Congress on Friday demanded a “serious investigation” by the RBI and SEBI into the allegations of "brazen stock manipulation" by the Adani Group while bringing the BJP government on the line of fire asking whether it is “turning a blind eye” towards the illegalities of a conglomerate that is closely identified with Prime Minister Narendra Modi.
The demand for a probe came as Congress highlighted the "high exposure" of LIC and SBI as well as other public sector banks, where crores of Indians have have "poured their savings", to the Adani Group when their private sector counterparts have "chosen to avoid investing because of concerns" over corporate governance and indebtedness.
Hindenburg Research has claimed that Adani Group has indulged in "brazen stock manipulation" and "accounting fraud" through a "vast labyrinth of offshore shell entities", allegations which were denied by the conglomerate.
In a statement, Congress General Secretary Jairam Ramesh said usually a party should not be reacting to a research report by a hedge fund but Adani Group is "no ordinary conglomerate", as it is "closely identified" with Modi since he was Gujarat Chief Minister.
"We fully understand the close relationship between the Adani Group and the current government. But it is incumbent on the Congress as a responsible opposition party to urge SEBI and RBI to play their roles as stewards of the financial system and to investigate these allegations in the wider public interest," Ramesh said.
"For all its posturing about black money, has the Modi government chosen to turn a blind eye towards illicit activities by its favourite business group?" he asked.
The party felt that the allegations require "serious investigation by those who are responsible for the stability and security” of the Indian financial system that has been “exposed” to "systemic risks through liberal investments".
Ramesh said 8 per cent of LIC’s equity assets under management or a "gigantic sum" of Rs 74,000 crore are in Adani companies, comprising second-largest holding, while state-owned banks have lent twice as much to the Adani group as private banks, with 40 per cent of their lending being done by SBI.
"This irresponsibility has exposed the crores of Indians who have poured their savings into LIC and SBI to financial risk. If, as alleged, the Adani Group has artificially inflated the value of its stock through manipulation, and then raised funds by pledging those shares, banks such as SBI could face heavy losses in the event of a fall in those share prices," Ramesh said.
"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? Are these not clear-cut cases of “phone banking”?" he asked.
He said the Modi government can try and impose censorship but in an era of globalisation of Indian businesses and financial markets, can Hindenburg-type reports that focus on corporate misgovernance be simply brushed aside and dismissed as being 'malicious'?"
Emphasising that a probe will not be easy, Ramesh said the Adani Group has built monopolies in ports and airports and become an overwhelmingly dominant player in power, roads, railways, energy and media.
"In perhaps the most egregious case of crony capitalism, the previous operator of Mumbai’s Chhatrapati Shivaji Maharaj International Airport, India’s second busiest airport, was raided by the Enforcement Directorate (ED) and the Central Board of Investigation (CBI) after it rejected an offer by the Adani Group. The operator agreed to sell the airport to Adani a month later and it is a mystery what happened to the ED and CBI cases thereafter," he said.