Steinhoff slayer Viceroy strikes “financial zombie” Vedanta - top exec Chris Griffith resigns

Key topics:Viceroy calls Vedanta a "financial zombie" with Ponzi-like operationsCEO Chris Griffith resigns amid fraud, debt, and governance allegationsViceroy claims Vedanta drains subsidiaries to prop up unsustainable debt.Sign up for your early morning brew of the BizNews Insider to keep you up to speed with the content that matters. The newsletter will land in your inbox at 5:30am weekdays. Register here.Support South Africa’s bastion of independent journalism, offering balanced insights on investments, business, and the political economy, by joining BizNews Premium. Register here.If you prefer WhatsApp for updates, sign up to the BizNews channel here.The auditorium doors will open for BNIC#2 on 10 September 2025 in Hermanus. For more information and tickets, click here..BizNews Reporter.Viceroy Research, a short-selling firm well known in South Africa for its role in bringing down Steinhoff CEO Markus Jooste, has secured another local scalp in Vedanta CEO Chris Griffith. News emerged today that the South African mining executive has resigned. Viceroy yesterday released a report describing the company as “Ponzi-like” and issued a report claiming widespread irregularities at the Indian company. It refers to Vedanta as a “financial zombie” and says its research “has uncovered material quantitative and qualitative discrepancies.” The short-seller hit the headlines on December 6, 2017, the day after Steinhoff announced accounting irregularities and Markus Jooste’s resignation, when Viceroy released a report titled “Steinhoff – Seeing Through the Smoke and Mirrors.” (click here to access)The 37-page document alleged widespread financial manipulation, including the use of off-balance-sheet entities, inflated profits, and questionable transactions with related parties. It highlighted red flags such as Steinhoff’s complex corporate structure and lack of transparency. The report played a significant role in amplifying the market’s reaction, intensifying investor panic. On December 6 and 7, 2017, Steinhoff shares plummeted over 60%, closing at R15.87 on the JSE, down from R55 before the crisis. By early 2018, the stock had lost over 95% of its value. They were delisted last year, worth virtually nothing. Bloomberg today reports that the company announced internally this week that Chris Griffith, the top executive in Vedanta’s base metals business who joined Vedanta in 2023, left the mining firm in recent days.Aside from being in charge of some of its key assets, like zinc mines in South Africa and neighbouring Namibia, Griffiths was also the president of the firm’s international business. Viceroy called the group structure an “under-appreciated risk to creditors.” Vedanta Resources’ debt burden has long weighed on sentiment around the conglomerate, the result of an acquisition spree that includes stakes in Bharat Aluminium Company and Hindustan Zinc Limited. In a statement, Vedanta dismissed the report as “a malicious combination of selective misinformation and baseless allegations,” and said the short seller had not contacted it. “We remain focused on the business and growth, and request everyone to avoid speculation and unsubstantiated allegations,” a spokesperson said.Viceroy distributed a note yesterday outlining its position. It reads: Viceroy is short the debt stack of Vedanta Resources (VRL PropCo), the heavily indebted parent and majority owner of Vedanta Limited (NSE : VEDL). The entire group structure is financially unsustainable, operationally compromised, and poses a severe, under-appreciated risk to creditors.The core of our investment thesis rests on a simple but critical dynamic: VRL is a “parasite” holding company with no significant operations of its own, propped up entirely by cash extracted from its dying “host”: VEDL.To service its own debt burden, VRL is systematically draining VEDL, forcing the operating company to take on ever-increasing leverage and deplete its cash reserves. This looting erodes the fundamental value of VEDL, which constitutes the primary collateral for VRL’s own creditors..Read more:.BHI 2.0: Joburg broker disappears with R30m in alleged Ponzi scam.Consequently, VRL’s actions to meet its short-term obligations directly impair its creditors’ long-term ability to recover their principal, a situation that resembles a Ponzi scheme where VEDL stakeholders, which include VRL creditors, are the “suckers”.This arrangement has pushed the entire group to the brink of insolvency, propped up only by a continuous cycle of new debt, accounting tricks, and the deferral of massive, undisclosed liabilities. New credit lines serve only to destroy the PropCo’s only collateral, staving immediate insolvency at the expense of any chance of creditors recovering principal. The mechanisms used to maintain the illusion of stability are failing, and a group-wide insolvency event is no longer a distant risk.Our investigation has uncovered material quantitative and qualitative discrepancies in Vedanta group’s, many of which we believe are tantamount to fraud. Of note:Bait and Switch Funding Model – Vedanta Limited promotes ludicrous capital-intensive projects that it cannot afford in order to raise fresh capital. This capital is then paid out to the PropCo to service its debt.Irreconcilable Interest Expenses – Vedanta’s interest expenses vastly exceed its reported note rates, and continues to increase despite paydowns and restructuring.Inflated Asset Values – We evidence inflated asset values across VEDL’s large list of non-performing operating subsidiaries. The debt across these assets vastly exceeds their true value and is cross collateralized among the Group.CAPEX Fraud – Expenses across operating subsidiaries are systematically capitalized, artificially inflating profits and asset values. This is a material misrepresentation.Off-Balance Sheet Items – Billions of dollars of disputed expenses are kept off-balance sheet and undisclosed in financial reports.Governance Failure – Vedanta presents systematic governance failures across management and auditors, including inappropriate auditor choices.To cure its maladies VRL has proposed a demerger of the entities it has rolled up through its decades-long acquisition strategy, which it now claims are more valuable individually.. This fails to address the fundamental cash crunch and will saddle the resultant companies with unsustainable debts from their inception.VRL is a financial zombie being kept alive by transfusions of cash from its subsidiary VEDL. The short thesis is not death by a thousand cuts: Any one of the multitude of risks we outline is sufficient to topple Vedanta’s already fragile, Ponzi-like structure.”You can download the full Viceroy report on Vedanta by clicking here.

Steinhoff slayer Viceroy strikes “financial zombie” Vedanta - top exec Chris Griffith resigns

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