Australian retirement savings amounting to tens of millions of dollars are in trouble amid a recent scandal involving mining megacorporation Adani Group.
The Indian business has come under fire in recent weeks for fraudulent practices, which has caused its stock to plummet.
But it’s not just Adani’s investors who are taking a hit; major superannuation funds, including those providing for government workers and Commonwealth Bank employees, have also been caught in the crossfire.
These funds were seeking higher returns by investing in emerging markets, but it looks like they’ve bitten off more than they can chew with Adani.
Among those affected are several major superannuation funds, including ones that provide for government workers in Queensland and employees at the Commonwealth Bank (CBA).
Even the Future Fund consisting of approximately $243 billion, which was supposed to boost Australia’s long-term financial position, has invested in two Adani companies that are now worth just a fraction of their original value.
Climate activist group Market Forces has accused the various funds of “failing their members,” as they invested in Adani despite its “unacceptable coal expansion plans”.
The Hindenburg report, which highlighted Adani’s questionable dealings, had been out for years before these investments were made.
However, Market Forces also found that the impact of Adani Group’s troubles on these super funds is limited, though not insignificant.
The diversification of their stock holdings means that the Adani investments are just a small part of their portfolios.
“Any super fund investing in Adani Group companies has failed its members on climate action and due diligence,” Market Forces asset management campaigner Will van de Pol said in a recent report from The Guardian.
“These funds have used members’ money to prop up Adani’s unacceptable coal expansion plans, including the disastrous Carmichael mine, and failed to see glaring investment risks that existed for years before being outlined in the Hindenburg report.”
Market Forces is running a campaign to dissuade Australians from putting their hard-earned cash into companies it believes are harming the planet.
After the campaign’s initial launch, Commonwealth Super Corp told members their retirement savings were invested in Adani Ports. Within a few weeks, the fund confirmed it had divested its $10 million stake in the conglomerate.
“After a successful community campaign convinced 36 of the world’s biggest banks to refuse Adani’s requests for loans, Adani announced late last year that it would “self-fund” its coal mine and rail project,” Market Forces said in a report.
“This means it is entirely possible that Adani will use the capital from its investors to finance the construction of a coal mine that will threaten water supplies, trash the land rights of traditional owners and fuel deadly global warming.”
Adani Group, which operates Australia’s contentious Carmichael coalmine and rail project in Queensland, has been facing intense selling since 24 January, when a report by US investor Hindenburg Research accused the conglomerate of engaging in stock manipulation and accounting fraud.
The allegations have taken a significant toll on the value of Adani Group, with shares in seven of its listed companies shedding roughly US$125 billion (A$182 billion) since the report’s release. This represents well over half of the conglomerate’s overall value.
Despite the damaging allegations, Adani Group has responded by publishing a 413-page rebuttal of the claims, characterising the report as an attack on India.
However, this response has not been able to stop the decline in the company’s value.
Known for short-selling and uncovering corporate wrongdoing, Hindenburg also made the claim that even journalists, politicians, and citizens had been too intimidated to speak out against Adani.
This event caused Adani founder Gautam Adani, formerly Asia’s wealthiest person, to plummet down the global rich-list rankings. Despite the group’s listed entities stabilising, Adani denied the allegations and threatened legal action against Hindenburg.
The company has also taken legal action against environmental activist Ben Pennings in Australia for supposedly causing them millions in losses during his anti-coal mining campaign.
In addition, a subsidiary of Adani filed criminal defamation suits against two journalists from CNBC TV18, who they accused of broadcasting a “grossly malicious, defamatory and false” news report.
Adani maintains that it respects the freedom of the press and has a right to defend itself against defamatory or misleading statements, having previously exercised those rights within the bounds of the law.
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