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India's wealthiest businessman accused of fraud


Think you've had a long week? At least you didn't lose $50 billion. That is the story of Gautam Adani's week. He is, maybe was, the richest man in India. He's head of the Adani Group. That is a massive energy and infrastructure conglomerate in India, a conglomerate that was the subject of a scathing report this week accusing it of massive fraud and tanking its share price.

Here to tell us more is Sadanand Dhume. He's a senior fellow at the American Enterprise Institute. Welcome back.


KELLY: OK. Start with Gautam Adani. He's a billionaire. He is close with the prime minister, Narendra Modi. What else do we need to know about him?

DHUME: Well, he is the richest man in Asia - I'm not sure if he still is - the third richest man in the world and, of course, the richest man in India; very, very well-connected. He's had a meteoric rise. His personal network before the scandal broke was about $120 billion, of which $100 billion was just accumulated over the last three years.


DHUME: So very, very wealthy, very, very influential and known to be extremely close to the prime minister of India, Narendra Modi.

KELLY: All right. Let me turn you to the firm that has produced this report. It's a firm called Hindenburg Research. They are American. Briefly tell us who they are and what the report alleges.

DHUME: So I hadn't heard of Hindenburg Research before this. It's a small firm. They focus on short selling. So what they essentially do is that they look for companies that they think are overvalued, specifically for companies where they think the overvaluation is based on some kind of fraud or malpractice. In this case, they're charging them with a kind of massive accounting fraud. And what they do is they bet against these companies. And if their bet pays off and the companies, in fact, lose money, Hindenburg ends up making a lot of money. And, in fact, they've been very clear over here that they are betting against the Adani Group.

KELLY: So this report drops on Tuesday. Adani shares fall off a cliff. This is in two trading days this week in India?

DHUME: Yes. There is real uncertainty not just about the Adani Group shares, but about the larger market because this is a very important conglomerate in India, and it has implications that go beyond the financial health just of Mr. Adani and Mr. Adani's group of companies.

KELLY: Right. Well, because, we mentioned, he's very close with the prime minister. Are there political implications?

DHUME: There are huge political implications. If there is one businessman in India who is most identified with Mr. Modi, it is, in fact, Mr. Adani. When Mr. Modi was sworn in as India's prime minister for the first time in 2014, he flew from Gujarat to New Delhi for his inauguration on Mr. Adani's private jet. He is very closely identified with Mr. Adani. Mr. Adani is viewed as a figure who is key to Mr. Modi's economic plans for India, whether it's in infrastructure or whether it's in the media, which is something that Adani is just branching out into now. So, you know, the implications are not just financial. They are also political.

KELLY: Has Mr. Adani or his company or his attorneys - have they responded to this report?

DHUME: Yes, they have rubbished the report. They say that the research is fraudulent. They say that it doesn't hold water. And they have said that they are exploring legal avenues and they may sue Hindenburg Research, to which the research firm has responded by saying that they would welcome any such legal action.

KELLY: I've got to think there must be global implications, certainly implications beyond India for a company this big to have this terrible a week.

DHUME: Well, you know, Mary Louise, the global implications are that this is a very big deal for India. And India is a large economy. India is the third-largest economy in the world. Many people are viewing India potentially as a counterweight to China. And if you have a huge setback to an extremely important set of companies in India that are really central to the prime minister's economic vision, it's a setback for India. And a setback for India on a large scale obviously has global implications.

KELLY: Sadanand Dhume of the American Enterprise Institute and columnist for The Wall Street Journal. Thanks so much.

DHUME: Thank you so much. Transcript provided by NPR, Copyright NPR.

Kai McNamee
[Copyright 2024 NPR]
Mary Louise Kelly is a co-host of All Things Considered, NPR's award-winning afternoon newsmagazine.
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