Hindenburg 2.0 | ‘Recycled allegations’: Adani denies ‘mysterious investors’ report

Partners of the Adani family invested hundreds of millions of dollars in publicly traded Adani Group stocks through Mauritius-based “opaque” investment funds, the Organised Crime and Corruption Reporting Project (OCCRP) has alleged.

The conglomerate on Thursday (August 31) morning denied all allegations even as shares of its listed companies took a tumble a day after the non-profit released the details. “We categorically reject these recycled allegations. These news reports appear to be yet another concerted bid by Soros-funded interests supported by a section of the foreign media to revive the meritless Hindenburg report,” the group said in a detailed media statement.

The latest controversy comes even as the one over the report by US-based short seller Hindenburg Research refuses to die down despite Adani Group denying all allegations. Hindenburg accused the conglomerate of accounting fraud, stock price manipulation, and improper use of tax havens. The controversy wiped off close to $150 billion in value of Adani Group stocks.

The allegations

The fresh allegations come from an organisation funded by the likes of George Soros and Rockefeller Brothers Fund. Citing review of files from multiple tax havens and internal Adani Group emails, OCCRP has said its investigation found at least two cases where the “mysterious” investors bought and sold Adani stock through such offshore structures.

The two men, Nasser Ali Shaban Ahli and Chang Chung-Ling, who, OCCRO claims, have long-time business ties to the Adani family and have also served as directors and shareholders in group companies and firms associated with Gautam Adani’s elder brother, Vinod Adani, “spent years buying and selling Adani stock through offshore structures that obscured their involvement — and made considerable profits in the process.”

The documents “show that the management company in charge of their investments paid a Vinod Adani company to advise them in their investment,” it alleged.

OCCRP asked if Ahli and Chang should be considered to be acting on behalf of Adani promoters. “If so, their stake in the Adani Group would mean that insiders altogether owned more than the 75 percent allowed by law,” it said, adding this violated Indian listing law.

It went on to state that there was no evidence that Chang and Ahli’s money for their investments came from the Adani family, but said its investigation showed there “is evidence” that their trading in Adani stock “was coordinated with the family”.

“Rehashed from Hindenburg”

Adani Group stated to OCCRP that the Mauritius funds in question had already been named in the Hindenburg report and the “allegations are not only baseless and unsubstantiated but are rehashed from Hindenburg’s allegations”.

“It is categorically stated that all the Adani Group’s publicly listed entities are in compliance with all applicable laws including the regulation relating to public share holdings,” it told the OCCRP.

In the media statement released on Thursday, the group said, “These claims are based on closed cases from a decade ago when the Directorate of Revenue Intelligence (DRI) probed allegations of over invoicing, transfer of funds abroad, related party transactions and investments through FPIs. 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. The matter attained finality in March 2023 when the Hon'ble Supreme Court of India ruled in our favour. Clearly, since there was no over-valuation, there is no relevance or foundation for these allegations on transfer of funds.”

It added, “Notably, these FPIs are already part of the investigation by the Securities and Exchange Board of India (SEBI). As per the Expert Committee appointed by the Hon’ble Supreme Court, there is no evidence of any breach of the Minimum Public Shareholding (MPS) requirements or manipulation of stock prices.”

Saying that it was “unfortunate that these publications, which sent us queries, chose not to carry our response in full,” that group stated that these are attempts aimed at “generating profits by driving down our stock prices and these short sellers are under investigation by various authorities.”

Stocks nosedive

Expectedly, Adani stocks tumbled on Thursday morning. On the BSE, the stock of Adani Green Energy nosedived 4.43 per cent to Rs 927.65 apiece, with a market capitalisation of Rs 1.47 lakh crore.

The scrip of Adani Power plunged 3.82 per cent to Rs 315.85, flagship firm Adani Enterprises declined 3.56 per cent to Rs 2,424 and Adani Energy Solutions fell 3.18 per cent to Rs 814.95 apiece on the bourse.

Also, Adani Ports and Special Economic Zone (APSEZ) slipped 2.75 per cent to Rs 796.50, Adani Total Gas dipped 2.74 per cent to Rs 634.60, NDTV fell 2.69 per cent to Rs 213.30, and Adani Wilmar declined 1.83 per cent to Rs 362.20 per piece on the BSE.

The report said the “Adani Group’s rise has been staggering, growing from under USD 8 billion in market capitalization in September 2013 — the year before Modi became prime minister — to USD 260 billion last year”.

The conglomerate is active in a dizzying array of fields, including transportation and logistics, natural gas distribution, coal trade and production, power generation and transmission, road construction, data centres, and real estate.