In a remarkable revelation that he has termed a “smoking gun,” senior lawyer and Rajya Sabha MP Mahesh Jethmalani has alleged that a businessman with Chinese connections commissioned the report by short-seller Hindenburg Research, which resulted in a significant decline in the shares of Adani Group companies.
Earlier this week, the Securities and Exchange Board of India (SEBI) reported that foreign portfolio investor Kingdon Capital Management LLC and its entities indirectly supported Hindenburg in its actions against Adani Enterprises Ltd. The market regulator’s investigation further revealed that Kotak Mahindra and Hindenburg conspired to take short positions in Adani shares.
The short sale of Adani Group shares orchestrated by Hindenburg Research has garnered significant attention, particularly in light of a recent notice by the Securities and Exchange Board of India (SEBI). The investigation has unveiled a complex network of players and motivations, shedding light on potential financial and geopolitical implications.
Hindenburg Research, known for its critical and often controversial reports on various companies, was engaged by American businessman Mark Kingdon. Kingdon’s objective was to commission a detailed report on the Adani Group, one of India’s largest conglomerates. To execute the trading strategy, Mark Kingdon approached Kotak’s International Investment arm (KMIL). This collaboration led to the establishment of the Kotak India Opportunity Fund (KIOF), designed specifically to trade in Adani shares. This offshore fund played a pivotal role in the subsequent financial maneuvers.
Before the Hindenburg report was prepared, KIOF took significant short positions in Adani shares through the Mauritius route. This strategic move was funded by $40 million from Kingdon’s Master Fund. Notably, the Master Fund has substantial holdings by the Kingdon family, including Mark Kingdon’s wife, Anla Cheng, a prominent figure with significant influence.
The most intriguing revelation is the involvement of Anla Cheng, a Chinese American who is a well-known lobbyist for Chinese interests in the United States. Cheng was the CEO of SupChina, a media initiative with pro-China leanings, which later rebranded to The China Project. This rebranding occurred following accusations of news subversion in favor of China, brought to light by a whistleblower’s sworn statement before the US Congress.
The China Project ultimately shut down amid calls for an investigation into its activities, including alleged links to the Chinese Communist Party. “The China Project was shut down following calls for an investigation into its subversive activities by some US senators, including allegations of links with the Chinese Communist Party,” Jethmalani wrote. “The Chinese Communist Party has a bone to pick with the Adani Group.” This connection is particularly relevant given the contentious relationship between the Chinese government and the Adani Group. Further details reveal a concerted campaign to undermine an Indian multinational that had successfully thwarted China’s global outreach on multiple fronts:
- Sri Lanka: The Adani Group won contracts for coal projects near Jaffna, outbidding Chinese competitors.
- Australia: By scaling down its rail line construction plan in the Galilee Basin, Adani rendered the China Stone project unviable, ensuring it did not serve the Chinese plant.
- Israel: Adani successfully outbid China for the purchase of a port in Haifa, a strategic victory against Chinese economic interests.
The intricate connections between the key players suggest that the short sale of Adani shares was not merely a financial maneuver but also had geopolitical undertones. Anla Cheng’s ties to Chinese interests add a layer of complexity to the narrative, hinting at possible motivations beyond profit.
Mahesh Jethmalani’s view, as expressed, is a serious allegation against Anla Cheng and her husband Mark Kingdon. He claims that Cheng, allegedly a Chinese spy, along with Kingdon, hired Hindenburg Research to produce a damaging report on the Adani Group. This report, according to Jethmalani, was part of a strategy to short-sell Adani shares, leading to significant financial gains for Cheng and Kingdon while causing substantial losses to Indian retail investors.
Jethmalani suggests that this was not merely a financial maneuver but a broader attempt to promote Chinese strategic interests by weakening a strong Indian corporate competitor. He accuses the I.N.D.I alliance of supporting these actions under the pretense of attacking “crony capitalism,” thereby indirectly aiding Chinese state interests.
Jethmalani’s claims point to a broader geopolitical conflict and raise concerns about the influence of foreign interests in Indian markets and politics. These allegations underscore the complexities of global financial maneuvers and their potential impacts on national economies and investors.
The short sale of Adani shares by Hindenburg Research, underpinned by the involvement of Mark Kingdon, Kotak’s International Investment arm, and Anla Cheng, represents a multifaceted issue intertwining finance and geopolitics. The Adani Group’s strategic victories against Chinese interests in Sri Lanka, Australia, and Israel further complicate the narrative. As SEBI continues its investigation, the full extent of these connections and their implications remains to be seen. This case serves as a reminder of the far-reaching impacts that financial strategies can have, influenced by an intricate web of global players and interests.
