SEBI probe into Adani group now tied in knots
Unfortunately, after short-seller Hindenburg’s alleged ‘accounting fraud’ and ‘stock manipulation’ by the Adani Group, the official probe into the Group’s companies is itself getting tied in knots. Contradictory statements by the government and market watchdog Securities and Exchange Board of India (SEBI) regarding how long the latter has been investigating the Adani Group has provoked a new controversy. In response to a public interest litigation (PIL), the Supreme Court initially gave SEBI two months to complete its investigation. However, SEBI recently pleaded for an extension of six months since the job was ‘complex’. Lawyer Prashant Bhushan, arguing the PIL, replied that SEBI should be denied the extension since it had been probing the group since 2016. He based this plea on a statement made in Parliament in July 2021 by the Union Minister of State for Finance, Pankaj Chaudhary. Denying Bhushan’s statement, SEBI has now filed an affidavit that there has been no probe since 2016.
Seizing on the contradictory positions of SEBI and the Union government, Opposition spokespersons have gone to town alleging a ‘soft’ approach vis-à-vis the Adani Group. The situation has become curious, with the Union finance ministry reiterating that the Adani Group has, in fact, been probed by SEBI since 2016 on compliance with regulations. Some corporate groups have meanwhile questioned SEBI’s neutrality. If the apex court-appointed panel headed by Justice A M Sapre on the Adani imbroglio could file its report by May 8, why was SEBI dragging its feet, they have asked.
Fortunately for SEBI, the Supreme Court did not have time to hear the matter on Monday and has deferred it by two months when the court reassembles after the summer break. These two months should be used to settle the disquiet on the Adani imbroglio. The SEBI is an autonomous body that functions under the aegis of the finance ministry and, as stated in its preamble, its object is “... to protect the interests of investors in securities and to promote the development of, and to regulate the securities market…” The charges made by the Hindenburg report are serious and wiped out $140 billion of the Adani Group’s market value. There should be no delay by SEBI in answering those investors who lost money. Moreover, since there are two versions of the length of the SEBI probe into the Adani Group, the government needs to clarify which version is correct.