Adani associates hid purchases of group shares, report says

Millions of dollars were invested in some publicly traded stocks of India’s Adani Group via “opaque” Mauritius funds that “obscured” involvement of alleged business partners of the Adani family, the Organised Crime and Corruption Reporting Project (OCCRP) said on Thursday.

Citing a review of files from multiple tax havens and internal Adani Group emails, the nonprofit global network of investigative journalists said two individual investors — Nasser Ali Shaban Ahli from Dubai and Chang Chung-Ling from Taiwan — with “longtime business ties” to the Adani family used such offshore structures to buy and sell Adani shares.

The assertions couldn’t be independently verified.

Ahli and Chang didn’t respond to requests seeking comment. The Adani Group, controlled by billionaire Gautam Adani who was the third-richest person before the scandal erupted in January, said it categorically rejected what it called recycled allegations “in their entirety”.

The OCCRP report, which comes after US-based short-seller Hindenburg Research accused the group in January of improper business dealings, pushed shares of group companies lower on Thursday and revived corporate governance concerns.

Flagship Adani Enterprises fell 3.5%, while Adani Ports, Adani Power, Adani Green, Adani Total Gas and Adani Wilmar slid between 2%-4.5% each.

“If true, it could mean a violation of Indian financial market regulator SEBI’s [the Securities and Exchange Board of India] laws for publicly listed stocks, that could sway the outcome or push SEBI to dig deeper in its investigation into the group,” CreditiSights senior research analyst Lakshmanan R. said.

SEBI didn’t respond to requests for comment.

Adani group stocks lost $150bn in market value after the January report and remain about $100bn lower despite a recovery in recent months after it repaid some debt and regained some investor confidence.

Family ties

Between them, at the peak of their investment in June 2016, Ahli and Chang held stakes ranging from 8% to about 14% of four Adani Group units — Adani Power, Adani Enterprises, Adani Ports, and Adani Transmissions — through two Mauritius-based funds, the report said.

At one point, their investment in Adani funds was worth $430m, the report said.

Under Indian laws, a company must to have 25% of its shares held by public shareholders to avoid price manipulation.

While the OCCRP said there was no evidence Chang and Ahli’s money for their investments came from the Adani family, its reporting and documents — including an agreement, corporate records and an email — shows there “is evidence” that their trading in Adani stock “was co-ordinated with the family”.

It said that Ahli and Chang were associated with companies of the group as well as with Vinod Adani, a brother of Gautam Adani. Vinod Adani didn’t respond to a request for comment.

“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,” the OCCRP said.

If so, the stake of promoters in Adani holdings would exceed the 75% limit allowed for insider ownership, it added.

Hindenburg ‘validated’

Hindenburg said on social media platform X on Thursday that the OCCRP report “validated” issues it flagged regarding the offshore funds owning at least 13% of the public float in multiple Adani stocks through “associates of Vinod Adani”.

Adani Group says Hindenburg's January claims are misleading and without evidence, adding thar it always complied with laws.

In a statement to OCCRP, Adani Group said the Mauritius funds investigated by reporters had already been named in the Hindenburg report, and the “allegations are not only baseless and unsubstantiated but are rehashed from Hindenburg's allegations”.

India’s Supreme Court has appointed a panel to oversee an SEBI probe based on the Hindenburg report. The panel in May said the regulator had so far “drawn a blank”.

Last week, SEBI said its report was nearing completion and its investigation on some offshore deals was taking time because several entities were located in tax haven jurisdictions. The regulator “shall take appropriate action based on outcome of the investigations”, it said.

SEBI also said it examined one Adani Group transaction for violation of minimum public float rules, an issue the OCCRP report also flagged.

In an interview with a reporter from the UK-based Guardian, OCCRP said Chang said he knew nothing about any secret purchases of Adani stock. He asked why journalists weren’t interested in his other investments, adding: “We are a simple business.” 

Reuters