The mutually beneficial relationship between the world’s richest tycoons and our most powerful political leaders is under intense scrutiny in the spectacular fallout of the Adani empire’s alleged corporate con, but whether it’s “brazen cronyism” or “nation-building” depends on who you ask.
The Securities and Exchange Board of India (SEBI), India’s markets regulator, last week confirmed it was delving into the explosive accusations levelled against Adani — including alleged stock manipulation and fraud — in a damning January report from short-seller Hindenburg Research.
The report ricocheted through global markets and trashed Adani on a historic scale. More than US$100 billion in value disappeared overnight, despite eponymous CEO Gautam Adani’s assurances the allegations were false. About 50% of Adani stock value has disappeared into thin air since.
But it was a handful of carefully worded sentences in the report that have renewed questions swirling about Indian PM Narendra Modi’s apparent ties with the Indian tycoon, whose meteoric rise from high school dropout to billionaire was a respected success story for the country.
“Adani has pulled off this gargantuan feat with the help of enablers in government and a cottage industry of international companies that facilitate these activities,” the Hindenburg report alleged.
“These issues of corruption permeate multiple layers of government.”
Modi’s old friend
Just how deep the ties run between Modi and Adani is a mystery, but the pair go way back. Both grew up in India’s western state of Gujarat, where Modi became chief minister in 2001 just months before the torrid anti-Muslim pogrom — two months of violent, bloody retaliation in the region from Hindu mobs.
In the fallout, Adani assembled a group of local businessmen to create the Resurgent Group of Gujarat, a platform that denounced those pointing the finger at the newly-minted Modi and threw support behind the Hindu Hriday Samrat, or the Emperor of Hindu Hearts, as Modi became known.
Why the fascination with Modi? It’s believed the rising politician caught Adani’s eye thanks to his $7.2 trillion visionary growth dream for India, something the astute businessman shared. After just three terms as chief minister, Modi took Adani’s private jet to be sworn in as India’s prime minister.
It’s been a pretty good decade for Adani since. The Adani empire has taken control of a dozen ports where a third of India’s freight passes through, seven airports that control a quarter of all airline passenger movements, and warehouses that control a third of the country’s grain, as Indian political activist Arundhati Roy wrote in The Guardian.
“In the nine years of Modi’s tenure, Adani’s wealth grew from $8 billion [A$11.6 billion] to $137 billion [A$199 billion]. In 2022 alone, he made $72 billion [A$104.8 billion], which is more than the combined earnings of the world’s next nine billionaires put together,” she wrote.
And the Adani empire’s diversification into airports, maritime, coal, renewable energy and most recently media has been made smoother by oddly serendipitous tax and regulation changes that have allowed Adani’s dream of “nation building” to manifest — and fast.
In 2018, for instance, Adani snapped up six airports in a mass privatisation following the easing of competition laws that allowed anyone, not just those who knew the sector well, to bid. Just like that, the tycoon became one of the country’s biggest private airport operators.
At the time, Kerala state finance minister Thomas Isaac said Adani’s clean sweep, including a 50-year lease on the bustling Trivandrum International Airport, was an act of “brazen cronyism” that proved the power of politically connected billionaires. The government retorted that the bid process was transparently done.
Many speculate it was Adani’s influence that sparked Modi’s surprising move to commit India to net zero by 2070 at Glasgow’s COP26 — two decades behind the mid-century goal many, including Australia, are working towards, but something that impressed his compatriots.
It was one of five climate pledges, with further promises to ensure half of India’s energy mix was renewable by 2030, and to reduce carbon emissions by one billion tonnes by the same date. Leading climate think tank the Council on Energy, Environment and Water declared it “real climate action” from Modi.
Silence reigns supreme over ties
But any attempt to scrutinise Modi over his apparent ties to Adani have been swiftly shut down. When the progressive Congress Party leader Rahul Gandhi stood up in Parliament with photos of Modi and Adani on a plane together, his claims of preferential treatment between the pair were expunged from the parliamentary record.
Ahead of the 2023 Munich Security Conference last week, billionaire investor George Soros copped backlash from both sides of India’s government after saying Modi and Adani are “close allies” and that their fates — good or bad — is intertwined.
“Modi is silent on the subject, but he will have to answer questions from foreign investors and in Parliament,” Soros said.
“This will significantly weaken Modi’s stranglehold on India’s federal government and open the door to push for much-needed institutional reforms. I may be naïve, but I expect a democratic revival in India.”
Home Minister Amit Shah declared Modi’s government had “nothing to hide or be afraid of” in Adani’s spectacular downfall. About 10% of the infrastructure projects in India’s pipeline are under the purview of Adani, plus an earmarked $100 billion in India’s green energy sector.
Climate Energy Finance director Tim Buckley told Crikey it’s clear the “pervasive corrupting influence of coal [is] permeating through all government decisions” as India eyes the lucrative and powerful status of a global superpower that some predict it’s headed for.
“Adani has been walking both sides of the road,” Buckley declared, “leveraging crony capitalism for everything he can milk from it.”
