Adani Group used 'opaque' offshore funds to invest in stocks: report

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) has said in an article.

Citing a review of files from multiple tax havens and internal Adani Group emails, the non-profit 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 Adani Group, controlled by billionaire Gautam Adani who was the third-richest man in the world 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 Adani Group in January of improper business dealings, pushed down shares of Adani Group companies on Thursday and revived corporate governance concerns.

Shares of Adani Enterprises, the flagship company of the group, fell 3.5 percent, while Adani Ports, Adani Power, Adani Green, Adani Total Gas and Adani Wilmar slid between 2 -4.5 percent each.

"If true, it could mean a violation of Indian financial market regulator SEBI laws for publicly listed stocks, that could sway the outcome or push SEBI to dig deeper in its ongoing investigation into the group,” CreditiSights senior research analyst Lakshmanan R. said.

Days following the January report, Adani group stocks lost $150 billion in market value and remain down around $100 billion following 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 Ju ne 2016, Ahli and Chang held free-floating shares of four Adani Group units — Adani Power, Adani Enterprises, Adani Ports, and Adani Transmissions — ranging from 8 percent to about 14 percent stakes in the companies through two Mauritius-based funds, the report said.

At one point, their investment in Adani funds was worth $430 million, the report said. Under Indian laws, every company needs to have 25 percent of its shares held by public shareholders to avoid price manipulation.

While 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 — showed there "is evidence" that their trading in Adani stock "was coordinated with the family."

It said that Ahli and Chang were associated with companies of the group as well as with Vinod Adani, who is a brother of Gautam Adani.

"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," OCCRP said.

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

Denying report

Adani Group denied a new report investigating alleged manipulation of the conglomerate's share prices, accusing its authors of conspiring to drive down its stocks for profit.

Adani said in a Thursday statement that it "categorically" rejected the OCCRP's findings and accused the investigative journalism network of seeking to profit by "driving down our stock prices".

"We have complete faith in the due process of law and remain confident of the quality of our disclosures and corporate governance standards," it said.