Adani family secretly invested in own shares, alleges OCCRP; company denies

New Delhi: Billionaire Gautam Adani's group was on Thursday hit by fresh allegations of associates of the promoter family using Mauritius-based 'opaque' investment funds to secretly invest hundreds of millions of dollars to fuel the spectacular rise in group stocks from 2013 to 2018, a charge the conglomerate denied vehemently.

The Organised Crime and Corruption Reporting Project (OCCRP) said documents obtained by it revealed details of a complex offshore operation in two Mauritius-based funds managed by the partners of the promoter family to support prices of shares of group companies from 2013 to 2018 - a period during which the ports-to-energy conglomerate saw meteoric rise to become India's largest and most powerful businesses.

OCCRP said two close associates of Vinod Adani -- the elder brother of group founder, and chairman Gautam Adani -- are sole beneficiaries of Mauritius-based companies through which the money appeared to flow.

Nasser Ali Shaban Ahli from the United Arab Emirates and Chang Chung-Ling from Taiwan spent years trading hundreds of millions of dollars worth of Adani group stock through two Mauritius-based funds that were overseen by a Dubai-based company run by a known employee of Vinod Adani.

Market regulator SEBI had been handed evidence in early 2014 of alleged suspicious stock market activity by the Adani Group, OCCRP said citing a letter.

U K Sinha, who headed the Securities and Exchange Board of India (SEBI) in 2014, is now a director and chairperson of Adani-owned news broadcaster NDTV.

The fresh broadside, which comes months after US short-selling firm Hindenburg Research published an explosive report in January that accused Adani Group of running the "largest con in corporate history", sent all 10 listed Adani stocks down.

Shares of flagship Adani Enterprises Ltd closed 3.72 per cent lower after dipping as much as 5.2 per cent. Other group stocks closed 2-3.5 per cent lower.

Hindenburg had alleged corporate fraud and stock price manipulation at the conglomerate and raised questions on Vinod Adani's role. The Group had denied Hindenburg allegations, which wiped close to USD 150 billion in the market value of the group at its lowest point and cost Gautam Adani his prime spot on the world rich list, and had stated that Vinod Adani has "no role in the day to day affairs" of the company.

On the OCCRP allegations, the Group on Thursday termed them as "recycled allegations" and called them "yet another concerted bid by (George) Soros-funded interests supported by a section of the foreign media to revive the meritless Hindenburg report".

On the allegation of about USD 1 billion of over-invoicing scam money being routed to the two Mauritius funds, it said, "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, it said, adding the matter attained finality in March 2023 when the Supreme Court of India ruled in the group's favour.

"Clearly, since there was no over-valuation, there is no relevance or foundation for these allegations on transfer of funds," it said.

Opposition parties, which stalled proceedings in Parliament for nearly one full session when the Hindenburg allegations first came out, were quick to latch on to the OCCRP to attack the government and Adani group.

Congress general secretary Jairam Ramesh questioned the role of SEBI in investigating the role of shell companies linked to the Adani Group.

"Despite the Modi government's best efforts, the truth will not stay suppressed forever. However, the full story about the flow of Benami funds into the Adani Group, how foreign citizens came to play a role in critical national infrastructure and how PM (Narendra) Modi 'violated rules, regulations and norms to enrich his close friends' can only be revealed by a JPC," he said.

CPI(M) charged that the links of the Gujarat-based business conglomerate with Modi have ensured no action against it.

The documents show that, through the Mauritius funds, they "spent years buying and selling Adani stock through offshore structures that obscured their involvement - and made considerable profits in the process," the OCCRP said. "They also show that the management company in charge of their investment paid a Vinod Adani company to advise them in their investments."

The trove of documents lays out a complex web of companies that date back to 2010, when Chang Chung-Ling and Nasser Ali Shaban Ahli, who have both been directors of Adani-linked companies, began setting up offshore shell companies in Mauritius, the British Virgin Islands and the United Arab Emirates.

Four offshore companies established by them sent hundreds of millions of dollars into a large investment fund in Bermuda called Global Opportunities Fund (GOF), with those monies invested in the Indian stock market from 2013 onwards.

Another layer of opacity was introduced as the money from the duo's offshore companies flowed from GOF into two funds to which GOF subscribed: Emerging India Focus Funds (EIFF) and EM Resurgent Fund (EMRF).

These funds then appear to have spent years acquiring shares in four Adani-listed companies -- Adani Enterprises, Adani Ports and Special Economic Zone, Adani Power and Adani Transmission.

The foreign portfolio investors named in the OCCRP report "are already part of the investigation by the Securities and Exchange Board of India (SEBI)", Adani Group said. "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."

"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 Supreme Court and SEBI are overseeing these matters, it is vital to respect the ongoing regulatory process," it said. "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."

PTI had on August 24 reported that the Soros-funded organisation, which calls itself an investigative reporting platform formed by 24 non-profit investigative centres, spread across Europe, Africa, Asia and Latin America, is planning the publication of fresh allegations against a top Indian corporate.

Separately, 360 ONE Asset Management (Mauritius) Ltd said it is the investment manager for Emerging India Focus Fund and EM Resurgent Fund.

Both funds "are fully compliant broad-based funds registered with Financial Services Commission, Mauritius," it said in an exchange filing. "In neither of these two funds, the Adani group or any of the individuals mentioned in the (OCCRP) article, are investors. These funds as on date have zero investments in any of the shares of the Adani Group." It went on to state that in the past among many other portfolio investments; the funds have had investments in shares of Adani Group companies; all of which were sold in 2018.

The investments by Chang and Ahli raise a stink of stock price manipulation. Also questions were raised if the funds they controlled should be classified as promoter group, which would potentially lead to a breach of listing regulations.

The rules provide that 25 per cent of a company's shares must be kept 'free float' or available for public trade on the stock exchange – while 75 per cent can be held by promoters. Vinod Adani has recently been acknowledged by the conglomerate as a promoter and so holding of funds controlled by him should be classified as a promoter group, OCCRP alluded to.

OCCRP asked if Ahli and Chang should be considered to be acting on behalf of Adani promoters. "If so, their stake in the Adani Group would mean that insiders altogether owned more than the 75 per cent allowed by law," it said, adding this violated Indian listing law.

The paper trail that links Ahli and Chang to Vinod Adani, and leads them all to a Bermuda fund provided by 360 ONE, can be traced back to Dubai in July 2009.

It went on to state that there was no evidence of Chang and Ahli's money for their investments coming from the Adani family, but said its investigation showed there "is evidence" that their trading in Adani stock "was coordinated with the family".

"The Adani Group's rise has been staggering, growing from under USD 8 billion in market capitalisation in September 2013 -- the year before Modi became prime minister -- to USD 260 billion last year," it said.

The conglomerate is active in a dizzying array of fields, including transportation and logistics, natural gas distribution, coal trade and production, power generation and transmission, road construction, data centres, and real estate.