Hindenburg row: Sebi concealed important facts and "slept over" DRI info on stock manipulation by Adani, petitioner tells Supreme Court

A petitioner in the Adani-Hindenburg matter has alleged in the Supreme Court that market regulator Securities and Exchange Board of India (Sebi) suppressed important facts from the top Court and slept over Directorate of Revenue Intelligence (DRI)'s letter on alleged stock manipulation by the Adani firms.

In the affidavit filed before the Supreme Court, the petitioner has said that while the investigation against the Adani group was going on in the over invoicing case, the Directorate of Revenue Intelligence (DRI) sent a letter to the then Sebi chairperson in 2014 alerting him that the group may be committing stock market manipulation using the money allegedly siphoned off using the modus operandi of over-valuation in the import of power equipment, news agency PTI reported.

The affidavit claimed that the letter was accompanied by a CD containing evidence of siphoning off Rs 2,323 crore and two notes on the case being investigated by the DRI. The letter, the affidavit said, also stated that more documents may be obtained from the Mumbai Zonal Unit of the DRI.

"The petitioner herein submits that not only has the Sebi suppressed important facts from this court and slept over DRI alerts, but there is also an apparent conflict of interest in Sebi conducting Adani investigation."

"Mr. Cyril Shroff, Managing Partner, Cyril Amarchand Mangaldas, has been a member of Sebi's Committee on Corporate Governance, which looks at offences like insider trading," the affidavit said, adding his daughter is married to Gautam Adani's son. This, the affidavit said, shows a clear conflict of interest.

Five out of the 24 Sebi investigation reports are on insider trading allegations against the Adani group companies, the petitioner submitted.

In a January 24 report, Hindenburg Research had alleged accounting fraud, stock price manipulation and improper use of tax havens, triggering a stock market rout of the Adani group shares that erased close to USD 150 billion in market value at its lowest point.

The top Court had then asked Sebi to look into the allegations and submit its findings. A separate six-member expert panel was formed in March which included a retired judge and veteran bankers, to go into regulatory aspects of the allegations.

Recently, Sebi had informed the Supreme Court it has completed the probe in all but two allegations against the Adani group, and is still awaiting information from five tax havens on the actual owners behind the foreign entities that have invested in the conglomerate.

The Sebi, in a status report to the Supreme Court, said out of the 24 matters it was probing, findings in as many as 22 are final.

The apex court is seized of four PILs on the Adani-Hindenburg controversy including those by lawyers M L Sharma and Vishal Tiwari, Congress leader Jaya Thakur and law student Anamika Jaiswal.

On its part, the Adani group has rejected all allegations.

(With PTI inputs)

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