India's Adani crisis marks its first political the UK

A former British Conservative minister quit the board of a firm linked to Adani and its failed FPO
Jo Johnson in 2018
Jo Johnson in 2018
Photo: Henry Nicholls (Reuters)
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The unfolding crisis for India’s Adani group has claimed its first political casualty. The Financial Times reports that former UK Conservative minister Joseph (Jo) Edmund Johnson resigned from the board of a London-based investment bank associated with the troubled business empire.

Johnson, the younger brother of former UK prime minister Boris Johnson, was a member of British parliament from 2010 to 2019. He has occupied, among other positions, the office of the minister of state for universities, science, research and innovation, minister for London, and minister of state for transport.

On Feb. 1, he reportedly quit the board of Elara Capital, a subsidiary of which reportedly was one of the underwriters of the mega share sale of Adani Enterprises. The follow-on public offer (FPO) was abruptly canceled late yesterday night after key Adani group stocks tumbled following the damning allegations made by Hindenburg Research on Jan. 24.

A former investment banker, Jo Johnson had joined Elara Capital’s board of directors in June. This is the second time he has quit a position at a financial firm recently. He resigned from Binance, the world’s largest cryptocurrency exchange, in December 2022.

The Adani group, led by 60-year-old Gautam Adani, who is closely associated with Indian prime minister Narendra Modi, has denied all wrongdoing.

How is Elara Capital connected to Adani?

Hindenburg’s report had alleged that Elara Capital India, a subsidiary of the UK firm, had helped the Adani group manipulate the share prices of its companies and had been party to large-scale accounting fraud by the conglomerate. It dubbed Elara Capital one of Adani’s “stock parking entities” meant to stay off the radar of Indian authorities.

The other underwriter, Indian brokerage firm Monarch Networth Capital, is allegedly partially owned by Adani Properties, according to Hindenburg.

A Forbes report published on Feb. 1 suggested that both Elara and Monarch may have bought into the Adani FPO, too.

Indian opposition is furious but the government is silent

The opposition in India has been demanding answers from the Modi government. Both houses of Indian parliament were today adjourned without transacting any business after opposition leaders sought a joint parliamentary probe into the matter.

They accused the government of forcing India’s premier life insurer and its biggest state-run bank to invest in Adani’s stocks, thereby “endangering the savings” of millions of Indians. The Indian government has remained tight-lipped on the matter thus far.

Modi has frequently been accused of cozy ties with Adani. Shortly before he assumed the prime minister’s office, he was often photographed flying on Adani’s private plane.

Adani himself has, however, denied receiving any help from the prime minister in his business’s success over the past four decades.