WASHINGTON – The US government concluded that short-seller Hindenburg Research’s allegations of corporate fraud against Indian billionaire Gautam Adani weren’t relevant before extending his conglomerate as much as US$553 million (S740 million) for a container terminal in Sri Lanka, a senior US official said.
Allegations in a scathing report by US-based Hindenburg Research, which erased around US$100 billion from the Adani Group’s market value earlier this year, were front and centre as the International Development Finance Corp., or DFC, conducted a due diligence investigation of the conglomerate, an official from the US agency told Bloomberg.
The DFC was satisfied that the accusations in the short-seller’s report, which said Adani was pulling off “the largest con in corporate history,” weren’t applicable to Adani Ports & Special Economic Zone, the subsidiary spearheading the Sri Lankan project, the DFC official said, declining to be named to detail the negotiations.
The US agency will also continue to monitor the Indian firm to ensure the US government doesn’t unintentionally support financial misconduct or other inappropriate behaviour, the official said, noting that it’s critical that the United States approaches infrastructure projects differently than China.
The Sri Lankan port deal involving Adani marks one of the biggest and most prominent US government-backed infrastructure projects in Asia. It comes after years of American efforts to counter growing Chinese influence in the region as a result of President Xi Jinping’s Belt and Road Initiative to build infrastructure around the globe.
The Adani Group has denied the allegations featured in the Hindenburg report, including stock-price manipulation. Formal regulatory inquiries and court hearings into the issue in India haven’t uncovered any wrongdoing. Adani stocks have rallied of late, and Adani Ports and Special Economic Zone has gained 7.4 per cent so far this year.
The Adani Group, which has attracted controversy for its giant Australia coal mine and for the billionaire’s perceived closeness with Indian Prime Minister Narendra Modi, has touted the DFC’s investment as a vote of confidence following the Hindenburg allegations.
“We see this as a reaffirmation by the international community of our vision, our capabilities and our governance,” Karan Adani, the tycoon’s son and chief executive officer at Adani Ports, told reporters in Colombo when the deal was announced.