The big con


Billionaire Indian tycoon Gautam Adani with Indian Prime Minister Narendra Modi IMAGE/National Herald

Early? in January, Gautam Adani, an Indian businessman and associate of India’s prime minister, Narendra Modi, was the world’s third richest man. By the end of the month he had lost much of his fortune, after being accused by the US-based research investment firm Hindenburg Research of pulling the ‘largest con in corporate history’. Facing allegations of fraud and a stock-market rout, he appeared in Haifa on 31 January, smiling for pictures with Benjamin Netanyahu and hailing the Abraham Accords brokered by Jared Kushner as a ‘gamechanger’, as he took charge of Israel’s largest port. Adani’s ‘liberation’ of Haifa, as Netanyahu put it, brings closer the prospect of a rail link between Israel and its new friends in Saudi Arabia and the Persian Gulf. His ‘strategic purchase’, for which he paid a staggering $1.2 billion, also limits Chinese influence in the region. And Adani had his own reasons to smile. Standing next to Netanyahu, who had just name-checked his ‘good friend’ Modi, Adani was showing that he still had allies in high places.

The day before, a company controlled by Abu Dhabi’s royal family had pledged to invest a further $400 million in his floundering flagship business, Adani Enterprises Ltd. He hoped to raise $2.5 billion through a stock offering: Indian tycoons close to Modi had promised to buy shares, although mutual funds and retail investors were keeping a fastidious distance. Modi stonewalled questions in parliament about his partnership with Adani, which began decades ago in Gujarat; regulatory agencies in India conspicuously failed to investigate Adani’s use of offshore shell companies; and his supporters took to the airwaves to allege that white people just couldn’t bear to see India make progress.

In the weeks since then, Adani’s spectacular fall has continued: among other reverses, he had to cancel the $2.5 billion share sale, and no longer sits near the top of the list of the world’s richest men. In his glory days, he would tweet that it was ‘Fascinating to hear from Prez @EmmanuelMacron at Chateau Versailles’ or that he was ‘Honoured to host @BorisJohnson, the first UK PM to visit Gujarat, at Adani HQ’. His social media feeds have now gone quiet. Adani was not only a beneficiary of the new political and economic order devised by Modi to consolidate Hindu supremacism in India. The neglected details of his frictionless rise show that after their calamitous romance with Russia’s oligarchy, Western politicians, journalists and bankers facilitated the ascent of another hyper-nationalist elite with dubiously sourced wealth and an extreme aversion to the rule of law and civil liberties.

A day after Adani showed up in Haifa, Jo Johnson – Boris Johnson’s brother and a former Financial Times journalist, who was elevated to the House of Lords in 2020 after a decade in the Commons – abruptly resigned from Elara Capital, a UK investment firm that according to Hindenburg Research is complicit in the Adani Group’s practice of inflating stock prices through shell companies in Mauritius. Johnson isn’t the only one afflicted with buyer’s remorse. Norway’s largest pension fund, KLP, recently abandoned all its shares in Adani Green Energy Ltd. France’s TotalEnergies, Adani’s largest European collaborator and the main source of his credibility among foreign investors, has put a green hydrogen partnership with him on hold. The asset management unit of J.P.Morgan Chase has, in Bloomberg’s words, ‘wiped its ESG portfolios clean of their exposure to the Adani empire’. Bangladesh, which had agreed to pay dramatically high prices for electricity from Adani’s tax-free coal-fired power station in India, is now asking to renegotiate.

Prompted by these developments, Western journalists have been busy investigating Adani, looking into the opaque sources of his funding in offshore entities in Mauritius, the Bahamas and Cyprus, and the role of his ‘elusive’ older brother Vinod. At least some of these facts have been known for a long time. For two decades, Indian journalists have faced down legal threats in order to track the intertwined rise of Modi and Adani. When Modi was barred from travelling to the United States and the European Union because of his suspected complicity in the anti-Muslim pogrom in Gujarat in 2002, and many Indian businessmen recoiled from him, Adani worked hard to rehabilitate his associate. Since becoming prime minister in 2014, Modi has repaid the favour: he turned Adani into India’s biggest operator of private airports and ports, as well as its leading producer of power from coal-fired plants. While presiding over an environmental crisis – India suffers from toxic smog, heatwaves, dry riverbeds, falling groundwater reserves and land subsidence – Modi has helped Adani, a fossil fuel tycoon, position himself as India’s champion of decarbonisation.

Last year the head of Sri Lanka’s largest electricity board was forced to resign after confessing to parliament that Modi had put ‘pressure’ on the island’s then president, Gotabaya Rajapaksa, to award a renewable energy project to Adani. A jaunt to Australia alongside Modi expedited Adani’s plan to open a huge coal mine – and secured him the promise of a massive loan to enable this from India’s biggest bank. The Wangan and Jagalingou Indigenous peoples, who live near the proposed mine, warned many Western financial institutions against investing in the site, with the help of an online campaign, #StopAdani. But Adani still managed to fund it – in part, it has recently become clear, by using stock from his ‘green’ companies as collateral. A visit to Dhaka with Modi resulted in the deal to sell electricity – generated by burning his Australian coal at his environmentally hazardous plant in India – at inflated prices to Bangladesh, one of the countries most vulnerable to climate change.

Modi has counted on sympathetic journalists and financial speculators in the West to cast a seductive veil over his version of political economy, environmental activism and history. ‘I’d bet on Modi to transform India, all of it, including the newly integrated Kashmir region,’ Roger Cohen of the New York Times wrote in 2019 after Modi annulled the special constitutional status of India’s only Muslim-majority state and imposed a months-long curfew. McKinsey’s global managing partner, Bob Sternfels, recently said that we may be living in ‘India’s century’. Praising Modi for ‘implementing policies that have modernised India and supported its growth’, the economist and consultant Nouriel Roubini described the country as a ‘vibrant democracy’. But it is becoming harder to evade the reality that, despoiled by a venal, inept and tyrannical regime, ‘India is broken’ – the title of a disturbing new book by the economic historian Ashoka Mody.*

The number of Indians who go to sleep hungry rose from 190,000,000 in 2018 to 350,000,000 in 2022, and malnutrition and malnourishment killed more than two-thirds of the children who died under the age of five last year. Meanwhile, Modi’s cronies have flourished. The Economist estimates that the share of wealth held by billionaires in India that derives from cronyism has risen from 29 per cent to 43 per cent in six years. According to a recent Oxfam report, India’s richest 1 per cent owned more than 40.5 per cent of its total wealth in 2021 – such statistics are more often associated with the notorious oligarchies of Russia and Latin America. The new Indian plutocracy owes its swift ascent to Modi, who audaciously clarified the quid pro quo. Under the ‘electoral bond’ scheme he introduced in 2017, any business or special interest group can give unlimited sums of money to his party and keep the transaction hidden from public scrutiny.

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