinder to this, SEBI filed an affidavit stating the opposite.
In the affidavit, it stated that the allegation that it had been investigating Adani companies in connection with its probe into alleged Global Depository Receipt (GDR) irregularities was “factually baseless”. It added that investigations were conducted into 51 listed Indian companies, none of which were Adani’s.
“Pursuant to the completion of the investigation, appropriate enforcement actions were taken in this matter. Hence, the allegation that the Securities and Exchange Board of India has been investigating Adani since 2016 is factually baseless. I, therefore, say and submit that reliance sought to be placed on the investigation pertaining to GDRs is wholly misplaced,” the affidavit said.
SEBI had in April requested the SC for a six-month extension to complete the investigation into the report by Hindenburg, asserting that the extension was needed for proper investigation or else it would be “legally untenable”.
“The application for extension of time filed by SEBI is meant to ensure carriage of justice keeping in mind the interest of investors and the securities market since any incorrect or premature conclusion of the case arrived at without full facts material on record would not serve the ends of justice and hence would be legally untenable,” the body stated.
The court Friday stated orally that it would extend the investigation period for SEBI, but only by three months.
Meanwhile, apart from Ramesh, other Opposition leaders, too, commented on this.
Shiv Sena UBT’s Priyanka Chaturvedi pointed out on social media that the rejoinder was filed by a 22-year-old (assistant manager) on behalf of the SEBI.
“Wow. A 22-year-old has been hired by @SEBI_India to file an affidavit in the Supreme Court on their behalf! Must be either super experienced from kindergarten days to file such replies or naive enough to be part of something as big as this,” she tweeted.
Also Read: SC forms expert panel, gives SEBI 2 months to probe Hindenburg allegations against Adani
A ‘complex’ matter
SEBI, reportedly investigating possible violation of “related party” transaction rules in the Adani Group’s dealings with at least three offshore entities, had on 29 April requested the six-month extension to complete its investigation.
Last week, though, a bench comprising Chief Justice of India D.Y. Chandrachud, and Justices P.S. Narasimha and J.B. Pardiwala, stated that it could not give more than three months to complete the probe. The court had on 2 March granted the SEBI and an expert committee a two-month period to conclude the investigation, which expired on 2 May.
SEBI’s response in court last week was given after attorney Prashant Bhushan, representing the petitioners, argued that the regulator had been investigating Adani transactions since 2016 and therefore no additional time should be granted.
In response, SEBI argued that Hindenburg’s allegations against the Adani Group were extremely complex and involved a multitude of “sub-transactions across numerous jurisdictions”. It stated that it had contacted 11 overseas regulators for information in order to determine if the group had violated any regulations regarding its publicly traded shares as early as October 6, 2020.
(Edited by Nida Fatima Siddiqui)
Also Read: Veteran bankers, ex UIDAI head, retired judges — who’s on SC’s panel to probe Adani-Hindenburg row