Mumbai: Shares of listed Adani Group companies plummeted up to 2 per cent this morning after the Organized Crime and Corruption Reporting Project (OCCRP), a global network of investigative journalists, claimed that exclusive documents obtained by it and shared with The Guardian and Financial Times showed how hundreds of millions of dollars were invested in publicly traded Adani stock through Mauritius-based “opaque investment funds”.
OCCRP attributed its claims to “files from multiple tax havens, bank records, and internal Adani Group emails”.
The fresh revelations were once again lapped up by India’s opposition parties to nail the ruling Bharatiya Janata Party considering the closeness of Adani Group Chairman Gautam Adani to Prime Minister Narendra Modi. Congress Party leader Rahul Gandhi once again demanded a Joint Parliamentary Committee (JPC) probe into the allegations against the Adani Group. The Opposition had disrupted the Budget Session of Parliament over the Hindenburg report earlier this year.
An Adani Group spokesperson stated on August that these news reports appeared to be “yet another concerted bid by Soros-funded interests supported by a section of the foreign media” to revive the “meritless” Hindenburg report. “In fact, this was anticipated, as was reported by the media last week,” the Adani Group stated.
OCCRP claimed that in at least two cases “the mysterious investors turn out to have widely reported ties to the group’s majority shareholders, the Adani family”. It alleged that the two men, Nasser Ali Shaban Ahli and Chang Chung-Ling, had longtime business ties to the family and have also served as directors and shareholders in Adani Group companies and companies associated with one of the family’s senior members, Vinod Adani (Elder brother of Adani group chairperson Gautam Adani).
According to OCCRP, the documents showed that, through the Mauritius funds, both of them spent years buying and selling Adani stock through offshore structures “that obscured their involvement — and made considerable profits in the process”.
“They also show that the management company in charge of their investments paid a Vinod Adani company to advise them in their investments. The question of whether this arrangement is a violation of the law rests on whether Ahli and Chang should be considered to be acting on behalf of Adani “promoters,” a term used in India to refer to the majority owners of a business holding and its affiliated parties. If so, their stake in the Adani Group would mean that insiders altogether owned more than the 75 per cent allowed by law,” OCCRP claimed and quoted one Arun Agarwal, “an Indian market specialist and transparency advocate”, saying that “When the company buys its own shares above 75 per cent… it’s not just illegal, but it’s share price manipulation”.
The OCCRP pointed out that the allegation against the Adani Group of stock manipulation, levelled in January 2023 by a New York-based short seller Hindenburg, caused Adani stock to plummet, triggered protests, and prompted an investigation by India’s Supreme Court.
“But the expert committee convened by the court was unable to get to the bottom of the scandal, which has serious political implications because of the group’s widely perceived closeness to Prime Minister Narendra Modi and its central role in his plan for developing the country,” it noted.
The Adani Group categorically rejected “these recycled allegations” and stated: “These claims are based on closed cases from a decade ago when the Directorate of Revenue Intelligence (DRI) probed allegations of over-invoicing, transfer of funds abroad, related party transactions and investments through FPIs [Foreign Portfolio Investments]. An independent adjudicating authority and an appellate tribunal had both confirmed that there was no over-valuation and that the transactions were in accordance with applicable law. The matter attained finality in March 2023 when the Hon’ble Supreme Court of India ruled in our favour. Clearly, since there was no over-valuation, there is no relevance or foundation for these allegations on transfer of funds.”
The Adani Group spokesperson further clarified that these FPIs are already part of the investigation by the Securities and Exchange Board of India (SEBI). As per the Expert Committee appointed by the Hon’ble Supreme Court, there is no evidence of any breach of the Minimum Public Shareholding (MPS) requirements or manipulation of stock prices.
It is unfortunate that these publications, which sent us queries, chose not to carry our response in full.
These attempts are aimed at, inter alia, generating profits by driving down our stock prices and these short sellers are under investigation by various authorities. As the Hon’ble Supreme Court and SEBI are overseeing these matters, it is vital to respect the ongoing regulatory process.
We have complete faith in the due process of law and remain confident of the quality of our disclosures and corporate governance standards. In light of these facts, the timing of these news reports is suspicious, mischievous and malicious – and we reject these reports in their entirety.
– global bihari bureau
