The United States government, through the International Development Finance Corp. (DFC), scrutinized the allegations of corporate fraud made by Hindenburg Research against Indian billionaire Gautam Adani before approving a loan of up to $553 million for a container terminal project in Sri Lanka. Despite the significant impact of Hindenburg Research's scathing report, which led to a substantial drop in the market value of Adani Group by approximately $100 billion earlier this year, the DFC determined that these allegations were not pertinent to Adani's specific project.
During the due diligence investigation conducted by the DFC, the accusations outlined in Hindenburg Research's report were a focal point. The report had accused Adani of orchestrating "the largest con in corporate history." However, the DFC, after a thorough examination, was satisfied that these allegations did not apply to Adani Ports & Special Economic Zone Ltd., the subsidiary responsible for spearheading the container terminal project in Sri Lanka. The official from the US agency, who spoke on the condition of anonymity to provide insights into the negotiations, emphasized that the accusations were deemed irrelevant to the specific venture.
Despite approving the loan, the DFC remains committed to monitoring the activities of the Adani Group to prevent any unintentional support for financial misconduct or inappropriate behaviour. The official stressed the importance of approaching infrastructure projects differently than China, highlighting the need for stringent oversight. This cautious approach aligns with broader US efforts to counterbalance China's influence in the region, particularly in response to President Xi Jinping's Belt and Road Initiative, which aims to establish global infrastructure networks.
The Sri Lankan port deal, backed by the US government, represents one of the most significant and high-profile infrastructure projects in Asia. This strategic move comes after years of American endeavours to counteract China's expanding influence, making it a crucial component of the geopolitical landscape. As the US navigates complex international dynamics, it remains vigilant in ensuring that its financial support aligns with ethical standards and avoids unintentional endorsement of any misconduct.
The Adani Group, in response to the Hindenburg allegations, has vehemently denied any wrongdoing, including stock-price manipulation. Formal regulatory inquiries and court hearings in India have failed to uncover evidence supporting the allegations. The recent rally in Adani stocks, coupled with a 7.4% gain in Adani Ports and Special Economic Zone Ltd. this year, has bolstered the group's position. Adani, known for its controversial Australia coal mine and perceived proximity to Indian Prime Minister Narendra Modi, considers the DFC's investment as a vote of confidence, portraying it as an affirmation of the group's vision, capabilities, and governance on the international stage. Karan Adani, the tycoon's son and CEO of Adani Ports, expressed this sentiment when announcing the deal in Colombo.