New Delhi: The Organised Crime and Corruption Reporting Project (OCCRP), an international network of investigative journalists, has released a report with details suggesting that individuals ‘closely associated’ with the Adani family indulged in stock price manipulation amounting to violation of India’s rules on stock holdings by promoters of a company — a significant development in the ongoing Adani-Hindenburg saga.
The Adani Group has, however, said in a statement that it “reject(s) these reports in their entirety” and termed them “recycled allegations” — a reference to the report released by US-based short seller Hindenburg Research in February this year, in which it accused the conglomerate of “brazen stock manipulation and accounting fraud”.
Significantly, while the Hindenburg report did not name investors in Adani companies who might have aided the alleged violation of rules, the OCCRP report published Thursday provides details of at least two such investors who it claimed were related to the Adani Group and allegedly invested in Adani companies in contravention of the rules.
If true, the association of these investors with promoters of Adani companies would mean that the Adani Group broke rules set by India’s markets regulator Securities and Exchange Board of India (SEBI) regarding stock price manipulation and minimum public shareholding norms.
Soon after OCCRP’s report was made public, social media erupted with insinuations about one of the network’s donors — billionaire George Soros — and his ‘anti-India activities’. Even the Adani Group in its statement termed the OCCRP’s claims as “another concerted bid by Soros-funded interests” to “revive the meritless Hindenburg report”.
Drew Sullivan, co-founder of the OCCRP took to X (formerly Twitter), in an attempt to dispel these notions, said that OCCRP signs agreements with all donors to ensure that its editors have “total editorial control”.
It is pertinent to note that a Supreme Court-appointed expert committee in May this year found that Adani Group companies had not broken any laws or rules with regard to some related-party transactions in the past, as the law at the time did not deem them illegal.
SEBI is also conducting its own investigation into the Adani Group, and reportedly told the apex court on 25 August that it has probed 24 transactions involving Adani companies, of which ’22 are final in nature’, and that it would take ‘appropriate action’ based on the outcome of the investigations.
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‘Mysterious investors’ & free-floating shares
The OCCRP said it had obtained exclusive documents including “files from multiple tax havens, bank records, and internal Adani Group emails”, which it shared with The Guardian and Financial Times — both of which also published separate reports on the matter.
“These documents, which have been corroborated by people with direct knowledge of the Adani Group’s business and public records from multiple countries, show how hundreds of millions of dollars were invested in publicly traded Adani stock through opaque investment funds based in the island nation of Mauritius,” OCCRP said in its report.
“In at least two cases — representing Adani stock holdings that at one point reached $430 million — the mysterious investors turn out to have widely reported ties to the group’s majority shareholders, the Adani family,” the report added.
The two investors named in the report are Nasser Ali Shaban Ahli from the UAE and Chang Chung-Ling from Taiwan. OCCRP says that these two businessmen “have longtime business ties to the (Adani) family” and have also served as directors and shareholders in Adani Group companies and companies associated with group chairperson Gautam Adani’s elder brother Vinod Adani.
Investments in the Adani companies, said the OCCRP report, were made by Lingo Investment Ltd (in the British Virgin Islands), owned by Chang, Gulf Arij Trading FZE (in the UAE), owned by Ahli, Mid East Ocean Trade (in Mauritius), of which Ahli was the beneficial owner, and Gulf Asia Trade & Investment Ltd (in the British Virgin Islands), of which Ahli was the “controlling person”.
The investments in the form of purchase of shares available to the public were said to have taken place between 2013 and 2018 in four Adani companies.
“Between them, at the peak of their investment in June 2016, the two funds held free-floating shares of four Adani Group companies ranging from 8 to nearly 14 percent: Adani Power, Adani Enterprises, Adani Ports, and Adani Transmissions,” the report said.
Adani Enterprises, the flagship company of the Group, saw its stock price fall 3.7 percent by the close of trading hours Thursday — the biggest drop of the four companies named in the OCCRP report. This was followed by Adani Ports & SEZ (-3.54 per cent), Adani Power (-3.18 per cent), and Adani Transmission (renamed Adani Energy Solutions in July this year), which saw its stock price falling 3.15 per cent.
‘Link’ to Adani family, basis for ‘wrongdoing’
Simply establishing that these investments took place is not enough to definitively prove any wrongdoing, but the OCCRP report also said that both Chang and Ahli were closely associated with the Adani family, which could amount to a potential violation of SEBI’s rules.
SEBI’s Minimum Public Shareholding rules say that a publicly listed company must have at least 25 percent of its shares held by the public — and not by the promoter of the company — in order to be eligible to stay listed. That is, if a listed company’s promoters own more than 75 percent of the stock of that company, then the company would be delisted.
If OCCRP’s allegations — that Chang and Ahli were closely associated with the Adani family — turn out to be true, this would mean that ‘insiders’ — promoters or their associates — owned more than 75 percent of Adani Power, Adani Enterprises, Adani Ports, and Adani Transmissions.
Further, by illegally controlling the supply of available stocks, such manipulation would also have resulted in an increase of the companies’ stock prices due to artificial scarcity of stocks.
OCCRP says there is a lot of publicly available information tying the two businessmen to the Adani Group.
“Chang and Ahli’s connections to the Adani family have been widely reported over the years,” the report said. “The men were linked to the family in two separate government investigations into alleged wrongdoing by the Adani Group. Both cases were eventually dismissed,” it added.
The first case pertained to a 2007 investigation by the Directorate of Revenue Intelligence (DRI) into an allegedly illegal diamond trading scheme. According to OCCRP, a DRI report named Chang as the director of three Adani companies involved in the alleged scheme, while Ahli allegedly “represented a trading firm that was also involved”.
“As part of the case, it was revealed that Chang shared a Singapore residential address with Vinod Adani, the low-profile older brother of the Adani Group’s chairman, Gautam Adani,” OCCRP said.
The second case was to do with an alleged over-invoicing scam that came to light through a separate DRI probe in 2014.
According to OCCRP, the DRI had at the time claimed that Adani companies were “illegally funnelling money out of India by overpaying their own foreign subsidiary by as much as $1 billion for imported power generation equipment”.
“Here, too, Chang and Ahli’s names appeared,” OCCRP said, adding that at separate times, “the two men were directors of two companies later owned by Vinod Adani that handled the proceeds from the scheme, one in the UAE and one in Mauritius”.
While OCCRP says it has no evidence to establish that funds allegedly utilised by Chang and Ahli for their Adani Group investments came from the Adani family — since the source of the funds is unknown — it did claim that it had documents showing that Vinod Adani “used one of the same Mauritius funds to make his own investments”.
‘Timing suspicious & malicious’: Adani Group
The Adani Group, however, said these past cases were closed by investigating agencies.
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 added.
“The matter attained finality in March 2023 when the Hon’ble Supreme Court of India ruled in our favour,” read the statement by the Adani Group Thursday.
It added, “Clearly, since there was no over-valuation, there is no relevance or foundation for these allegations on transfer of funds.”
The response also mentioned that SEBI is probing the matter and that the SC-appointed expert committee found no evidence of any breach of minimum public shareholding norms or stock price manipulation.
“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,” read the statement. It added that since the Supreme Court and SEBI are overseeing the matter, it is vital to respect the ongoing regulatory process.
“In light of these facts, the timing of these news reports is suspicious, mischievous and malicious — and we reject these reports in their entirety,” it added.
(Edited by Amrtansh Arora)
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