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RUBY:

From Schwartz Media, I’m Ruby Jones. This is 7am.

A salacious report is threatening the fortune of one of the world’s richest men: Gautam Adani. He’s best known here in Australia for the controversial Carmichael coal mine - but his empire also spans airlines, apples, and media networks. Now, investors are deserting him, and questions about whether he has been protected by powerful political allies in India are being raised – all because of a single report. So what are the accusations against Adani? Will we hear more now that the floodgates are open? Or will his critics be silenced once again?

Today, associate editor of The Saturday Paper Martin McKenzie-Murray, on Gautam Adani’s rise and how it’s been built on silencing his critics.

It’s Monday, February 13.

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RUBY:

Marty, when you're seeking to understand a person like Gautam Adani who's one of the richest men in the world, ally, friend to the Indian prime minister, owner of a very controversial coal mine here in Australia - Where do you begin your reporting journey?

MARTY:

Good question, Ruby. I spoke with a lot of people this week who have been very closely watching Gautam Adani's spectacular rise and most of them watching it with a certain amount of suspicion. So that includes investigative reporters in India, financiers and market analysts, as well as activists here in Australia. One man who was particularly interesting was veteran Indian investigative reporter, Paranjoy Guha Thakurta. I spoke to him from his home in New Delhi.

Archival Tape – Paranjoy Guha Thakurta:

“How are you, Martin? You are Martin, correct?”

Archival Tape – Martin McKenzie-Murray:

“That's right. Yeah. Thank you”

MARTY:

And what's interesting about Paranjoy is that he's been a journalist for almost half a century. He's debated on live television. He's often deployed as a public affairs commentator. He's written several books, but he's almost vanished from public life in India for the past two and a half years. And that's because there are several, in fact, six defamation lawsuits brought against him by the Adani Group.

Archival Tape – Paranjoy Guha Thakurta:

“You know, what can I do?! I mean, there's this gag order on me. Okay? So, so that that's really ironic, but go ahead, Martin, ask me whatever you wish to”

MARTY:

And there is a very severe gag order on him that has existed for two and a half years. Issued by courts and preventing him from writing or speaking about Gautam Adani or the Adani Group in a way that's contrary to his business interests.

Archival Tape – Paranjoy Guha Thakurta:

“It has a chilling effect on others. So, I mean, it sends a message, look, if you can do it to Mr. A, then we can do it to B and C and D? Yeah.”

MARTY:

So that was a beginning place, speaking to Paranjoy.

RUBY:

And that suggests really a power imbalance and perhaps a resistance to scrutiny?

MARTY:

Definitely. Emphatically, yes. Adani's career is decades old. His rise from kind of provincial businessman to fierce history-making industrialist has made him almost a national myth now. But a part of that is a reputation for aggressive litigation, the use of courts, the use of lawsuits - arguably to silence critics, especially journalists. And Paranjoy is far from the only one to have lost jobs and to have received severe gag orders for his reporting.

RUBY:

Hmm. Well, let's talk a bit about Gautam’s rise to power, because he didn't start life as a rich man, did he? So where did he begin and how did he build his wealth?

Archival Tape – Gautam Adani:

“I was born in a middle class family.”

MARTY:

Yeah, he wasn't born into wealth, but he he had an ambition to acquire it from a pretty young age.

Archival Tape – Gautam Adani:

“And I lived through the 1970s and 80’s, when India had a huge infrastructure deficit...”

MARTY:

So he is from the state of Gujarat, which is on India's western coast and is renowned for its very, very long coastline…

Archival Tape – Unidentified Biographer:

“If others dismissed Mundra as a vast marshy coastline in the wilderness...”

MARTY:

…and it's heavy industrialisation….

Archival Tape – Unidentified Biographer:

“...Adani saw it as a port town that would be the platform to achieve his dreams.”

MARTY:

So Adani dropped out of college, moved to Mumbai to dabble in diamond trading. He didn't find his fortune there. Returned to Gujarat to work in the family business, which is a modest little thing. And they developed plastic wrap like cling wrap. And it seems inauspicious. But that was the kind of the germ or the foundation of his future empire was PVC, polyvinyl chloride, So at that point, it was very much a state regulated economy in India in the 1980s, and there were import licences issued to local manufacturers from the government. And Adani quite astutely bought up all local manufacturers’ licences. He pooled them together and in doing that, he could then en masse or in vast bulk, start importing the PVC and there was a very profitable surplus from that. So he then diversifies into other industrial chemicals. But I think the career really sort of takes off in the mid-nineties when the government sells him massively discounted land and he builds his first port.

Archival Tape – Unidentified Biographer:

“The Mundra port provided a gateway for Adani to enter other businesses.”

MARTY:

…and this is sort of the beginning of his, shall we say, profitable relationship with governments…

Archival Tape – Unidentified Biographer:

“Adani's fourth big mantra for success was to align his business vision with the priorities of the government of the day.”

MARTY:

And so, from there we see him kind of very assiduously court the Chief Minister of his local state, Gujarat…

Archival Tape –Unidentified Biographer:

“Chief Minister Narendra Modi.”

MARTY:

…Narendra modi…

Archival Tape – Unidentified Biographer:

“As Chief Minister, Modi launched a series of programmes to promote massive economic development of the state of Gujarat.”

MARTY:

…who of course in 2014, after more than a decade as Chief Minister of this province, becomes prime minister…

Archival Tape – Newsreader:

“Tsunami! This is a Modi tsunami…”

MARTY:

And the two of them have been inseparable.

RUBY:

And Marty, it seems like once Narendra Modi becomes Prime Minister, things also really take off for Adani because he goes from successful local businessman to this global level of fortune. So can you tell me a bit more about their friendship - about how both men have benefited from it?

MARTY:

So, really, from 2014, we see the Adani Group's expansion explode. Gujarat experiences probably before India generally or wholly, a rapid expansion and development industrially, and it became kind of an Indian success story and emblematic of the aspirational growth that Modi was promising. And so Adani was seen as kind of totemic of this success, Gujarat’s local success. And Modi wanted to be a part of that, to kind of enjoy the reflected success. And from there, the two men’s fates, I think, became kind of braided. Adani enjoyed increasing generosity from governments, And Modi got to kind of bask in the light of this man who had dramatically transformed himself from a small provincial businessman into this kind of titan of industry. And I should say here that from that humble beginning of PVC the colossal size of Adani and its involvement in almost every imaginable aspect of Indian public life is very, very, very difficult to overstate. He's the world's largest builder of new coal mines. He owns mines across India. He has several ports, airports…

Archival Tape – Newsreader:

“In the middle of a sharply declining economy comes news that Adani group has gained control of Mumbai international airport”

MARTY:

…power stations. He's in the… not just the production of energy, but its transmission. He's in food production. He sells enormous, if not the largest quantity of edible oils, apples…

Archival Tape – Advertisement:

“This apple that you see in my hand, this one. It's very special…”

MARTY:

…huge amounts of cement. He's getting into data now and recently acquired NDTV, which was considered one of the last independent TV stations. And so controversial was that acquisition that…

Archival Tape – Newsreader:

“The founders of NDTV Prannoy Roy and Radhika Roy on Tuesday resigned from the board of RRBR Holdings…”

MARTY:

…and several journalists have since followed. His portfolio and wealth of strategic assets is staggering. And of course it's not just in India because the Adani Group owns the controversial Carmichael mine in central Queensland.

Archival Tape – Newsreader:

“Few developments in Australia have aroused such passion as the proposal by the Indian corporate colossus Adani to build
a giant coal mine in Queensland's Galilee Basin.”

Archival Tape – Protestors, shouting:

“Stop Adani, stop stop Adani!”

MARTY:

…and they have interests in Sri Lanka, Israel, Abu Dhabi. Meteoric rise. And so earlier this year, Forbes listed him as the world's third richest man, just behind Jeff Bezos and Elon Musk.

Archival Tape – Interviewer:

“How does it feel to be wealthy? What does money mean to you?”

Archival Tape – Gautam Adani:

“These rankings and numbers do not matter to me. I'm a first generation entrepreneur. I get my thrills. From handling challenges. And the bigger they are, the happier I am.”

RUBY:

Hmm. Okay. So he's a man of limitless ambition, it seems. And he has the wealth and the connections to really back that up. At the pinnacle of his success, how is Gautam Adani spoken about in his home country? Because no doubt there'd be many that see him as this success story?

MARTY:

Yeah…

RUBY:

Really turning a family business into a global empire, becoming one of the richest men in the world. But I imagine there's also a lot of criticism of the ways in which he's done that and of his dominance in India.?

MARTY:

Yeah, it's an interesting question. Obviously, India is a staggeringly large country and so unsurprisingly, views or opinions on Adani and his influence vary. There is a defensiveness about his reputation from some, and I think one of the reasons for that is one - the theoretical romance of his rise from provincial businessman to this kind of world-altering history-making industrialist. There's a certain romance of that to some, but there's also a defensiveness in that Adani, I think quite cleverly, together with the now Prime Minister Modi, have for a long time made this narrative of aggressive Indian growth and Adani's fundamental or inseparable role in that. And both Modi politically and Adani have both wrapped themselves in a pretty ferocious nationalism. So a criticism for some, a criticism of Adani is a criticism of India. Now, there are also others who consider him an oligarch who has practised in cronyism, who has enjoyed very generous, sometimes questionable dispensation from governments. For instance, mines of his enjoy huge special economic zones which liberate him from various taxes and duties, and he has silenced critics for many years. But he's a phenomenally influential and divisive figure.

RUBY:

Hmm Okay. But a couple of weeks ago, things changed for Adani. Tell me about what happened.

MARTY:

Yes, so on January 24, the Hindenburg Research Group released their report on Adani very bluntly, entitled “How the World's Third Richest Man is Pulling the Largest Con in Corporate History”, wonderfully titled. And it's basically an earthquake, a financial earthquake. This is about a $200 billion company. But once the Hindenburg report dropped, the market moved and it moved quickly, halving the value of the company.

RUBY:

We'll be back after this.

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Archival Tape – News reader 1:

“Shares of Adani Group companies continued to slide for a third straight session following a report from short seller Hindenburg that accused the conglomerate of stock manipulation and an accounting fraud scheme.”

Archival Tape – News reader 2:

“More than 100 billion dollars wiped off the value his business empire…”

RUBY:

So, Marty, last month, Hindenburg Research publishes this report in which they make a lot of allegations about the way that Adani Group has been operating. There's an immediate effect of that report for Adani's profits. But can you tell me what's exactly in the report? What are the allegations against the group?

MARTY:

So as the title suggests, the report is 32,000 words. It impressed people with its level of detail, alleges decades of cronyism, stock manipulation, very creative accounting, which basically is manifest as this kind of vast global Cockney shell game. So the moving of monies through opaquely, registered companies and tax havens like the Cayman Islands. One allegation is that these kind of ghostly entities that are actually attached to Adani are meant to seem separate, independent and are boosting share value or suggesting this kind of imaginary demand that's not there. Adani, in response, emphatically rejects any wrongdoing

Archival Tape – Gautam Adani:

“We are shocked that Hindenburg Research has published a report on January 24, 2023, without making any attempt to contact us or verify the factual metrics.”

MARTY:

…and points out the fact that Hindenburg Research Group are in fact short sellers. And so they have this huge conflict of interest and that they are profiting from Adani's plummeting share value.

Archival Tape – Gautam Adani:

“The group has always been in compliance with all laws, regardless of jurisdiction, and maintains the highest standard of corporate governance. Thank you.”

RUBY:

And so what is this likely to mean for Gautam Adani personally and for his business interests? Because a loss of, I believe, it's $74 billion. I mean, that doesn't seem like something that can be easily recovered from. And these types of allegations, they're obviously very serious. So is something like this big enough to signal the end of Adani's global empire, or do you think that this can be recovered from.

MARTY:

I think a lot who have been criticising Anthony for a long time for various things, whether it's corruption, cronyism, environmental degradation, the kind of aggressive displacement of indigenous people in India might be gleefully rubbing their hands, wondering or hoping that this spells the end of Adani Group. But I would and others would counsel against that. I spoke with a very experienced investor and market analyst Tim Buckley. He was a senior equity research analyst at Deutsche Bank, Citigroup, some of the largest investment banks in the world. And he says that it's a staggering, you know, the hit on the markets’ divestment from Adani is staggering. But Gautam Adani still enjoys this preposterous concentration of strategic assets in India airports, ports, mines, sometimes monopolistic assets. He still enjoys a closeness with the Prime Minister and other investors have kept faith. State investors like Abu Dhabi and Israel have kept faith. They don't look like divesting any time soon. And the wiliness and the astuteness of Adani has gone nowhere either. So there's obviously an enormous amount of damage. There'll be various reporting or investigations in various jurisdictions in which Adani has interests. But it's way, way too soon to suggest that this is the beginning of the end for him. The size, the colossal size and intimate involvement in most aspects of public life in India, it's difficult to see that just evaporating.

RUBY:

Hmm. And as you say, a lot of his success is tied to his ability to make connections and the most high profile of those is obviously the Indian Prime Minister, Narendra Modi. So how is that relationship looking now? And has any of the fallout over Adani's business practices reflected on Modi?

MARTY:

Yeah, reflected on Modi and the government generally. So these rumours and whispers have been going for a very, very, very long time. In fact, Adani has previously been arrested for forgery and tax evasion, but he's always managed to get off. And so there are questions here for how serious the government has been and looking at alleged financial malfeasance. And of course, the relationship with Modi is under intense scrutiny in India now. It's been fiercely debated in parliament and it's become a global story. So, you know, uncomfortably, for Modi, the closeness of their relationship, which has existed over a couple of decades, is now under pretty intense scrutiny.

RUBY:

Yeah and when you say the whispers have been going on for a very long time, that is down to the activists and reporters who have raised questions about Adani’s operations, going back years. This must be an interesting moment for them, especially because someone like Paranjoy, who you mentioned earlier, who you’ve been speaking with - he is still gagged today, that legal action against him is still running. So what does someone like him feel watching all this unfold?

MARTY:

Yeah, the journalist Paranjoy, who has lived under severe gag order for two and a half years, also lifted the threat of arrest has previously lost jobs for being critical of Adani. He said he feels vindicated But he remains under enormous stress. This is a very proud, very intelligent, articulate man who has spent his life, his living, has been thinking and talking and debating. So the essence of his profession has been robbed… has been taken from him with this severe gag order. And so with that in mind, I asked him if he had any regrets going up against one of the world's most powerful men. And he said absolutely not…

Archival Tape – Paranjoy Guha Thakurta:

“I'm just doing my job. I mean, I just sort of did what I had to.”

MARTY:

He says this is his job. He has no regrets…

Archival Tape – Paranjoy Guha Thakurta:

“It's my duty to ask questions of those who are in positions of power and authority. And that includes corporate captains.”

MARTY:

…and is feeling quite vindicated at the moment.

RUBY:

Marty, thank you so much for your time.

MARTY:

Thank you.

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RUBY:

Also in the news today…

News Corp Australia will get rid of one in 20 jobs at its newspapers, in a fresh round of job cuts.

The cuts come as News Corp’s global business reported a fall revenue of 7 per cent in the latest quarter.

And…

Two brothers of NSW premier Dominic Perrottet have been called to appear at an inquiry into property development.

Charles and Jean-Claude Perrottet were summoned on Wednesday, but reportedly have ignored the official summons to
give evidence.

I’m Ruby Jones, this is 7am - see you tomorrow.

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