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Adani, BBC reports signal West’s Anxieties

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By Siddharth Khanna

The motives behind revelations of Indian billionaire Gautam Adani’s alleged corporate scandal may well lie in the West and be a geopolitical warning to India.

Adani’s conglomerate has lost nearly USD $100 billion following the release of a report by a US short seller, Hindenburg Research, alleging fraud and stock-price manipulation by Adani’s conglomerate, which has denied the allegations.

But the allegations forced the group to scrap its public offering, raising fears in the financial world over the adequacy of India’s corporate governance, its banking scrutiny and the credibility and transparency of its capital markets.

In short, this scandal has dealt a severe blow to India’s efforts to overcome the Covid pandemic induced setbacks to a hitherto exceptional economic growth and take its place among the dominant influencers of global geopolitics.

India’s rise, while maintaining an independent approach to international confrontations – such as between the East and West over Ukraine, and the Global North and South over environmental controls — has caused irritation in the capitals of the Western alliance.

The Hindenburg report and a BBC documentary critical of Modi’s alleged involvement in riots in Gujarat in 2002 — from which he was absolved by India’s Supreme Court — occurred around the same time and originated in the heart of the Western Alliance, UK and the US.

With the approach of the G20 summit in India this year, the Western Alliance appears to seek a clear condemnation of its antagonists than what was achieved in the final declaration at the gathering of the group last year in Bali. There is growing belief that there is validity in the view that the orchestrators of the attacks on Modi and Adani had served the interests of the West in forcing New Delhi away from the current, principled stance on Russia over the war in Ukraine, and China for its military assertiveness on the border in the South China Sea and Taiwan.

The allegations caused the Adani Group to cancel its USD $2.5 billion share offering, and to offer refunds to investors. The offering became controversial when Hindenburg Research published its report, alleging a conspiracy by the Adani Group to commit accounting fraud and enrich its principals through stock market manipulation. The Adani Group has denied Hindenburg’s report and threatened legal action against the US investment firm.

In fact, the repercussion of this scandal goes far beyond this sharp fall in the stock markets or the drastic diminishing of the personal wealth of Gautam Adani.

The scandal’s fallout — the turmoil in the global investor community — has triggered concerns over the credibility of India’s banking system and its capital markets.

These after-effects will have a negative impact on attracting funds from the global institutional and private investors for the development and growth projects initiated by the Indian government and corporates.

It will have a hugely adverse impact on India’s attempts to overcome the ravages of the Covid pandemic and return to the path of growth that once made it the world’s fastest expanding economy.

In danger is India’s hitherto swiftly improving record of the ease of doing business in the country and corporate governance.

In this turmoil, with the opposition accusing the ruling BJP of collusion with Adani, the government has been forced to review and reassess the nation’s financial and equity market operations, and its big players.

The opposition in fact is asking for a probe into the affairs of Adani himself, projected as a close associate of Prime Minister Narendra Modi.

Even more alarming is the threat from this report opening a Pandora’s Box of corporate wrongdoings that have been prevalent over decades.

There are fears that more investigations of prominent Indian business entities are afoot on Wall Street.

It bodes ill for the ruling party’s fortunes in the general elections next year, and can be seen as another warning to tow the line of the West in issues from the Ukraine to the South China Seas.

(The author, a journalist and filmmaker, specialises in geopolitics and international affairs).