Business partners of Adani family used 'opaque' funds to invest in its stocks: Report

Months after the US-based short seller Hindenburg Research raised questions about its business dealings, India's Adani group is once again in the line of fire. A nonprofit media organisation has said that business partners of the Adani family used 'opaque' funds to invest in its stocks.

The Organised Crime and Corruption Reporting Project (OCCRP), alleged that millions of dollars were invested in some publicly traded stocks of the group via "opaque" Mauritius funds, which "obscured" the involvement of alleged business partners of the Adani family.

The nonprofit media organisation said its investigation found at least two cases where the investors bought and sold Adani stock through such offshore structures. It named two individual investors, Nasser Ali Shaban Ahli and Chang Chung-Ling, who were described as "longtime business partners" of the Adani family. These two, the report said, spent years buying and selling Adani stocks while making considerable profits in the process.

The organisation said there was no evidence that Chang and Ahli's funds came from the Adani family. The source of the funds remains unknown. But documents showed evidence that their trading in Adani stock"was coordinated with the family", with Vinod Adani -- he is the elder brother of billionaire Gautam Adani -- usingthe same Mauritius funds to make his own investments.

Moreover, whether this arrangement is a violation of the Indian securities law is yet to be determined.

It may be argued that Ahli and Chang were acting on behalf of Adani “promoters”, a term used in India to refer to the majority owners of a business holding. If this turns out to be the case, this would mean insiders together own more than the 75 per cent of the shares.

“When the company buys its own shares above 75 percent … it’s not just illegal, but it’s share price manipulation,” Newslaundry quoted Arun Agarwal, an Indian market specialist and transparency advocate, as saying.

In response, the Adani group said the Mauritius funds investigated by OCCRP's reporters had already been named in the Hindenburg report. It added that the allegations were not only "baseless and unsubstantiated" but were "rehashed" from Hindenburg's allegations.

The latest allegations come after Hindenburg Research accused the Adani group of using offshore entities in tax havens such as Mauritius for dubious business dealings, including “brazen stock manipulation” and “accounting fraud”. However, the Adani group had called the short seller's claims misleading and without evidence, adding that it always complied with laws.

Days following the January report, the conglomerate stocks lost $150 billion in market value. The Hindenburg report, particularly, hit Gautam Adani hard. The Ahmedabad-based billionaire, who leads the ports-to-energy conglomerate, was, until January this year, the world's third-richest person.

However, following a recovery in recent months, the Adani group's market cap now remains around $100 billion.

After the uproar over theHindenburg allegations this year, in addition to appointing its expert committee, India’s Supreme Court had directed SEBI to investigate the matter. The SEBI report is due next month.

(With inputs from agencies)