Hindenburg promoted by I.N.D.I alliance, has Chinese connection: Top lawyer

Top Indian lawyer Mahesh Jethmalani has a few explosive claims about last year's Hindenburg Report that led to a $150-billion slump in Adani stocks

Vinayak Chakravorty
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Adani Group was hampering Chinese business interests globally, Jethmalani outlined as reason for the course of action

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Top Indian lawyer Mahesh Jethmalani has alleged that there is a “Chinese connection” behind last year’s Hindenburg Report that led to a $150-billion slump in Adani stocks, adding that such “interests and activities were robustly promoted within India by the desperate to survive I.N.D.I alliance”.

On Friday morning, Jethmalani uploaded a three-part post on X, claiming that Mark Kingdon, hedge fund manager and president of the US-based investment firm Kingdon Capital Management, and his wife, “accomplished Chinese spy Anla Cheng”, had hired the American short seller Hindenburg Research to create the report against the Adani Group.

Jethmalani also mentioned that “the services of Kotak” had been engaged “to facilitate a trading account to short sell Adani shares”. Earlier this week, reacting to a show-cause notice issued by India’s capital market regulator SEBI in the case, Hindenburg had claimed that India’s Kotak Mahindra Bank had set up an offshore fund structure to be used by the short seller’s “investor partner to bet against Adani”.

On his official X page, @JethmalaniM wrote: “For those who want to learn about accomplished #Chinese spy #AnlaCheng who along with her husband #MarkKingdon hired #Hindenburg for a research report on #Adani, engaged the services of Kotak to facilitate a trading account to short sell Adani shares; who made millions of dollars from their short selling; who eroded Adani market cap enormously, with no thought for several Indian retail investors who they financially decimated through their nefarious design to promote Chinese strategic interests by destroying an Indian corporate competitor who had prevailed in many bids over the Chinese State in strategic international projects; and whose interests and activities were robustly promoted within India by the desperate to survive I.N.D.I alliance by camouflaging their sell out to the Chinese State in the guise of attacking “crony capitalism”, read the attached sworn statement of Shannon Van Sant, ex employee of Cheng’s company #SupChina before the US Congress.”

In an earlier X post on Thursday, @JethmalaniM had referred to Anla Cheng, a lobbyist for Chinese interests in the United States, as “a huge smoking gun in the sordid episode”. Jethmalani said the course of action adopted by Kingdon and Cheng was an outcome of the Adani Group’s hampering Chinese business interests globally — notably, by outbidding Chinese companies for coal projects in Sri Lanka and the Haifa Port project in Israel.

The Adani-Hindenburg saga started last year when the United States-based short seller published a damaging 32,000-word report that contained 720 citations and ran into 106 pages. The report alleged that the Adani Group rampantly manipulated stocks and engaged in accounting fraud for decades. Consequently, Adani stocks witnessed a $150-billion fall.

On July 2, SEBI, or the Securities and Exchange Board of India, issued a show-cause notice against Hindenburg alleging that the US-based short seller had violated rules while placing bets on Adani Group stocks. SEBI had also said that the foreign portfolio investor Kingdon Capital Management LLC had indirectly aided Hindenburg to target Adani Enterprises Limited.

Hindenburg in a reactionary note, had described SEBI’s show-cause notice as “nonsense”, adding that it was “concocted to serve a pre-ordained purpose: an attempt to silence and intimidate those who expose corruption and fraud perpetrated by the most powerful individuals in India”.

In its note, Hindenburg also mentioned how Kotak Mahindra Bank had set up an offshore fund structure to be used by its “investor partner to bet against Adani”.

“While SEBI seemingly tied itself in knots to claim jurisdiction over us, its notice conspicuously failed to name the party that has an actual tie to India: Kotak Bank, one of India’s largest banks and brokerage firms founded by Uday Kotak, which created and oversaw the offshore fund structure used by our investor partner to bet against Adani. Instead it simply named the K-India Opportunities fund and masked the “Kotak” name with the acronym “KMIL”, the Hindenburg note said.

The US-based short seller added that Uday Kotak had personally led SEBI’s 2017 Committee on Corporate Governance, and added: “We suspect SEBI’s lack of mention of Kotak or any other Kotak board member may be meant to protect yet another powerful Indian businessman from the prospect of scrutiny, a role SEBI seems to embrace”.

Kotak have subsequently denied Hindenburg’s contentions.

“Hindenburg has never been a client of the firm nor has it ever been an investor in the fund. The Fund was never aware that Hindenburg was a partner of any of its investors. KMIL has also received a confirmation and declaration from the Fund's investor that its investments were made as a principal and not on behalf of any other person,” a spokesperson of Kotak Mahindra International Limited told the media.

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