The Investigative Reporters Network says it has documents supporting Hindenburg’s claims that Adani Group used offshore tax havens to drive up the stock price.
Millions of dollars were invested in some of India’s Adani Group’s publicly traded shares via “opaque” Mauritius funds that “obscured” the involvement of alleged business partners of the Adani family, a global network of investigative journalists said in a report.
Citing a review of files from multiple tax havens and internal Adani Group emails, the Organized Crime and Corruption Reporting Project (OCCRP) said on Thursday that two individual investors — Nasser Ali Shaaban Ahli of Dubai and Zhang Zhongling of Taiwan — have “long experience in… this field”. Business relationships with the Adani family used such offshore structures to buy and sell Adani shares.
The non-profit organization OCCRP released its report after US-based short-selling firm Hindenburg Research in January accused the Adani Group, which is controlled by billionaire Gautam Adani, of improper business dealings.
Adani, who was the world’s third-richest man before the Hindenburg scandal broke, is said to have close ties with Indian Prime Minister Narendra Modi and his ruling Bharatiya Janata Party (BJP).
Al Jazeera has not independently verified OCCRP’s assertions.
What is the accuser Adani?
At the peak of their investments in June 2016, Ahli and Chang owned free shares in four units of the Adani Group — Adani Power, Adani Companies, Adani Ports, and Adani Transport — ranging from 8 percent to about 14 percent stakes in companies from through two companies. The boxes are located in Mauritius, the OCCRP report said.
At one point, their investments in Adani funds were worth $430 million, she added.
Under Indian laws, every company must have 25% of its shares held by public shareholders to avoid price gouging.
While the OCCRP said there was no evidence that Chang and Ahli’s money for their investments came from the Adani family, its reports and documents — including agreement and company records and email — showed there was “evidence” that their trading in Adani shares “was coordinated with the family.” .
It is widely known that both men – Nasir Ali Shaban Ahli from the United Arab Emirates and Chang Chung Ling from Taiwan – have long-standing relations with a senior member of the Adani family. They were even directors and shareholders of subsidiaries.
— Organized Crime and Corruption Reporting Project (OCCRP@) August 30, 2023
She said that Ahly and Chang are linked to the group companies as well as to Vinod Adani, who is Gautam Adani’s brother.
“The question of whether this arrangement violates the law depends on whether Ahly and Chang should be considered to be acting on behalf of Adani’s ‘promoters’, a term used in India to refer to the majority owners of a company.” OCCRP said.
If so, the OCCRP said, the promoters’ stake in Adani’s holdings would exceed the 75 percent limit for insider ownership.
How did Adani react?
Adani Group said it “categorically” rejects what it called the recycled allegations “in their entirety,” accusing OCCRP of seeking profit by “lowering our stock prices.”
“We have full confidence in the legal due process and remain confident in the quality of our disclosures and corporate governance standards,” the group said in a statement.
“In light of these facts, the timing of these news reports is suspicious, mischievous and malicious.”
In a statement to the OCCRP, the Adani Group said the Mauritian funds investigated by the journalists had already been mentioned in the Hindenburg report and that “the allegations are not only unfounded and unsubstantiated, but are paraphrased from the Hindenburg allegations.”
Meanwhile, the OCCRP report sent shares of Adani Group companies lower on Thursday and revived concerns about corporate governance.
Shares of Adani companies, the flagship company of the group, fell by 3.5 percent, while shares of Adani Ports, Adani Power, Adani Green, Adani Total Gas and Adani Wilmar fell between 2 percent and 4.5 percent each.
“If (the allegations) are true, it could mean a violation of SEBI’s laws regulating the Indian financial market in relation to publicly listed shares. This could affect the outcome or prompt SEBI to dig deeper in its ongoing investigation,” said Lakshmanan R, senior research analyst at CreditiSights. regarding the group.
SEBI is the Securities and Exchange Board of India, which is the government agency that regulates the stock market and protects the interests of investors.
Since the Hindenburg report in January, shares of the Adani Group have lost $150bn of their market value and are still down about $100bn after recovering in recent months after paying down some debt and restoring some investor confidence.
What did Hindenburg say?
In a post on social media platform X, Hindenburg said the OCCRP report “proved” the problems it had reported about offshore funds holding at least 13 percent public equity stakes in several Adani shares through Vinod Adani Partners.
Finally, the loop is closed.
The Financial Times and OCCRP reported that offshore funds holding at least a 13% free float stake in several of Adani’s shares were secretly controlled by Vinod Adani’s associates, concealing the relationship with two groups of books. https://t.co/L4clFVpA2K pic.twitter.com/ofWf6KQK5h
– Hindenburg Research (@HindenburgRes) August 30, 2023
Adani Group called Hindenburg’s claims in January misleading and without evidence and said it always complied with the laws.
The Supreme Court of India has appointed a panel to oversee the SEBI investigation based on the Hindenburg Report. The committee said in May that the regulator had so far “left a vacuum” in investigations of suspected abuse.
Last week, the SEBI said its report was nearing completion and that its investigation into some of the offshore deals is taking time because some of the entities are located in tax haven jurisdictions. She added that the regulatory body “must take appropriate action based on the results of the investigations.”