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Adani Group: Even Billionaires Aren’t Immune to Fraud Allegations

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Indian billionaire Gautam Adani saw a significant portion of his fortune disappear as investors fled his companies for a second day prompted by fraud claims made by a US investment firm. The Adani Group, which is headed by Adani, dismissed the report as malicious but this response failed to stem the uproar. India’s main opposition party has demanded an investigation. The firm’s publicly listed companies have lost about $50bn in market value. Shares in the firm’s flagship Adani Enterprises dropped by nearly 20% on Friday, while some of the group’s other publicly listed firms tumbled even further, triggering automatic halts in trading in Mumbai.

This fallout comes just days after a US investment firm, Hindenburg Research, published a report accusing the Adani Group of engaging in decades of “brazen” stock manipulation and accounting fraud. The report came ahead of a planned share sale for Adani Enterprises, which is now seeing little demand.

Adani is a self-made tycoon who has built a fortune with investments in ports, airports, renewable energy and other industries. His wealth has soared in the past three years, as the value of shares in his firms skyrocketed. His firm said it was considering legal action against Hindenburg.

An ally of Indian Prime Minister Narendra Modi, Adani has long faced claims from opposition politicians alleging that he has benefited from his political ties, which he denies. Many Indian banks and state-owned insurance companies have either invested in or loaned billions of dollars to companies linked to the Adani Group. However, in interviews with a news agency, some of India’s leading public sector banks said they were not worried about risks stemming from their exposure to the firm.

The wider stock market has been hit by the episode, helping to send India’s benchmark stock index down more than 1% on Friday. Adani dropped from the third richest person in the world to the seventh on Forbes’ rich list, maintaining an estimated net worth of more than $96bn, according to the publication.

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