“In the 36 hours since we released our report, Adani hasn’t addressed a single substantive issue we raised. At the conclusion of our report, we asked 88 straightforward questions that we believe give the company a chance to be transparent. Thus far, Adani has answered none of these questions,” the United States-based short-seller Hindenburg Research replied after its expose titled “Adani Group: How The World’s 3rd Richest Man Is Pulling The Largest Con In Corporate History”.

As what is being seen as the Hindenburg effect as it were, the Adani Group’s companies have reportedly lost ₹85,000 Crore and meanwhile, have also threatened to take legal action against Hindenburg Research. Stocks have plummeted.

The US-based group however replied in its social media post that “If Adani is serious, it should also file suit in the US where we operate. We have a long list of documents we would demand in a legal discovery process,” and added “Regarding the company’s threats of legal action, to be clear, we would welcome it.”

This was in response to a statement of “clarification” issued by Jugeshinder Singh, Adani Group CFO, on January 25 expressing shock, a day after the Hindenburg Research’s report was released. It called the “report is a malicious combination of selective misinformation and stale, baseless and discredited allegations that have been tested and rejected by India’s highest courts.”

As expected, Adani Group has also questioned the report’s timing, and accused it of having “mala fide intention to undermine the Adani Group’s reputation with the principal objective of damaging the upcoming Follow-on Public Offering from Adani Enterprises, the biggest FPO ever in India.”

According to a report in the financial paper Mint, on Friday January, “shares of Adani Group's seven listed companies crashed for the second straight day” even after the group led by the “richest man in Asia” issued its clarification. Hindenburg’s 129-page report comes after a two-year investigation, and stated that “the INR 17.8 trillion (U.S. $218 billion) Indian conglomerate Adani Group has engaged in a brazen stock manipulation and accounting fraud scheme over the course of decades.”

Hindenburg Research named the Gautam Adani, Founder and Chairman of the Adani Group, stating that he “amassed a net worth of roughly $120 billion, adding over $100 billion in the past 3 years largely through stock price appreciation in the group’s 7 key listed companies, which have spiked an average of 819% in that period.”

It added that the report was research based and that it “involved speaking with dozens of individuals, including former senior executives of the Adani Group, reviewing thousands of documents, and conducting diligence site visits in almost half a dozen countries.”

However, Jugeshinder Singh, Adani Group CFO’s statement had claimed that the report was published “without making any attempt to contact us or verify the factual matrix” and called it “a malicious combination of selective misinformation and stale, baseless and discredited allegations that have been tested and rejected by India’s highest courts.”

Meanwhile, according to a report in Fortune India foreign brokerage house CLSA has stated in a report that “Indian banks have an exposure of ₹81,200 crore to Adani group, whose group debt is ₹2 lakh crore (about $24 billion)”.

The CLSA report is in the public domain soon after the Hindenburg Research report. The financial publication reported that the Hindenburg had “triggered a massive rout in listed Adani stocks, wiping out a cumulative ₹87,500 crore in market cap.”

Hindenburg had stated in the summary of the report that, “Even if you ignore the findings of our investigation and take the financials of Adani Group at face value, its 7 key listed companies have 85% downside purely on a fundamental basis owing to sky-high valuations.” It added that “Key listed Adani companies have also taken on substantial debt, including pledging shares of their inflated stock for loans, putting the entire group on precarious financial footing”.

It stated that the Adani group “has previously been the focus of 4 major government fraud investigations which have alleged money laundering, theft of taxpayer funds and corruption, totaling an estimated U.S. $17 billion. Adani family members allegedly cooperated to create offshore shell entities in tax-haven jurisdictions like Mauritius, the UAE, and Caribbean Islands, generating forged import/export documentation in an apparent effort to generate fake or illegitimate turnover and to siphon money from the listed companies.”

It then goes on to name Gautam Adani’s younger brother, Rajesh Adani, as having been “arrested at least twice over separate allegations of forgery and tax fraud. He was subsequently promoted to serve as Managing Director of Adani Group.”

The report also named Gautam Adani’s brother-in-law, Samir Vora, as being accused in the past “by the DRI of being a ringleader of a diamond trading scam and of repeatedly making false statements to regulators”.

The report asked “Given his history, why was he subsequently promoted to Executive Director of the critical Adani Australia division?” This was just one among the 88 questions, number 87 being “If Adani Group has nothing to hide, why does it feel the need to pursue legal action against even the smallest of its critics?”

Adani Group in its clarification has claimed that “The investor community has always reposed faith in the Adani Group on the basis of detailed analysis and reports prepared by financial experts and leading national and international credit rating agencies. Our informed and knowledgeable investors are not influenced by one-sided, motivated and unsubstantiated reports with vested interests.

“The Adani Group, which is India’s leader in infrastructure and job creation, is a diverse portfolio of market-leading businesses managed by CEOs of the highest professional calibre and overseen by experts in various fields for several decades. The Group has always been in compliance with all laws, regardless of jurisdiction, and maintains the highest standards of corporate governance.”

According to Mint, “Adani Transmission shares tumbled over 19% and Adani Total Gas sank 19.1% in their biggest daily drop since mid-March 2020, while Adani Green Energy sank about 16% on the BSE in early trading session”. On Friday, “Adani Enterprises was trading over 2% lower even as it kicked off the ₹20,000 crore follow-on public offer (FPO)” reported the Mint.

While it is too early to tell if the report, and the allegations it levels will be brought up by the Opposition in the upcoming Budget session of parliament, a extensive political reaction has been issued by the Congress on January 27, party general secretary Jairam Ramesh issued a statement saying that “forensic analysis by Hindenburg Research of the Adani Group demands a response from the Congress party. This is because the Adani Group is no ordinary conglomerate: it is closely identified with Prime Minister Narendra Modi since the time he was Chief Minister.”

It questioned the “high exposure of financial institutions such as the Life Insurance Company of India (LIC) and the State Bank of India (SBI) to the Adani Group” stating that it had “implications for financial stability and for the crores of Indians whose savings are stewarded by these pillars of the financial system.

It added that “as much as 8% of LIC’s equity assets under management, amounting to a gigantic sum of ₹74,000 crore, are in Adani companies and comprise its second-largest holding.”

According to the latest report by Bloomsberg, published on January 27, “State-controlled Life Insurance Corp. of India is spending about 3 billion rupees ($37 million) as an anchor investor in a $2.5 billion new share sale by Adani Enterprises Ltd., according to a filing. The investment would add to its current holding of 4.23%.” The LIC’s investment, stated the financial news agency, “signalled its vote of confidence in Asia’s richest man and his beleaguered group on Jan. 25.”

The Congress has called for a probe while asking if the Modi government has “chosen to turn a blind eye towards illicit activities by its favourite business group? Is there a quid pro quo?... Indians are increasingly aware of how the rise of Modi’s cronies has exacerbated the problem of inequality, but need to understand how this has been financed by their own hard-earned savings. Will the RBI ensure that risks to financial stability are investigated and contained?”

It stated that there was a “close relationship between the Adani Group and the current government” and urged the “SEBI and RBI to play their roles as stewards of the financial system and to investigate these allegations in the wider public interest.”

Congress leader Jairam Ramesh issued a detailed statement on the current crisis.

Meanwhile, a Facebook user posted a photo of Nathan Anderson, the man behind the Hindenburg report, calling him “the real hero” adding how his report “on irregularities has given Adani a blow of $ 6.1 billion, ie.Rs. 489,99,30,00,000.”

According to Reiters “Hindenburg has a track-record of finding corporate wrongdoings and placing bets against the companies.”

The organisation's own website states that it was, “Founded by Nate Anderson, CFA, CAIA, Hindenburg Research specialises in forensic financial research. Our experience in the investment management industry spans decades, with a historical focus on equity, credit, and derivatives analysis.”

It states that it drew its name from the 1937 Hindenburg Disaster as it saw it to be the “epitome of a totally man-made, totally avoidable disaster. Almost 100 people were loaded onto a balloon filled with the most flammable element in the universe. This was despite dozens of earlier hydrogen-based aircraft meeting with similar fates. Nonetheless, the operators of the Hindenburg forged ahead, adopting the oft-cited Wall Street maxim of “this time is different”.

The organisation stated that it now looks out for “similar man-made disasters floating around in the market and aim to shed light on them before they lure in more unsuspecting victims.”