Indian opposition demonstrators in New Delhi accuse Prime Minister Narendra Modi of remaining silent on the Adani affair for too long.
(Photo: Bloomberg)
In the Wirecard case, short sellers had sounded the alarm years before domestic investigative authorities crooked their first fingers. In the affair surrounding the Indian Adani group of the formerly richest man in Asia, it is again so-called short sellers who raise the suspicion of massive abuses – and thus already triggered a crash in the stock market value of more than 110 billion dollars.
Given the unprecedented level of asset destruction, it is imperative that Indian financial regulators quickly clarify the allegations against the Adani conglomerate. But almost two weeks after the start of the stock market drama, India is threatening to repeat the German mistakes.
The basic structure of the Adani affair and that of the Wirecard scandal are surprisingly similar. In the case of Wirecard, the dubious business partners, through whom hundreds of millions of euros allegedly flowed, came from Singapore, Dubai and the Philippines.
The allegations against Adani focus on letterbox companies and opaque funds from Mauritius, the United Arab Emirates and Cyprus. They hold billions in shares in the Adani Group – and are suspected of being involved in price and balance sheet manipulation on a large scale.
Group founder Gautam Adani dismisses the accusations, calling them a “calculated attack on India’s ambitions”. The nationalist line of defense caught on at least in parts of the population. “#IndiaStandsWithAdani” became one of the most popular hashtags on Twitter in India. This is also reminiscent of the German Wirecard defenders, who preferred to understand the criticism of the group as an attack on the domestic technology location instead of dealing with the allegations.
Does politics have enough distance to objectively assess the affair?
The two cases also have in common the close ties between companies and politics. While Chancellor Angela Merkel supported the company during a state visit to China in 2019, when the Wirecard allegations had long been known, Adani also maintains a good relationship with India’s Prime Minister Narendra Modi. Then as now, the question arises as to whether politicians have enough distance to assess the affair objectively.
In India, the opposition is calling for a parliamentary committee of inquiry into the state’s involvement with the Adani group. It still blocks. The government only asserts that the affair does not pose a major threat to the rest of the economy. But that alone is not enough to regain investor confidence. This can only be achieved with a thorough review. It would be desirable for the country to do this faster than was the case with Wirecard.
More: $110 billion crash becomes India’s major stress test