Organized Crime & Corruption Reporting Project Released Statement Claiming Adani Group Overcharged for Coal, Provides Example of Coal Shipment Price Increased by 3 Times in 2014 after Passing Through British Virgin Islands & Singapore
23rd May 2024 | Hong Kong
The Organized Crime & Corruption Reporting Project (OCCRP) has released a statement claiming Adani Group had overcharged for coal, providing an example of coal shipment price increasing by 3 times in 2014 after passing through British Virgin Islands & Singapore. In 2024 March, United States prosecutors are investigating India billionaire Gautam Adani and Adani Group for possible involvement in bribing officials in India for energy projects including renewable energy company Azure Power Global. Gautam Adani is India 2nd richest person with a personal fortune of around $100 billion. OCCRP: “On January 9, 2014, the bulk carrier MV Kalliopi L docked at Ennore port in Chennai, the southern Indian city in Tamil Nadu, after a two-week voyage from Indonesia. It carried 69,925 metric tons of coal destined for the state’s power company. However, the paperwork for the cargo took a more circuitous route, passing though the British Virgin Islands and Singapore. During this journey, the price of the coal more than tripled to US$91.91 per metric ton. The quality also inexplicably changed from low-grade steam coal to the clean, high-quality version sought by power companies. MV Kalliopi L’s profitable trip was not an isolated event. Documents obtained by OCCRP and shared with the Financial Times reveal that at least 24 other shipments that landed on the Tamil Nadu coast between January and October 2014 were originally priced as low-quality coal but ultimately sold by India’s Adani Group to the state’s power company for triple the cost. The evidence comes from multiple sources, including invoices and banking documents from several jurisdictions, details of investigations by India’s Directorate of Revenue Intelligence (DRI), leaked documents from a key Indonesian coal supplier for Adani, and a trove of documents obtained from the Indian state-owned power company TANGEDCO (Tamil Nadu Generation and Distribution Corporation). While not definitive, the data adds strong new evidence to over-invoicing allegations against the politically powerful Adani Group, which is perceived as close to Prime Minister Narendra Modi and is India’s largest importer and private producer of coal.” See released statement here
“ Organized Crime & Corruption Reporting Project Released Statement Claiming Adani Group Overcharged for Coal, Provides Example of Coal Shipment Price Increased by 3 Times in 2014 after Passing Through British Virgin Islands & Singapore “
United States Prosecutors Investigate India Billionaire Gautam Adani & Adani Group for Possible Involvement in Bribing Officials in India for Energy Projects Including Renewable Energy Company Azure Power Global, Gautam Adani is India 2nd Richest with Personal Fortune of $100 Billion, Adani Group Flagged by Short-Seller Hindenburg Research for Debt Concerns in 2023 January
16th March 2024 – United States prosecutors are investigating India billionaire Gautam Adani and Adani Group for possible involvement in bribing officials in India for energy projects including renewable energy company Azure Power Global. Gautam Adani is India 2nd richest person with a personal fortune of around $100 billion. In 2023 January, Adani Group was flagged by short-seller Hindenburg Research for debt concerns. Earlier in March 2024, India Adani Green Energy priced a new $409 million 18-year bond with yield of 6.7%. The Adani bond is the first USD bond issue since short-seller Hindenburg Research released report with debt concerns on Adani Group in 2023 January. Hindenburg Research: “After extensive research, we have taken a short position in Adani Group Companies through U.S.-traded bonds and non-Indian-traded derivative instruments. This report relates solely to the valuation of securities traded outside of India. This report does not constitute a recommendation on securities. This report represents our opinion and investigative commentary, and we encourage every reader to do their own due diligence. Please see our full disclaimer at the bottom of the report.” The report is titled: “Adani Group: How The World’s 3rd Richest Man Is Pulling The Largest Con In Corporate History.” In 2023 August, Adani Enterprises issued a statement on reports of Adani Enterprises selling 44% stake in joint venture Adani Wilmar valued at $6 billion, clarifying Adani Enterprises is not selling Adani Wilmar and disclosures to stock exchange will have to be made if they are selling Adani Enterprises. More info below:
India Adani Green Energy Priced $409 Million 18-Year Bond with Yield of 6.7%, First USD Bond Issue Since Short-Seller Hindenburg Research Released Report with Debt Concerns on Adani Group in 2023 January
10th March 2024 – India Adani Green Energy has priced a new $409 million 18-year bond with yield of 6.7%. The Adani bond is the first USD bond issue since short-seller Hindenburg Research released report with debt concerns on Adani Group in 2023 January. Hindenburg Research: “After extensive research, we have taken a short position in Adani Group Companies through U.S.-traded bonds and non-Indian-traded derivative instruments. This report relates solely to the valuation of securities traded outside of India. This report does not constitute a recommendation on securities. This report represents our opinion and investigative commentary, and we encourage every reader to do their own due diligence. Please see our full disclaimer at the bottom of the report.” The report is titled: “Adani Group: How The World’s 3rd Richest Man Is Pulling The Largest Con In Corporate History.” In 2023 August, Adani Enterprises issued a statement on reports of Adani Enterprises selling 44% stake in joint venture Adani Wilmar valued at $6 billion, clarifying Adani Enterprises is not selling Adani Wilmar and disclosures to stock exchange will have to be made if they are selling Adani Enterprises.
Adani Enterprises Issues Statement on Reports of Selling 44% Stake in Joint Venture Adani Wilmar Valued at $6 Billion, Not Selling Adani Wilmar
11th August 2023 – Adani Enterprises has issued a statement on reports of Adani Enterprises selling 44% stake in joint venture Adani Wilmar valued at $6 billion, clarifying Adani Enterprises is not selling Adani Wilmar and disclosures to stock exchange will have to be made if they are selling Adani Enterprises. The joint venture was setup in 1999 with leading agribusiness Wilmar Group. Earlier in July 2023, Bain Capital announced to buy 90% of Adani Capital with $500 Million AUM (Assets under Management) and Adani Housing with current CEO Gaurav Gupta to hold the remaining 10%, and the Adani family to fully exit the investments. Bain Capital will commit $120 million in capital and $50 million in non-convertible debentures (unsecured debts, issued without collaterals). Earlier in 2023 February, Adani Group (Chairman Gautam Adani, Asia richest man) hired high stakes & high profile United States law firm Wachtell, Lipton, Rosen & Katz to represent Adani Group for legal advice against short-seller Hindenburg Research. Since the released report by short-seller Hindenburg Research, Adani Group & Gautam Adani have seen a decline in their stock prices & personal fortune, with Adani Group losing around $110 billion and Gautam Adani losing around $60 billion (March 2023). On 26th January 2023, Asia richest man and the world 3rd richest man Gautam Adani with $113 billion fortune issued a statement considering legal actions on short-seller Hindenburg Research, after releasing a report on Adani Group raising concerns on debt & leverage of Adani Group (24/1/23).
Adani Wilmar
Adani Wilmar – We are one of the few large FMCG food companies in India to offer most of the essential kitchen commodities for Indian consumers, including edible oil, wheat flour, rice, pulses and sugar. Our products are offered under a diverse range of brands across a broad price spectrum and cater to different customer groups. We are a joint venture incorporated in January 1999 between the Adani Group, which is a multinational diversified business group with significant interests across transport and logistics, and energy and utility sectors, and the Wilmar Group, one of Asia’s leading agribusiness groups which was ranked among the largest listed companies by market capitalization on the Singapore Exchange as of February 2021. As a joint venture between the Adani Group and the Wilmar Group, we benefit from our strong parentage. We benefit from the Adani Group’s in-depth understanding of local markets, extensive experience in domestic trading and advanced logistics network in India, and leverage on the Wilmar Group’s global sourcing capabilities and technical know-how.
Bain Capital Buys 90% of Adani Capital with $500 Million AUM & Adani Housing with CEO Gaurav Gupta to Hold Remaining 10%, Adani Family Fully Exit Investments
28th July 2023 – Bain Capital has announced to buy 90% of Adani Capital with $500 Million AUM (Assets under Management) and Adani Housing with current CEO Gaurav Gupta to hold the remaining 10%, and the Adani family to fully exit the investments. Bain Capital will commit $120 million in capital and $50 million in non-convertible debentures (unsecured debts, issued without collaterals). Earlier in 2023 February, Adani Group (Chairman Gautam Adani, Asia richest man) hired high stakes & high profile United States law firm Wachtell, Lipton, Rosen & Katz to represent Adani Group for legal advice against short-seller Hindenburg Research. Since the released report by short-seller Hindenburg Research, Adani Group & Gautam Adani have seen a decline in their stock prices & personal fortune, with Adani Group losing around $110 billion and Gautam Adani losing around $60 billion (March 2023). On 26th January 2023, Asia richest man and the world 3rd richest man Gautam Adani with $113 billion fortune issued a statement considering legal actions on short-seller Hindenburg Research, after releasing a report on Adani Group raising concerns on debt & leverage of Adani Group (24/1/23). More info below.
Bain Capital Buys 90% of Adani Capital with $500 Million AUM & Adani Housing with CEO Gaurav Gupta to Hold Remaining 10%
Bain Capital to Acquire and Invest in Adani Capital’s Growth
- Transaction to position leading non-bank financial institution as a standalone company to drive expanded lending to underserved MSME, agriculture, and affordable housing segments.
- Includes significant support and reinvestment from Gaurav Gupta, who will continue to serve as MD & CEO.
23rd July 2023 – Bain Capital, a leading global private investment firm, today announced that it has entered into a definitive agreement to acquire 90% of Adani Capital and Adani Housing. The transaction will buy out 100 percent of the Adani family’s private investments in the company, with Gaurav Gupta fully rolling his stake in the company and continuing to serve as Managing Director and CEO. Bain Capital has also committed $120 million in primary capital to facilitate the company’s ongoing growth. Further, Bain Capital is also immediately making available to the Company a liquidity line $50 million in the form of Non-Convertible Debentures.
“Gaurav and the team have built a scale lending business that supports entrepreneurialism and is trying to solve the $300 billion+ unmet retail MSME credit demand in the country. The company has strong business fundamentals, an experienced team, with ability to serve and expand to core segments like agriculture, housing and to underbanked rural areas,” said Rishi Mandawat, a Partner at Bain Capital. “We see compelling opportunities to partner with Gaurav and team to support and facilitate Adani Capital’s next phase of growth by providing access to significant capital, strategic and operating resources, and deep experience partnering with financial services businesses in India and across the globe.”
“I have known Gaurav since his days as an investment banker,” said Mr. Gautam Adani, Chairman, Adani Group. “He wanted to become an entrepreneur and I backed him. He has not only built a good financial services business with a focus on the underserved in semi-urban and rural India but has also valuably contributed to the Adani Group. I am very happy that a credible investor like Bain Capital is stepping in now and this will help the business grow manyfold from here.”
“It has been an extraordinary six years; to have the capital, a strong brand and, more importantly, the freedom to build a business is perhaps unprecedented – and for this, I thank Gautambhai for the opportunity and for his faith in me,” said Gaurav Gupta. “Our aim has always been to support micro-entrepreneurs and first-time homeowners in Bharat and to be the most economical and convenient lender to our customers by leveraging technology. The team and I are very pleased to welcome a partner like Bain Capital who shares our vision of making affordable finance available to our customer segment with a strong focus on customer literacy and education. With Bain Capital committing INR 1,000 Cr of capital in the Company, we are now equipped to grow 4x from here.”
Entrepreneurialism and growing consumption rates across India are driving a significant increase in the volume of MSMEs, which now constitute an important segment of the Indian economy, contributing approximately 30% of its gross domestic product, according to the Ministry of Micro, Small & Medium Enterprises. Despite their potential, only 10% of MSMEs in India have access to a formal source of credit to support growth aspirations, particularly more acute in rural areas. Adani Capital was founded in 2017 to democratize access to affordable, convenient lending solutions and support the next generation of MSMEs and entrepreneurs in India. To realize that vision, Adani Capital has built an AUM of nearly $500 million, a network spanning more than 170 branches across eight states, and a team of over 2,500 professionals who expound its “customer-first” culture.
Avendus Capital was the exclusive financial advisor to Adani Capital, Adani Housing Finance and their shareholders on this transaction. Rothschild was the exclusive financial advisor to Bain Capital on this transaction. Bain Capital has deep experience in investing to support the growth and leadership of a diversified set of financial services businesses in India and across the globe, including Axis Bank, 360One (fka IIFL Wealth), Judo Bank, L&T Finance Holdings, Legacy Corporate Lending, and more. The transaction is expected to close in Q4 2023, pending necessary regulatory and market approvals.
Asset Manager GQG Partners with $88 Billion AUM Invests $1.87 Billion in 4 Companies of India Gautam Adani Family Trust at 4.2% to 12.7% Discounts to 2nd March 2023 Closing Price, Adani Ports & Special Economic Zone, Adani Green Energy, Adani Transmission & Adani Enterprises
4th March 2023 – Global boutique asset manager GQG Partners with $88 billion AUM (Assets under Management) has invested $1.87 billion in 4 companies of India Gautam Adani family trust at 4.2% to 12.7% discounts to 2nd March 2023 closing price (Thursday), Adani Ports & Special Economic Zone (4.2% discount) , Adani Green Energy (5.7% discount), Adani Transmission (5.7% discount) & Adani Enterprises (12.2% discount). GQG Partners is co-founded by Chairman & Chief Investment Officer Rajiv Jain & CEO Tim Carver, managing around $88 billion of AUM and is listed on Australia Stock Exchange (ASX) with a market capitalization of around $2.89 billion ($4.27 billion). In 2022, GQG Partners reported net revenue of $436 billion and net profit of $332 million. Earlier in 2023 February, India Adani Group (Chairman Gautam Adani, Asia richest man) hired high stakes & high profile United States law firm Wachtell, Lipton, Rosen & Katz to represent Adani Group for legal advice against short-seller Hindenburg Research. Since the released report by short-seller Hindenburg Research, Adani Group & Gautam Adani have seen a decline in their stock prices & personal fortune, with Adani Group losing around $110 billion and Gautam Adani losing around $60 billion. On 26th January 2023, Asia richest man and the world 3rd richest man Gautam Adani with $113 billion fortune issued a statement considering legal actions on short-seller Hindenburg Research, after releasing a report on Adani Group raising concerns on debt & leverage of Adani Group (24/1/23). More info below.
Asset Manager GQG Partners with $88 Billion AUM Invests $1.87 Billion in 4 Companies of India Gautam Adani Family Trust
GQG Partners Inc. is a global investment boutique focused on managing active equity portfolios and is headquartered in the United States. As at 31 December 2022, our group managed US$88.0 billion for investors that include many large pension funds, sovereign funds, wealth management firms and other financial institutions around the world. GQG is listed on the Australian Securities Exchange (ASX Code: GQG). Further information can be obtained from www.gqgpartners.com.
India Adani Group Hires High Stakes & High Profile United States Law Firm Wachtell, Lipton, Rosen & Katz for Legal Advice on Short-Seller Hindenburg Research
11th February 2023 – India Adani Group (Chairman Gautam Adani, Asia richest man) has hired high stakes & high profile United States law firm Wachtell, Lipton, Rosen & Katz to represent Adani Group for legal advice against short-seller Hindenburg Research. Wachtell, Lipton, Rosen & Katz is one of the most expensive & one of the most profitable per partner law firms. Wachtell Lipton was founded in 1965 by a small group of lawyers in New York. Herb Wachtell, Martin Lipton, Leonard Rosen and George Katz (former colleagues at NYU), with a reputation for taking on complex corporate governance cases, including cases that are high stakes & high profile. Since the released report by short-seller Hindenburg Research, Adani Group & Gautam Adani have seen a decline in their stock prices & personal fortune, with Adani Group losing around $110 billion and Gautam Adani losing around $60 billion. On 26th January 2023, Asia richest man and the world 3rd richest man Gautam Adani with $113 billion fortune issued a statement considering legal actions on short-seller Hindenburg Research, after releasing a report on Adani Group raising concerns on debt & leverage of Adani Group (24/1/23). More info below.
Wachtell, Lipton, Rosen & Katz – Wachtell Lipton was founded on a handshake in 1965 as a small group of lawyers dedicated to providing advice and expertise at the highest levels. We have achieved extraordinary results following the distinctive vision of our founders — a cohesive team of lawyers intensely focused on solving our clients’ most important problems. We have experience in the fields of mergers and acquisitions, strategic investments, takeovers and takeover defense, shareholder activism, corporate and securities law and corporate governance. We handle some of the largest, most complex and demanding transactions in the United States and around the world. We counsel both public and private acquirors and targets. We also handle sensitive investigation and litigation matters and corporate restructurings, and counsel boards of directors and senior management in critical situations. We have a track record of original and groundbreaking solutions and innovations that have had a dramatic impact on business and law. We are thought leaders.
Our distinctive structure defines our approach. We maintain a ratio of associates to partners significantly below that of other firms. We focus on matters that require the attention, extensive experience and sophistication of our partners. We limit the number and type of matters we undertake. Our system of lock-step compensation promotes a careful selection of matters as well as the flexibility to bring the right expertise to bear without regard to factors extrinsic to providing the best service and advice. We work together on a task-force basis on all of our matters, bringing to bear the requisite mix of people and expertise across practice areas. Our structure and approach attract talented and entrepreneurial lawyers, who enable us to achieve excellent results for our clients in complex and critical matters.
Adani Group is a diversified organisation in India with market cap of over $150 billion (26/1/23) comprising of 7 publicly traded companies. It has created a world class transport and utility infrastructure portfolio that has a pan-India presence. Adani Group is headquartered in Ahmedabad, in the state of Gujarat, India. Over the years, Adani Group has positioned itself to be the market leader in its transport logistics and energy utility portfolio businesses focusing on large scale infrastructure development in India with O & M practices benchmarked to global standards. With four IG rated businesses, it is the only Infrastructure Investment Grade issuer in India.
Hindenburg Research – Founded by Nate Anderson, CFA, CAIA, Hindenburg Research specializes in forensic financial research. Our experience in the investment management industry spans decades, with a historical focus on equity, credit, and derivatives analysis.
Adani Enterprise Cancels $2.5 Billion New Share Issue & Will Refund to Investors, Share Price Decline 58.7% in 2023 YTD & 8.3% in Last 12 Months with Current Market Value of $22 Billion
4th February 2023 – India conglomerate Adani Enterprise has cancelled its $2.5 billion new share issuance (to refund to investors), with Adani Enterprise share price declining 58.7% in 2023 (YTD, INR 3841 to INR 1586) and declining 8.3% (INR 1731 to INR 1586) in the last 12 months with current market value at $22 billion. Adani Enterprise is part of Adani Group founded by India richest man Gautam Adani. Since the released report by short-seller Hindenburg Research, Adani Group & Gautam Adani have seen a decline in their stock prices & personal fortune, with Adani Group losing around $110 billion and Gautam Adani losing around $60 billion. On 26th January 2023, Asia richest man and the world 3rd richest man Gautam Adani with $113 billion fortune issued a statement considering legal actions on short-seller Hindenburg Research, after releasing a report on Adani Group raising concerns on debt & leverage of Adani Group (24/1/23). More info below.
Asia Richest Man Gautam Adani with $113 Billion Fortune Considers Legal Actions on Short-Seller Hindenburg Research, Released Report on Adani Group Raising Debt Concerns & Taken Short Positions in Bonds & Derivatives
26th January 2023 – Asia richest man and the world 3rd richest man Gautam Adani with $113 billion fortune is considering legal actions on short-seller Hindenburg Research, after releasing a report on Adani Group raising concerns on debt & leverage of Adani Group (24/1/23). Hindenburg Research: “After extensive research, we have taken a short position in Adani Group Companies through U.S.-traded bonds and non-Indian-traded derivative instruments. This report relates solely to the valuation of securities traded outside of India. This report does not constitute a recommendation on securities. This report represents our opinion and investigative commentary, and we encourage every reader to do their own due diligence. Please see our full disclaimer at the bottom of the report.” The report is titled: “Adani Group: How The World’s 3rd Richest Man Is Pulling The Largest Con In Corporate History.” Jatin Jalundhwala, Group Head – Legal, Adani (26/1/23): “ The maliciously mischievous, unresearched report published by Hindenburg Research on 24 Jan 2023 has adversely affected the Adani Group, our shareholders and investors. The volatility in Indian stock markets created by the report is of great concern and has led to unwanted anguish for Indian citizens. Clearly, the report and its unsubstantiated contents were designed to have a deleterious effect on the share values of Adani Group companies as Hindenburg Research, by their own admission, is positioned to benefit from a slide in Adani shares. [“We hold short positions in Adani Group Companies through U.S.-traded bonds and non-Indian-traded derivatives, along with other non-Indian-traded reference securities.”]. We are deeply disturbed by this intentional and reckless attempt by a foreign entity to mislead the investor community and the general public, undermine the goodwill and reputation of the Adani Group and its leaders, and sabotage the FPO (Follow-on Public Offering) from Adani Enterprises. We are evaluating the relevant provisions under US and Indian laws for remedial and punitive action against Hindenburg Research.” Hindenburg Research had also previously shorted (short-sell) electric truck maker Nikola Crop & Twitter. See below for Hindenburg Research summary.
Hindenburg Research Summary – Adani Group
- Today we reveal the findings of our 2-year investigation, presenting evidence that the INR 17.8 trillion (U.S. $218 billion) Indian conglomerate Adani Group has engaged in a brazen stock manipulation and accounting fraud scheme over the course of decades.
- Gautam Adani, Founder and Chairman of the Adani Group, has amassed a net worth of roughly $120 billion, adding over $100 billion in the past 3 years largely through stock price appreciation in the group’s 7 key listed companies, which have spiked an average of 819% in that period.
- Our research involved speaking with dozens of individuals, including former senior executives of the Adani Group, reviewing thousands of documents, and conducting diligence site visits in almost half a dozen countries.
- Even if you ignore the findings of our investigation and take the financials of Adani Group at face value, its 7 key listed companies have 85% downside purely on a fundamental basis owing to sky-high valuations.
- Key listed Adani companies have also taken on substantial debt, including pledging shares of their inflated stock for loans, putting the entire group on precarious financial footing. 5 of 7 key listed companies have reported ‘current ratios’ below 1, indicating near-term liquidity pressure.
- The group’s very top ranks and 8 of 22 key leaders are Adani family members, a dynamic that places control of the group’s financials and key decisions in the hands of a few. A former executive described the Adani Group as “a family business.”
- The Adani Group has previously been the focus of 4 major government fraud investigations which have alleged money laundering, theft of taxpayer funds and corruption, totaling an estimated U.S. $17 billion. Adani family members allegedly cooperated to create offshore shell entities in tax-haven jurisdictions like Mauritius, the UAE, and Caribbean Islands, generating forged import/export documentation in an apparent effort to generate fake or illegitimate turnover and to siphon money from the listed companies.
- Gautam Adani’s younger brother, Rajesh Adani, was accused by the Directorate of Revenue Intelligence (DRI) of playing a central role in a diamond trading import/export scheme around 2004-2005. The alleged scheme involved the use of offshore shell entities to generate artificial turnover. Rajesh was arrested at least twice over separate allegations of forgery and tax fraud. He was subsequently promoted to serve as Managing Director of Adani Group.
- Gautam Adani’s brother-in-law, Samir Vora, was accused by the DRI of being a ringleader of the same diamond trading scam and of repeatedly making false statements to regulators. He was subsequently promoted to Executive Director of the critical Adani Australia division.
- Gautam Adani’s elder brother, Vinod Adani, has been described by media as “an elusive figure”. He has regularly been found at the center of the government’s investigations into Adani for his alleged role in managing a network of offshore entities used to facilitate fraud.
- Our research, which included downloading and cataloguing the entire Mauritius corporate registry, has uncovered that Vinod Adani, through several close associates, manages a vast labyrinth of offshore shell entities.
- We have identified 38 Mauritius shell entities controlled by Vinod Adani or close associates. We have identified entities that are also surreptitiously controlled by Vinod Adani in Cyprus, the UAE, Singapore, and several Caribbean Islands.
- Many of the Vinod Adani-associated entities have no obvious signs of operations, including no reported employees, no independent addresses or phone numbers and no meaningful online presence. Despite this, they have collectively moved billions of dollars into Indian Adani publicly listed and private entities, often without required disclosure of the related party nature of the deals.
- We have also uncovered rudimentary efforts seemingly designed to mask the nature of some of the shell entities. For example, 13 websites were created for Vinod Adani-associated entities; many were suspiciously formed on the same days, featuring only stock photos, naming no actual employees and listing the same set of nonsensical services, such as “consumption abroad” and “commercial presence”.
- The Vinod-Adani shells seem to serve several functions, including (1) stock parking / stock manipulation (2) and laundering money through Adani’s private companies onto the listed companies’ balance sheets in order to maintain the appearance of financial health and solvency.
- Publicly listed companies in India are subject to rules that require all promoter holdings (known as insider holdings in the U.S.) to be disclosed. Rules also require that listed companies have at least 25% of the float held by non-promoters in order to mitigate manipulation and insider trading. 4 of Adani’s listed companies are on the brink of the delisting threshold due to high promoter ownership.
- Our research indicates that offshore shells and funds tied to the Adani Group comprise many of the largest “public” (i.e., non-promoter) holders of Adani stock, an issue that would subject the Adani companies to delisting, were Indian securities regulator SEBI’s rules enforced.
- Many of the supposed “public” funds exhibit flagrant irregularities such as being (1) Mauritius or offshore-based entities, often shells (2) with beneficial ownership concealed via nominee directors (3) and with little to no diversification, holding portfolios almost exclusively consisting of shares in Adani listed companies.
- Right to Information (RTI) requests we filed with SEBI confirm that the offshore funds are the subjects of an ongoing investigation, more than a year-and-a-half after concerns were initially raised by media and members of parliament.
- A former trader for Elara, an offshore fund with almost $3 billion in concentrated holdings of Adani shares, including a fund that is ~99% concentrated in shares of Adani, told us that it is obvious that Adani controls the shares. He explained that the funds are intentionally structured to conceal their ultimate beneficial ownership.
- Leaked emails show that the CEO of Elara worked on deals with Dharmesh Doshi, a fugitive accountant who worked closely on stock manipulation deals with Ketan Parekh, an infamous Indian market manipulator. The emails indicate that the CEO of Elara worked with Doshi on stock deals after he evaded arrest and was widely known as a fugitive.
- Another firm called Monterosa Investment Holdings controls 5 supposedly independent funds that collectively hold over INR 360 billion (U.S. $4.5 billion) in shares of listed Adani companies, according to Legal Entity Identifier (LEI) data and Indian exchange data.
- Monterosa’s Chairman and CEO served as director in 3 companies alongside a fugitive diamond merchant who allegedly stole U.S. $1 billion before fleeing India. Vinod Adani’s daughter married the fugitive diamond merchant’s son.
- A once-related party entity of Adani invested heavily in one of the Monterosa funds that allocated to Adani Enterprises and Adani Power, according to corporate records, drawing a clear line between the Adani Group and the suspect offshore funds.
- Another Cyprus-based entity called New Leaina Investments until June-September 2021 owned over U.S. $420 million in Adani Green Energy shares, comprising ~95% of its portfolio. Parliamentary records show it was (and may still be) a shareholder of other Adani listed entities.
- New Leaina is operated by incorporation services firm Amicorp, which has worked extensively to aid Adani in developing its offshore entity network. Amicorp formed at least 7 Adani promoter entities, at least 17 offshore shells and entities associated with Vinod Adani, and at least 3 Mauritius-based offshore shareholders of Adani stock.
- Amicorp played a key role in the 1MDB international fraud scandal that resulted in U.S. $4.5 billion being siphoned from Malaysian taxpayers. Amicorp established ‘investment funds’ for the key perpetrators that were “simply a way to wash a client’s money through what looked like a mutual fund”, according to the book Billion Dollar Whale, which reported on the scandal.
- ‘Delivery volume’ is a unique daily data point that reports institutional investment flows. Our analysis found that offshore suspected stock parking entities accounted for up to 30%-47% of yearly ‘delivery volume’ in several Adani listed companies, a flagrant irregularity indicating that Adani stocks have likely been subject to ‘wash trading’ or other forms of manipulative trading via the suspect offshore entities.
- Evidence of stock manipulation in Adani listed companies shouldn’t come as a surprise. SEBI has investigated and prosecuted more than 70 entities and individuals over the years, including Adani promoters, for pumping Adani Enterprises’ stock.
- A 2007 SEBI ruling stated that “the charges leveled against promoters of Adani that they aided and abetted Ketan Parekh entities in manipulating the scrip of Adani stand proved”. Ketan Parekh is perhaps India’s most notorious stock market manipulator. Adani Group entities originally received bans for their roles, but those were later reduced to fines, a show of government leniency toward the Group that has become a decades-long pattern.
- Per the 2007 investigation, 14 Adani private entities transferred shares to entities controlled by Parekh, who then engaged in blatant market manipulation. Adani Group responded to SEBI by arguing that it had dealt with Ketan Parekh to finance the start of its operations at Mundra port, seemingly suggesting that share sales via stock manipulation somehow constitutes a legitimate form of financing.
- As part of our investigation, we interviewed an individual who was banned from trading on Indian markets for stock manipulation via Mauritius-based funds. He told us that he knew Ketan Parekh personally, and that little has changed, explaining “all the previous clients are still loyal to Ketan and are still working with Ketan”.
- In addition to using offshore capital to park stock, we found numerous examples of offshore shells sending money through onshore private Adani companies onto listed public Adani companies.
- The funds then seem to be used to engineer Adani’s accounting (whether by bolstering its reported profit or cash flows), cushioning its capital balances in order to make listed entities appear more creditworthy, or simply moved back out to other parts of the Adani empire where capital is needed.
- We also identified numerous undisclosed related party transactions by both listed and private companies, seemingly an open and repeated violation of Indian disclosure laws.
- In one instance, a Vinod Adani-controlled Mauritius entity with no signs of substantive operations lent INR 11.71 billion (U.S. ~$253 million at that time) to a private Adani entity which did not disclose it as being a related party loan. The private entity subsequently lent funds to listed entities, including INR 9.84 billion (U.S. $138 million at more recent substantially lower exchange rates) to Adani Enterprises.
- Another Vinod Adani-controlled Mauritius entity called Emerging Market Investment DMCC lists no employees on LinkedIn, has no substantive online presence, has announced no clients or deals, and is based out of an apartment in the UAE. It lent U.S. $1 billion to an Adani Power subsidiary.
- This offshore shell network also seems to be used for earnings manipulation. For example, we detail a series of transactions where assets were transferred from a subsidiary of listed Adani Enterprises to a private Singaporean entity controlled by Vinod Adani, without disclosure of the related party nature of these deals. Once on the books of the private entity, the assets were almost immediately impaired, likely helping the public entity avoid a material write-down and negative impact to net income.
- Adani Group’s obvious accounting irregularities and sketchy dealings seem to be enabled by virtually non-existent financial controls. Listed Adani companies have seen sustained turnover in the Chief Financial Officer role. For example, Adani Enterprises has had 5 chief financial officers over the course of 8 years, a key red flag indicating potential accounting issues.
- The independent auditor for Adani Enterprises and Adani Total Gas is a tiny firm called Shah Dhandharia. Shah Dhandharia seems to have no current website. Historical archives of its website show that it had only 4 partners and 11 employees. Records show it pays INR 32,000 (U.S. $435 in 2021) in monthly office rent. The only other listed entity we found that it audits has a market capitalization of about INR 640 million (U.S. $7.8 million).
- Shah Dhandharia hardly seems capable of complex audit work. Adani Enterprises alone has 156 subsidiaries and many more joint ventures and affiliates, for example. Further, Adani’s 7 key listed entities collectively have 578 subsidiaries and have engaged in a total of 6,025 separate related-party transactions in fiscal year 2022 alone, per BSE disclosures.
- The audit partners at Shah Dhandharia who respectively signed off on Adani Enterprises and Adani Total Gas’ annual audits were as young as 24 and 23 years old when they began approving the audits. They were essentially fresh out of school, hardly in a position to scrutinize and hold to account the financials of some of the largest companies in the country, run by one of its most powerful individuals.
- Gautam Adani has claimed in an interview to “have a very open mind towards criticism…Every criticism gives me an opportunity to improve myself.” Despite these claims, Adani has repeatedly sought to have critical journalists or commentators jailed or silenced through litigation, using his immense power to pressure the government and regulators to pursue those who question him.
- We believe the Adani Group has been able to operate a large, flagrant fraud in broad daylight in large part because investors, journalists, citizens and even politicians have been afraid to speak out for fear of reprisal.
- We have included 88 questions in the conclusion of our report. If Gautam Adani truly embraces transparency, as he claims, they should be easy questions to answer. We look forward to Adani’s response.
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