- Monday, March 27, 2023
By: Chandrashekar Bhat
INDIA is possibly facing an Enron moment, former US treasury secretary Larry Summers said, likening the crisis in Adani Group to the accounting scandal that exposed the US energy major in 2001.
“We haven’t talked about it on the show, but there’s been a kind of possible Enron moment in India,” he said during Bloomberg’s Wall Street Week programme last week.
Though the former Harvard University president did not name Adani, he was referring to the crisis that the apples-to-airport conglomerate is facing following an explosive report by US short-seller Hindenburg Research.
“And I imagine with India emerging as the world’s largest country, and the (G20) meeting taking place in India, there’s going to be a lot of curiosity from all present, about how that’s gonna to play through and what if any larger systemic implications that’s gonna have for India,” Summers said.
The comparison was to Enron Corporation shares plummeting in 2001 following the revelation that the company inflated revenues and hid trading losses.
Adani Group companies too have seen a rout in value totalling over Rs 11 trillion (£110 billion) since Hindenburg released a report on January 24.
Hindenburg accused Adani Group of “brazen stock manipulation and accounting fraud” and using several offshore shell companies to inflate stock prices.
The group has denied the allegations, calling them “malicious”, “baseless” and a “calculated attack on India”.
Its founder chairman Gautam Adani, a first-generation entrepreneur, has lost nearly $78 bn (£64.89 bn) in net worth and slipped to 29th rank on the World Billionaire Index from being Asia’s richest and the world’s third most wealthy businessman, in less than a month.
His wealth has shrunk from about $120 bn (£100 bn) to $42.7 bn (£35.52 bn).
Summers made the comments while referring to the meetings of G20 that India is hosting this year. The first meeting of G20 finance ministers and central bank governors (FMCBG) under the G20 Indian Presidency is to begin in Bengaluru on Friday (24).
“I hope we’re gonna see continued good work along the lines of very powerful calls that (US treasury secretary) Janet Yellen has made for World Bank reform,” he said.
“I hope we’re going to see some progress on the debt issue.”
He said there is a need for careful thinking about funding, the ongoing economic challenges and the ultimate reconstruction in Ukraine.
“And I think this issue of the global economy where there’s substantial inflationary pressure, and the breaks are having very uneven effects and how that’s going to play out is going to be an important area that the ministers and governments are going to have to discuss,” he said.
(PTI)
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