Hindenburg, a "short selling" firm, last week announced its short position in Adani Group companies and accused billionaire Gautam Adani of stock manipulation and accounting fraud.

Hindenburg and his founder Nate Anderson rose to fame in 2020 for exposing fraud at electric car company Nikola. Anderson's team of analysts revealed that a video promoting a hydrogen-powered truck was filmed with the vehicle driving down a hill, and the company had no working prototype. The scandal led to the ouster of CEO and founder Nicholas Trevor Milton, who was later convicted of lying, securities fraud and other crimes.

Last week, Hindenburg Research issued a report alleging that the Adani Group committed manipulation and accounting fraud. The company said that the Adani Group had significant debts and its valuation should actually be 85% lower. The conglomerate had approximately $27 billion in outstanding liabilities as of March 2022.

The most significant findings in this report are as follows: 1. 38 shell companies in Mauritius controlled by Vinod Adani (Gautami's brother), his associates or entities related to him in other tax havens were found to be manipulating profits through a network of offshore shell companies. 2. The Adani Group has already faced four major government investigations on fraud charges. 3. Adani Enterprises and Adani Total Gas were audited by a small firm with limited capabilities, with only 4 partners and 11 employees, and audited only one listed company. Given the complex structure of the Adani Enterprises conglomerate, with 156 subsidiaries and numerous joint ventures, the auditor appears inadequate for a thorough audit. The report on Gautam Adani's empire has already been mentioned by Bill Ackman, an American investor and head of the large investment company Pershing Square. He described it as highly credible and of high analytical quality.

The Adani Group was founded in the 1980s as a commodities trading company. Since then, it has grown into a conglomerate with seven publicly traded companies involved in energy, industry and logistics in India. The family business has close ties to Prime Minister Narendra Modi, and his access to loans from Indian banks has largely financed the firm's acquisition-based growth. According to Refinitiv, six different Adani Group companies raised approximately $10 billion between 2015 and 2021 through the sale of US dollar-denominated bonds underwritten by US and European investment banks.

Adani has criticised the Hindenburg report, saying it contains malicious and selective misinformation, but it has already caused his group to lose more than US$60 billion in market value since last week.