New Delhi: In the fifth edition of its “Hum Adani Ke Hai Kaun” protest series – in which the Congress asks three questions to the Prime Minister because of his silence on the Adani crisis – the Opposition party focused on the role of market regulator SEBI.
The Congress also alluded that Modi and his government pressured SEBI not to investigate allegations of financial fraud against the Adani Group.
Day 5’s questions come after Narendra Modi, during his two addresses to Lok Sabha and Rajya Sabha on Wednesday and Thursday, skipped any mention of the Adani Group, or the damning report by American short-seller Hindenburg Research.
The party’s note to Modi said while he’d used “strong words in the past” to call upon G20 nations “to eliminate safe havens for economic offender”, to “track down and unconditionally extradite money launderers” and to “break down the web of complex international regulations and excessive banking secrecy that hide the corrupt and their deeds”, he continued to show tolerance for such people.
“Furthermore, the failure of market regulators like the Securities and Exchange Board of India (SEBI) to protect Indian capital markets has tarnished their image and put a question mark on the integrity of India’s financial markets,” the note said.
Stating there were serious allegations of “brazen stock manipulation” against the Adani Group, the party said the collapse in Adani’s publicly-listed stock prices following the Hindenburg report had damaged investors who were “duped by artificially-inflated prices”.
The Congress asked when the SEBI would be held accountable for allowing stock prices to spiral even while the Adani Group was being investigated by the regulator.
The first question asked: “The value of Adani Group stock crashed by Rs 8,950,000 crore between 24 January and 6 February 2023. On 19 July 2021, the Ministry of Finance had admitted to Parliament that the Adani Group was under investigation for violating SEBI regulations.
“Yet Adani Group stock prices were allowed to spiral after that. When will SEBI be held accountable for this serious lapse and allowing the destruction of huge retail savings? Did the Modi government put pressure on SEBI to go slow in its investigation?”
The second question delved into the PM’s earlier promise of “cracking down on illicit flow of black money”. The Congress pointed out that the Adani Group was alleged to have manipulated stock prices by using offshore shell companies and related parties which posed as investments funds to bypass SEBI regulations. This was an issue that Rahul Gandhi had raised in Parliament as well.
The party said: “One of the egregious cases is that of the Monterosa group that has owned as much as $4.5 billion (837,000 crores) of Adani Group stock. The CEO of this supposedly independent firm is allegedly linked to a fugitive diamond merchant whose son is married to Vinod Adani’s daughter. Other large funds are known to invest almost exclusively in Adani Group companies, which is unusual for an investment fund.
“Take Elara Capital, in which former Conservative Minister Jo Johnson, brother of former Prime Minister Boris Johnson, was until recently a director. Elara held some $3 billion (&24,300 crores) worth of stock almost exclusively in the Adani Group. The Ministry of Finance told parliament that SEBI had frozen the accounts of certain funds operated by the Monterosa group in 2016, but no further action is evident.
“What has SEBI done to properly investigate these dubious benami companies? If not, what is the leverage that the Adani Group exercises that has prevented the full force of India’s regulators and investigative agencies from unravelling the truth? What did Gautam Adani discuss in person with SEBI chairperson Madhabi Puri Buch in October 2022?” asked the party in its second question.
The third question was on the inclusion of Adani Enterprises in the National Stock Exchange (NSE), asking whether the SEBI pressured the NSE to do so. It also said that the regulator thereafter also failed to protect investors by talking strict action.
“The inclusion of Adani Enterprises in the widely used National Stock Exchange (NSE) Nifty 50 index in September 2022 proved controversial. It had questionable fundamentals, an excessive price-to-earning ratio and a tiny free float. Adding Adani Enterprises compelled seemingly conservative Nifty index funds to make significant purchases of this risky stock, including the Employees Provident Fund Organisation, India’s largest pension fund,” the party said.
The Congress added that global stock indices have suspended the Adani Group companies as stock manipulation allegations are investigated, but India’s own exchanges haven’t done the same.
“Is it not SEBl’s responsibility to protect investors by taking strict action? Is there pressure from the Prime Minister’s Office on the NSE and SEBI to go easy on Adani in an effort to bail it out?” read the third question.
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