Senior lawyer Mahesh Jethmalani called the shocking allegations “smoking gun” and alleged that a businessman with China links commissioned the report from short seller Hindenburg Research, which led to the fall in share prices of Adani Group companies.
Earlier this week, the Securities and Exchange Board of India (SEBI) had said that foreign portfolio investor Kingdon Capital Management LLC and its affiliates had indirectly helped Hindenburg make an entry into Adani Enterprises Ltd. The market regulator’s investigation also found that Kotak Mahindra and Hindenburg had conspired to take short positions in Adani shares.
In a lengthy post on X, Jethmalani said that American businessman Mark Kingdon, behind Kingdon Capital Management LLC, hired Hindenburg to prepare a report on the Adani Group. Kingdon also approached Kotak’s international investment arm, Kotak Mahindra Investments Limited (KMIL), to set up an offshore fund and offshore account to trade Adani shares. This led to the creation of the Kotak India Opportunities Fund (KIOF).
The fund is alleged to have shorted Adani Group Companies shares via Mauritius before the Hindenburg report was published, with around $40 million provided by the Kingdon Master Fund.
The smoking gun the senior lawyer referred to was the revelation that Mr Kingdon’s wife, Chinese-American Anla Chen, holds significant shares in the Kingdon Master Fund and acts as a lobbyist for Chinese interests in the US.
“She was CEO of #SupChina, a pro-China media companies initiative that morphed into an organization called The China Project after a whistleblower accused SupChina in a sworn affidavit before the U.S. Congress of suppressing reporting for China’s interests,” the lawyers wrote.
“#TheChinaProject was shut down following calls from US Senators for an investigation into the project’s subversive activities including links to the Chinese Communist Party, which is clearly at odds with the Adani Group,” he added.
Jethmalani suggested Chen and Kingdon’s actions were prompted by Adani Group’s sabotage of Chinese interests around the world, including by outbidding Chinese companies for the port of Haifa in Israel and a coal project near Jaffna, Sri Lanka.
Key Questions
After stating his points, Jethmalani posed three big questions:
“Who introduced Mr. Kingdon to KMIL, what due diligence did KMIL conduct in relation to Mr. Kingdon, and did KMIL primarily participate in the short sale?” he asked.
The second question is whether any Indian person, organisation or entity that supported Hindenburg knew about the short selling scheme and whether they benefited from it. Jethmalani specifically mentioned politicians in an apparent criticism of the opposition parties, who have used the Adani Hindenburg issue to attack the group and the government on multiple occasions.
The lawyers also asked whether these people and organisations knew about their connections to China.
“Misrepresentation”
SEBI, in a notice to explain to Hindenburg Research LLC, said the organisation’s reports contained misrepresentations and inaccuracies and a favourable narrative was created through selective disclosures and eye-catching headlines, creating panic in Adani share prices and causing a decline in the Adani Group’s share prices.
Hindenburg alleges it failed to provide Kingdon with notice of the investigation before sharing the draft report, and Kingdon alleges it failed to provide Hindenburg with notice of the transaction before the report was released in a mass email.
A Kotak Mahindra International spokesperson said in a statement that KMIL and KIOF “categorically state that Hindenburg has never been a client of the company, nor has it been an investor in the funds. The funds were not aware that Hindenburg was a partner of any of the investors.”
“KMIL has also received confirmations and declarations from the investors in the fund that the investments have been made in their principal capacity and not on behalf of any other person,” the spokesperson said.
(Disclaimer: New Delhi TV is a subsidiary of AMG Media Networks Limited, an Adani Group company.)
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