Now Adani faces OCCRP’s charges of irregularities

Gautam Adani

Rama Krishna Sangem

India’s leading businessman Gautam Adani is in troubles once again. Even as he is fighting Hindenburg report in January this year, another America based investigating media agency – OCCRP (Organised Crime and Corruption Reporting Project) levelled fresh charges against the business tycoon. Adani, however, dismissed these charges as conspiracy by George Soros funded outfits.

Earlier, the US-based short-seller Hindenburg Research put allegations of stock manipulation on the Adani Group, the non-profit media organisation OCCRP published an article laying out some details of the manipulation.

The report came as the Supreme Court is hearing the case concerning the allegations. The Securities and Exchange Board of India (Sebi) has already submitted a report to the court based on its investigation into the charges by Hindenburg.


What are the new allegations?

The report by OCCRP said that “hundreds of millions of dollars” were invested in the Adani Group stocks through opaque investment funds based in Mauritius.

It added that in at least two cases, the investors turned out to be related to the Adani family, who are majority shareholders. In 2017, the stocks held by these two individuals were valued at a whopping $430 million.

The new allegations state that two individuals, Nasser Ali Shaban Ahli from UAE and Chang Chung-Ling from Taiwan, spent years buying and selling Adani stock through offshore structures that obscured their involvement — and made considerable profits in the process.

These investors used two funds, Emerging India Focus Fund (EIFF) and EM Resurgent Fund (EMRF), to trade “large amounts of shares” in four Adani companies between 2013 and 2018. These were: Adani Power, Adani Enterprises, Adani Ports, and Adani Transmissions. Over the years, the stocks were bought at low prices and sold at much higher prices.

Moreover, the money was channelled through four companies, which were either owned or controlled by Ahli or Chang. From these companies, money was sent to a large investment fund in Bermuda called the Global Opportunities Fund (GOF). Later, GOF subscribed to two funds, EIFF and EMRF.


Why is that a problem?

The main reason why the share trade by these two individuals is a problem is that it breaches Indian law. According to the report, Ahli and Chang have long been related to the Adani Group companies, making them insiders and associated with the promoters.

According to the Indian market rules, promoters of a listed company cannot own shares above 75 per cent. This, according to experts, is a way to create artificial scarcity and manipulate stock prices.

In this case, with the stake of Ahli and Chang, the total promoter holding crosses this threshold. If the relation is established, it will be a breach of law and would also corroborate with the findings in the Hindenburg report.

According to OCCRP, Ahli and Chang have served as directors and shareholders in Adani Group companies and companies associated with Vinod Adani.


Role of Vinod Adani

In a 2007 case filed by the Directorate of Revenue Intelligence (DRI), Chang has been described as the director of three Adani companies. Ahli’s name has also been mentioned as related to a trading firm that was involved.

In another 2014 case by DRI, Chang and Ahli have been mentioned as directors of two companies, which were later owned by Vinod Adani, brother of Gautam Adani.

In the Hindenburg report, Chang was also either a director or shareholder in a Singapore company that was listed as a “related party” in a disclosure by an Adani company.


Moreover, the latest findings revealed that Ahli and Chang paid a Vinod Adani company to advise them on their investments. Vinod Adani is Gautam Adani’s brother.


Vinod Adani has recently been acknowledged by the conglomerate as a promoter. So, the allegations point out that Chang and Ahli were, in fact, linked with Vinod Adani, who has been named as a group promoter.


If the links are established, it could mean that the conglomerate breached the 75 per cent holding rule.


Adani Group denies the allegations


The Adani Group On Thursday issued a statement denying the allegations. It said the reports “appear to be yet another concerted bid by Soros-funded interests supported by a section of the foreign media to revive the meritless Hindenburg report”.


“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. 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,” it added.


It also said, “Notably, 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 Supreme Court, there is no evidence of any breach of the Minimum Public Shareholding (MPS) requirements or manipulation of stock prices.”


What is the Hindenburg case?


In January 2023, Hindenburg Research came up with a report accusing the Adani Group of improperly using offshore tax havens and flagging concerns about high debt.

It also alleged that there was “brazen stock manipulation” using offshore shell companies. The report said that Adani family members allegedly cooperated to create offshore shell entities in tax-haven jurisdictions like Mauritius, the UAE, and the Caribbean Islands, generating forged import/export documentation in an apparent effort to generate fake or illegitimate turnover and to siphon money from the listed companies.

Adani Group denied the wrongdoing in a 413-page response. Later, the Supreme Court formed an expert committee to look into the matter. It also directed the Sebi to conduct an enquiry and see if there was any violation of the related party or minimum shareholding rules.


What did Sebi say?

On May 19, the six-member expert committee told the apex court that Sebi has “drawn a blank” in its investigation into alleged violations in money flows from offshore companies.

The committee also said that the markets regulator “suspects wrongdoing” on the ownership of foreign portfolio investors (FPIs), but it could not pinpoint the violations. Also, it added that the regulator has faced a wall as several of the FPIs are located outside its jurisdiction.

Last week, Sebi told the apex court that it had completed the probe in all but two allegations against the Adani Group and is still awaiting information from five tax havens on actual owners behind foreign investors investing in the conglomerate.

It also submitted its final investigation report to the apex court. The hearing on it is expected to take place soon.


What is OCCRP?

Organised Crime and Corruption Reporting Project (OCCRP) is a global NONPROFIT network of investigative journalists with staff on six continents. It was founded in 2006 by veteran journalists Drew Sullivan and Paul Radu and specialises in organised crime and corruption.

Among several stories it broke are the 2013 Magnitsky case, the Russian Laundromat scheme, and Dukanovic and organised crime story. It also worked on the Panama Papers project.


This will rock Parliament once again

The Opposition INDIA front is expected to raise OCCRP’s allegations against Adani in the coming Parliament session from September 18-22.

Rama Krishna Sangem

Ramakrishna chief editor of excel India online magazine and website

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