NEW DELHI - 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) said in an article on Thursday.
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.
Reuters has not independently verified OCCRP's assertions.
Ahli and Chang did not respond to Reuters requests seeking comment.
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 U.S.-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 per cent, while Adani Ports, Adani Power, Adani Green, Adani Total Gas and Adani Wilmar slid between 2 per cent-4.5 per cent 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.
SEBI, the Securities and Exchange Board of India, did not respond to Reuters' requests for comment.
Days following the January report, Adani group stocks lost US$150 billion in market value and remain down around US$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 June 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 per cent to about 14 per cent stakes in the companies through two Mauritius-based funds, the report said.
At one point, their investment in Adani funds was worth US$430 million, the report said.
Under Indian laws, every company needs to have 25 per cent 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. Vinod Adani did not respond to a Reuters request for comment.
"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 per cent limit allowed for insider ownership.
'VALIDATED', SAYS HINDENBURG
Hindenburg said on platform X on Thursday that the OCCRP report 'validated' issues it flagged with respect to the offshore funds owning at least 13 per cent of the public float in multiple Adani stocks through "associates of Vinod Adani."
Adani Group had called Hindenburg's January claims misleading and without evidence and said it always complied with laws.
In a statement to OCCRP, Adani Group said the Mauritius funds investigated by reporters had already been named in the Hindenburg report and the "allegations are not only baseless and unsubstantiated but are rehashed from Hindenburg's allegations."
India's Supreme Court has appointed a panel to oversee a SEBI probe based on the Hindenburg report. The panel in May said the regulator had so far "drawn a blank" in investigations into the suspected violations.
Last week, SEBI said its report was nearing completion and its investigation on some offshore deals was taking time as some entities were located in tax haven jurisdictions. The regulator "shall take appropriate action based on outcome of the investigations," it said.
SEBI also said it examined one Adani group transaction for violation of minimum public float rules, an issue that the OCCRP report also flagged.
In an interview with a reporter from the Guardian, OCCRP said Chang said he knew nothing about any secret purchases of Adani stock. He asked why journalists were not interested in his other investments and said, "We are a simple business." - Reuters