Lord Jo Johnson, the younger brother of former British Prime Minister Boris Johnson, has stepped down from a senior role at a global investment bank he is said to have links to to the Adani Empire.
Since June, the former Conservative peer has acted as a director of Elara Capital, a self-proclaimed “full-service investment bank” which was founded in 2002 to “raise funds for Indian corporates through the GDR, FCCB and London AIM market .”
The organization recently became embroiled in the struggles of Indian tycoon Gautam Adani’s business empire. Adani Group was the subject of a 100-page report by short sellers Hindenburg Research last month containing allegations of stock manipulation and accounting fraud by Adani insiders that added more fuel to the sell-off.
According to a report from Financial Times, it is Elara’s asset management arm that first caught the attention of Hindenburg researchers because the majority of its holdings were in Adani Enterprises. The Hindenberg report alleged that Mauritius-based funds managed by Elara were part of a conspiracy to conceal the family’s ownership of listed Adani Group companies, as well as to manipulate their share prices.
In his report, Hindenburg cited two unnamed former Elara traders who claimed that the routing of transactions through Mauritius-based funds was designed to obscure who was ultimately behind them.
Adani Group categorically denied all of Hindenburg’s allegations, adding that Hindenburg’s conduct was “nothing short of a calculated securities fraud” and said the research firm attacked India as a whole in its 443-page rebuttal.
It also categorically denied having any connection with Elara Capital Funds. “Suggestions that they are in any way related parties to the promoters are false,” the Adani Group wrote.
In a statement to Happiness Lord Jo Johnson of Marylebone said: “I joined the board of Elara Capital, an India-focused investment firm based in London, as an independent non-executive director last June in the hope of making a contribution to the UK-India trade and investment relationship that has long I support and co-author a book about her.
“I have been consistently assured by Elara Capital that it is complying with its legal obligations and in good standing with the regulatory authorities. At the same time, I now realize that this is a role that requires greater expertise in specialist areas of financial regulation than I anticipated and I have accordingly resigned from the board.’
Johnson was hailed as a luminary in the technology and education space when he joined the board of Elara Capital. On his appointment, Elara Capital Chairman Raj Bhatt said: “We are honored to have Joe Johnson join our Board. Elara Capital will benefit from Joe’s experience and seek his guidance on investments in interesting growth sectors such as technology and education.”
Johnson is not the only British expert Ellara has managed to attract. Noted economist Lord Meghnad Desai is also a non-executive director at the firm. He said to Financial Times the allegations against Adani are “very vague” but he has approached Bhatt and Mauritius’ financial regulator for further information.
Elara Capital did not immediately respond Of fate request for comment.
What has happened to Adani since the report came out?
Adani Enterprises Ltd. was supposed to do a billion-dollar follow-on public offering, or FPO, on Wednesday, but decided against it at the last minute.
The lead firm said in the statement that it was withdrawing the deal to insulate investors in the offering from potential losses. Adani himself later released a video statement this week, saying it would not be “morally correct” to proceed with the sale given the “volatility” of the market.
The decision came after a drop in the price of the company and its subsidiaries. The collapse accelerated after Bloomberg News reported that Credit Suisse Group AG had stopped accepting bonds of Adani’s group of companies as collateral for margin loans to its private banking clients.
Shares of the company closed on Wednesday at 2,135.35 rupees, or 31% below the bottom of the price range, meaning any investor selling the stock would find themselves with immediate losses. The Adani empire has suffered stock losses of over $100 billion since the publication of the Hindenburg report.
Learn how to navigate and build trust in your business with The Trust Factor, a weekly newsletter that explores what leaders need to succeed. Register here.