Seven months following the explosive allegations of stock manipulation by the US-based short-seller Hindenburg Research against the Adani Group, fresh revelations have emerged.
The non-profit media organization Organized Crime and Corruption Reporting Project (OCCRP) has published a report providing further insights into the alleged manipulation.
Supreme Court in the Spotlight
The release of this report coincides with the ongoing Supreme Court hearings concerning the allegations against the Adani Group. The Securities and Exchange Board of India (SEBI) has already submitted a report to the court based on its investigation into Hindenburg’s claims.
Opaque Investment Funds Under Scrutiny
The OCCRP report alleges that “hundreds of millions of dollars” were funneled into Adani Group stocks through obscure investment funds based in Mauritius. Notably, it reveals that, in at least two instances, these investors were found to be linked to the Adani family, who are majority shareholders. In 2017, the holdings of these individuals amounted to a staggering $430 million.
Investors Profited from Offshore Trades
The report details how Nasser Ali Shaban Ahli from the UAE and Chang Chung-Ling from Taiwan engaged in years of buying and selling Adani stock through offshore structures that concealed their involvement. This covert trading activity occurred through two funds, Emerging India Focus Fund (EIFF) and EM Resurgent Fund (EMRF), involving significant shares in four Adani companies from 2013 to 2018.
Breach of Indian Market Rules
The core issue with the actions of these investors is that they appear to violate Indian market regulations. As per the report, Ahli and Chang’s historical ties to Adani Group companies classify them as insiders associated with the promoters. According to Indian market rules, promoters cannot hold shares exceeding 75 percent, a measure designed to prevent artificial scarcity and stock price manipulation.
Alleged Links to Adani Group Promoters
OCCRP highlights that Ahli and Chang have served as directors and shareholders in Adani Group companies and firms connected to Vinod Adani, Gautam Adani’s brother. These revelations suggest a potential breach of the 75 percent holding rule.
Adani Group Responds
The Adani Group swiftly responded to these allegations, labeling them as an attempt to resurrect the previously discredited Hindenburg report. They argued that the allegations were based on closed cases from over a decade ago, which had been thoroughly investigated and cleared.
Hindenburg Case Overview
The Hindenburg Research report, released in January 2023, had accused the Adani Group of improper use of offshore tax havens and had raised concerns about the group’s high debt. It had also alleged “brazen stock manipulation” through offshore shell companies. The Adani family members were implicated in the creation of offshore entities in tax havens to generate fake turnover and move money from listed companies.
SEBI’s Investigation
SEBI had initiated an investigation into these allegations and, in May 2023, informed the Supreme Court that it had “drawn a blank” in its inquiry into alleged violations related to money flows from offshore companies. The regulator had also expressed suspicions about the ownership of foreign portfolio investors (FPIs).
OCCRP: A Closer Look
The Organized Crime and Corruption Reporting Project (OCCRP) is a global non-profit network of investigative journalists with a presence on six continents. Founded in 2006, OCCRP specializes in exposing organized crime and corruption, and it has been behind groundbreaking investigative stories, including the 2013 Magnitsky case and the Russian Laundromat scheme. The organization’s work on the Panama Papers project also gained significant recognition.
