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Business News/ Companies / News/  Claims baseless, no probe into Adani since 2016, Sebi tells SC
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Claims baseless, no probe into Adani since 2016, Sebi tells SC

Sebi reiterated its request for an additional six months to conclude its investigation into the Adani-Hindenburg incident to ensure ‘ensure carriage of justice’ while refuting the claim that certain Adani group companies have been under scrutiny for potential law breaches since 2016

Sebi again requested SC for six months to complete probePremium
Sebi again requested SC for six months to complete probe

New Delhi: The markets regulator has not investigated publicly traded Adani group companies since 2016 for suspected misuse of global depository receipts (GDRs) to route black money or any other violation, the Securities and Exchange Board of India (Sebi) told the Supreme Court on Monday.

Sebi reiterated its request for an additional six months to conclude its investigation into the Adani-Hindenburg incident to ensure “ensure carriage of justice" while refuting the claim that certain Adani group companies have been under scrutiny for potential law breaches since 2016.

However, Sebi’s statement on Monday contradicts remarks made by junior finance minister Pankaj Chaudhary in July 2021, when he stated in parliament that Sebi was investigating certain Adani group companies for non-compliance with regulations. The finance ministry, however, said the government stands by its written response in Lok Sabha, which was based on due diligence and inputs from all concerned agencies.

A bench, headed by Chief Justice Dhananjaya Y. Chandrachud, could not take up Sebi’s plea on Monday due to lack of time and adjourned the regulator’s plea for July 10, thus automatically granting an additional two months to Sebi.

Meanwhile, filing an additional affidavit on Monday, Sebi rejected the submissions made last week by advocate Prashant Bhushan on behalf of one of the public interest litigation (PIL) petitioners that no case for a six-month timeframe was made out when the regulator has already been looking into similar complaints against the conglomerate since 2016.

Sebi said the 2016 investigation had nothing to do with the Hindenburg report but only to GDRs by 51 Indian listed companies. “However, no listed company of Adani group was part of the aforesaid 51 companies. Pursuant to the completion of the investigation, appropriate enforcement actions were taken in this matter. Hence, the allegation that Sebi has been investigating Adani since 2016 is factually baseless," the regulator’s affidavit stated.

The regulator maintained that the 12 transactions referred to as suspicious in the Hindenburg report are highly complex, and they have many sub-transactions across numerous jurisdictions.

“A rigorous investigation of these transactions would require collation of data/information from various sources including bank statements from multiple domestic as well as international banks, financial statements of onshore and offshore entities involved in the transactions and contracts and agreements, if any, entered between entities. Thereafter, the analysis would have to be conducted on the documents received from various sources before conclusive findings can be arrived at," said Sebi.

About its investigation into the minimum public shareholding norms, the affidavit said that the regulator has already approached 11 overseas regulators under the multilateral memorandum of understanding with the International Organization of Securities Commissions (IOSCO) and the first request to overseas regulators was made as early as in October 2020.

“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," it emphasised.

On 13 May, the Supreme Court offered an additional three months to Sebi, expressing reservations about the regulator’s request for a six-month timeframe. The court, however, said that it would review the Justice Sapre committee’s report on regulatory failure and breach of laws before deciding on an extension to Sebi.

Sebi, during the proceedings on Friday, told the bench that it is yet to form a final opinion regarding the “suspicious" nature of transactions and alleged breach of laws by the Adani group, as pointed out by a critical report by US short-seller Hindenburg Research in January that wiped out more than $140 billion in the market value of the conglomerate.

On that day, advocate Bhushan, appearing for PIL petitioner Anamika Jaiswal, opposed Sebi’s request, claiming that the regulator has been looking into similar complaints against the Adani group since 2016.

A six-member panel, led by former Supreme Court judge A.M. Sapre, was set up by the court’s 2 March order to investigate allegations of regulatory failure and breach of laws against the Adani group and to suggest steps to bolster the statutory and supervisory regime.

At that time, the Adani group, in a statement, welcomed the investigation, “which represents a fair opportunity for everyone to be heard and for all issues to be addressed".

Hindenburg’s report, released on 24 January, claimed “brazen accounting fraud" and “stock manipulation" by the Gautam Adani-led group. Though the conglomerate rejected the report as “maliciously mischievous", it triggered a massive rout of Adani Group stocks, which lost over $140 billion in days and forced the cancellation of a 20,000 crore share sale in the group’s flagship.

The Adani Group, however, denied allegations of stock market manipulation and accounting fraud by Hindenburg.

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Published: 15 May 2023, 11:54 PM IST
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