Adani probe: Documents point to conflict of interest in SC-constituted expert committee

A batch of petitions filed before the Supreme Court in February 2023 by a 34-year-old law student, Anamika Jaiswal, sought a CBI and SIT probe into transactions of the Adani Group. Although the SC ordered two parallel probes – one by an expert committee and another by market regulator SEBI – the petitioner has questioned the credibility of the three persons involved. The SC has not responded to this application for almost two months. TNM went through Anamika’s applications and affidavits to the SC based primarily on court orders, press releases and SEBI-related documents and found that it pointed to an unmistakable conflict of interest. .On 23 January 2023, the US-based research group Hindenberg released a report alleging corporate and accounting fraud and stock price manipulation by the Adani group. Following this, on March 2, the Supreme Court ordered two parallel investigations—one by SEBI and another by a six-member expert committee. The committee was headed by former SC judge AM Sapre and the members included retired Bombay High Court judge Justice JP Devadhar, Infosys co-founder Nandan Nilekani, founder and former Managing Director of ICICI Bank KV Kamath, former State Bank of India Chairman OP Bhatt and lawyer Somasekhar Sundaresan. Its brief was to investigate possible regulatory failures which led to investors losing crores following Hindenburg Research’s report. The committee submitted its report on May 2, 2023, and the results were inconclusive. The committee, after scrutinising the large volume of data and evidence, mostly provided by SEBI, said, “At this stage, taking into account the explanations provided by SEBI, supported by empirical data, prima facie, it would not be possible for the Committee to conclude that there has been a regulatory failure around the allegation of price manipulation.” The committee is, however, mired in a row, as Anamika objected to the presence of three people on it – OP Bhatt, Somashekhar Sundaresan and KV Kamath. In the application, Anamika contended that OP Bhatt, one of the members of the Expert Committee, was working as the Chairman of Greenko, a leading renewable energy company. “Since March 2022, Greenko and Adani Group are working in a close partnership to provide energy to Adani Group facilities in India,” the application said. The petitioner produced a Greenko press release dated 14 March 2022, regarding their partnership with Adani. According to the press statement, Adani Group and Greenko announced a partnership through which Adani Group’s facilities were to be provided Renewable Energy (RE) by Greenko. The company was contracted to supply up to 6 GWhr of power to Adani's proposed industrial complex. .The petitioner produced a Greenko press release dated 14 March 2022, regarding their partnership with Adani. According to the press statement, Adani Group and Greenko announced a partnership through which Adani Group’s facilities were to be provided Renewable Energy (RE) by Greenko. The company was contracted to supply up to 6 GWhr of power to Adani's proposed industrial complex. .The application also pointed out that the two companies were working together on an integrated hybrid renewable energy project in Andhra Pradesh. In Pinnapuram in Kurnool district, Greenco is developing a hybrid solar-wind-pumped storage project and signed Power Purchase Agreements (PPA) with multiple companies, including Adani. Of the seven standalone storage contracts signed for the project, Adani was contracted to supply 6,000 megawatt-hours (MWh).The Greenko Integrated Report 2022 said they are developing multiple storage projects of about 100 GWh of storage capacity across different states in India. “These projects have been strengthened by Greenko’s recent partnerships with Adani, ArcelorMittal and Ayana Power,” the report said.In the affidavit by the petitioner, it was pointed out that another member of the committee Somashekhar Sundaresan “has been regularly engaged by the Adani Group of Companies before the SEBI Board and other forums.” The petitioner provided a SEBI order from 2007 as documentary evidence to highlight Sunderesan’s conflict in the case. Sundaresan, a securities and regulatory expert, had represented seven Adani Group companies before SEBI in 2007 in fraudulent and unfair trade practices relating to securities market cases. .The list of companies Somasekhar represented included Adani Investments, Adani Agro Pvt. Ltd., Adani Impex Pvt. Ltd., Adani Properties Pvt. Ltd. and Advance Exports against a SEBI order in the said case, which had prohibited Adani group entities from “accessing the securities market either directly or indirectly and also prohibited them from buying, selling or otherwise dealing in securities, in any manner whatsoever, for a period of two years.” The petitioner submitted that another member of the expert committee, KV Kamath, who was the chairman of ICICI Bank from 1996 to 2009, figured in the CBI FIR in the ICICI Bank fraud case, thereby questioning the propriety of having him on an inquiry committee. “The case relates to Chanda Kocchar, who served as the Managing Director and CEO of ICICI Bank from 2009 to 2018. The CBI alleged that she and her family received various kickbacks over her tenure in lieu of loans provided to the Videocon group, many of which turned into non-performing assets (NPAs). Kamath was the non-executive chairman of the bank when some of those loans were approved and a member of the committee that sanctioned/approved the loans,” the application said.Conflict of interest within SEBIFrom SEBI’s end, the conflict of interest arose with a close relative of Adani being on the Committee on Corporate Governance, Anamika’s application says. This committee looked into Related Party Transactions (RPT), disclosure and transparency-related issues and other such matters. All of this pertained to the violations the Adani Group had been accused of by both Hindenburg and OCCRP investigations.Cyril Shroff, Managing Partner of Cyril Amarchand Mangaldas, serves on the SEBI Committee on Corporate Governance. Cyril Shroff’s daughter Paridhi is married to Gautam Adani’s son Karan.The petition mentions that out of the 24 investigations SEBI was conducting, five were related to insider trading, and the presence of a close relative on the committee was a clear conflict of interest. .The charge of insider trading was examined by the Corporate Governance Committee of SEBI, where Cyril Shroff was present. The same data was provided by SEBI to the expert committee. In the expert committee report, it was stated that between April 1, 2018 and December 31, 2022, 849 alerts were generated about Adani Group companies via automated surveillance systems (ASM) of SEBI. The alerts flag possible violations by the companies being scrutinised. Out of 849 alerts against Adani Groups, 246 of them, or 29%, were related to insider trading. The report also stated that investigations in these 246 alerts were still a ‘work in progress’.Petitioner alleges suppression of old investigations by SEBIIn addition to conflict of interest, the petitioner accused SEBI of suppressing previous investigations into Adani Group, and therefore, committing perjury.The petitioner said that SEBI had categorically stated before the Expert Committee that “the investigation into possible contraventions of rules and regulations by the Adani group of companies started on 23.10.2020 after receipt of complaints in June-July 2020.” Alleging that SEBI had deliberately not disclosed previous investigations into transactions of Adani Group, the petitioner produced a 2014 Directorate of Revenue Intelligence (DRI) letter to SEBI with an alert about ‘Adani having siphoned money and invested them in Adani listed companies through entities based in Dubai and Mauritius’. A CD with evidence to show the siphoning of Rs 2,323 crore by the Adani group, along with DRI officers’ notes on the case, were reportedly sent to SEBI on January 31, 2014, but no further action was taken. The DRI, in 2014, was reportedly investigating a case of overvaluation of import of equipment and machinery by various entities of Adani Group from a UAE-based subsidiary and on 15 May, 2014, issued a show cause notice to Adani Group. Accusing SEBI of suppressing facts and providing false information, amounting to perjury, the petition said the then SEBI chairperson UK Sinha chose to close the ongoing investigations against Adani Group instead of acting on the DRI alerts. UK Sinha, who retired from SEBI in March 2017, was appointed the Non-Executive Independent Director-Chairperson of NDTV, which was acquired by the Adani group in 2022. The Adani Group takeover of NDTV was completed on 30 December, 2022 and on 27 March 2023, UK Sinha was appointed as the Non-Executive Chairperson.The application to the SC sought the appointment of a fresh expert committee with experts from the field of finance, law and the stock market with ‘impeccable integrity, and who had no conflict of interest in the outcome of the instant matter’. The Supreme Court has yet to act on the application. .Want to read exclusive content? Become a TNM subscriber