Documents obtained suggest that a billionaire Indian family with close ties to Prime Minister Narendra Modi secretly invested hundreds of millions of dollars in their own shares on the Indian stock market. These offshore financial records indicate that associates of the Adani family may have discreetly acquired stock in the Adani Group's companies during its rapid rise to becoming one of India's largest and most influential businesses.
By 2022, Gautam Adani, the founder, had become India's wealthiest person and the world's third wealthiest, with a net worth exceeding $120 billion. Earlier this year, a report by Hindenburg, a New York financial research firm, accused the Adani Group of executing the "largest con in corporate history," alleging stock manipulation, accounting fraud, and the use of opaque offshore entities to purchase its own shares, contributing to the conglomerate's market valuation peaking at $288 billion in 2022.
The Adani Group denied these allegations, but the controversy initially wiped $100 billion off the group's market value and cost Gautam Adani his top spot on the world's rich list. New documents obtained by the Organised Crime and Corruption Reporting Project (OCCRP), shared with The Guardian and the Financial Times, reveal details of a previously undisclosed and intricate offshore operation in Mauritius, seemingly controlled by Adani associates. This operation allegedly supported the share prices of the group's companies from 2013 to 2018, a previously impenetrable offshore network.
The records also suggest the influential role allegedly played by Adani's older brother, Vinod, in these secretive offshore operations, despite the Adani Group's assertion that he has no role in the company's day-to-day affairs. Two close associates of Vinod Adani are named as sole beneficiaries of offshore companies through which money flowed. Financial records and interviews also indicate that investments in Adani stock from two Mauritius-based funds were overseen by a Dubai-based company, run by a known employee of Vinod Adani. This disclosure could have significant political implications for Prime Minister Narendra Modi, who has had a close relationship with Gautam Adani for two decades.
Gautam Adani's association with powerful political figures, particularly Prime Minister Modi, has long raised suspicions. Their relationship dates back to 2002 when Modi was the Chief Minister of Gujarat and Adani was a businessman in the state. Their fortunes have seemingly risen in parallel ever since. After Modi's victory in the general election in May 2014, he notably flew to Delhi on Gautam Adani's plane, an image immortalized in a widely recognized photograph in front of the Adani corporate logo.
During Modi's leadership, the Adani Group's power and influence have surged, securing lucrative state contracts for ports, power plants, electricity, coalmines, highways, energy parks, slum redevelopment, and airports. In some instances, legislative changes were made to facilitate Adani Group companies' expansion into sectors like airports and coal. Consequently, the Adani Group's stock value skyrocketed from approximately $8 billion in 2013 to $288 billion by September 2022.
Adani has consistently denied that his long-standing connection with the Prime Minister has resulted in preferential treatment, and the Indian government has echoed these denials.
However, documents unearthed by the OCCRP and reviewed by The Guardian suggest that SEBI, the government regulator responsible for investigating the Adani Group, was made aware of stock market activities involving Adani offshore funds as early as early 2014.
In a letter dated January 2014, Najib Shah, then the head of the Directorate of Revenue Intelligence (DRI), India's financial law enforcement agency, wrote to Upendra Kumar Sinha, the then head of SEBI. Shah mentioned, "There are indications that [Adani-linked] money may have found its way to stock markets in India as investment and disinvestment in the Adani Group." He pointed out that he had shared this information with Sinha because SEBI was "understood to be investigating the dealings of the Adani Group of companies in the stock market."
However, a few months later, after Modi's election in May 2014, SEBI's apparent interest seemed to wane, according to a source who worked for the regulator at that time.
The SEBI has never publicly disclosed the DRI's warning or any investigation it may have conducted into the Adani Group in 2014. This letter appears to contradict statements made by SEBI in recent court filings, where it denied investigations into the Adani Group before 2020 and dismissed suggestions of investigations dating back to 2016 as "factually baseless."
Critics, lawyers, and political opposition have recently raised questions about the SEBI's ability to independently investigate the Adani Group, as it operates under the purview of the Modi government.
In May, a report presented to the Supreme Court, which had established an expert committee to investigate the Adani Group following the publication of the Hindenburg report, indicated that SEBI had been looking into 13 offshore investors connected to the conglomerate since 2020. However, the regulator had reportedly encountered challenges in determining if these entities were linked to the Adani Group. Two of the entities under scrutiny were identified as EIFF and EMRF.
Critics have accused SEBI of delaying its investigation into potential Adani Group violations, repeatedly seeking extensions. On a recent Friday, SEBI submitted a report to the Supreme Court, stating that their investigations were in their final stages but did not disclose any findings.
The Adani Group responded, stating: "The provocative nature of the story and the proposed timing of its publication, when the allegations in it are entirely based on matters which are already under formal investigation by SEBI and are on the verge of finalizing the report, and while the honorable Supreme Court hearing is also scheduled shortly; makes us believe that the proposed publication is being done willfully to defame, disparage, erode the value of, and cause a loss to the Adani Group and its stakeholders."
They further clarified that all publicly listed entities within the Adani Group are compliant with applicable laws, including regulations regarding public share holdings and the Prevention of Money Laundering Act (PMLA).
A spokesperson for the two funds that invested in Adani stocks, EIFF and EMRF, also issued a statement denying wrongdoing: "Both the funds had multiple investments across asset classes like equities, mutual funds, alternate investment funds, bonds, etc. Amongst these, EIFF and EMRF had investments in equities of the Adani Group, apart from other investments."
They added, "EIFF and EMRF received subscriptions from Global Opportunities Fund Limited (GOF), which was a broad-based fund as per declarations received. GOF fully redeemed all its participation in EIFF in March 2019 and EMRF in March 2020."
Once again, SEBI did not respond to requests for comment.
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