Hindenburg: SC says can’t assume report credible until probed into

“We don’t have to treat what is set out in the Hindenberg report as ipso facto a true state of affairs. That is why we directed SEBI to investigate. Because for us to then accept something which is in a report of an entity, which is not before us, and whose veracity we have no means of testing, would really be unfair. So therefore, we asked SEBI ‘you go and exercise your powers and test what has not come to light, you treat these as revelations or disclosure of allegations and you now exercise your jurisdiction as an adjudicating body’,” the CJI said.

He made these remarks as Advocate Prashant Bhushan, appearing for one of the petitioners, sought to cast doubts on the probe carried out by SEBI in the matter and said they could have looked into a “credible” report published by Hindenburg Research.

“If they had taken into account all this material which is published by Hindenburg and thereafter by papers like Financial Times, The Guardian and OCCRP (Organized Crime and Corruption Reporting Project), the nature of the misdeeds would have been clear to them,” Bhushan told the bench, also comprising Justices J B Pardiwala and Manoj Misra.

But the CJI said, “I don’t think you can ask a statutory regulator to take as the gospel truth something which is filed in a newspaper whether it’s The Guardian or the Financial Times…”

On March 2 this year, the SC set up a six-member expert committee to “investigate if there was a regulatory failure in dealing with the alleged contravention of laws pertaining to the securities market in relation to the Adani Group or other companies”. Separately, the SC asked SEBI to probe if there was a violation of the minimum public shareholding norms in public limited firms; if there was a failure to disclose transactions with related parties; and if there was manipulation of stock prices.

Bhushan sought reconstitution of the committee, alleging conflict of interest on the part of two of its members: former SBI Chairman O P Bhat and Advocate Somasekhar Sundaresan. He submitted that Bhat is chairman of a company called Greenko Energy Holdings which is partnering with Adani Group for a power project and that Sundaresan had appeared for the Adani Group as counsel in 2006.

Taking exception, the CJI said, “Let’s be fair…When you say counsel for the Adani Group, he is not like an in-house counsel. He was appearing as a lawyer. Lawyers appear for a variety of clients. And 2006?… 17 years later?…Surely, there has to be some responsibility about allegations you make about people.”