Money-laundering laws: Firm linked to Adani investors lost licences in Mauritius

In its licence revocation notice on May 12, 2022, a copy of which is available on the regulator’s website, the FSC held that EIFM “acted in breach” of various sections of the Financial Services Act, the Securities Act, the Financial Intelligence and Anti-Money Laundering Regulations (2003 and 2018) and the Code on the Prevention of Money Laundering and Terrorist Financing.

These alleged breaches relate to non-compliance on maintaining records of clients and transactions, accounting and auditing standards; safeguards against dummy officers; corporate governance and the prescribed internal mechanism to identify risks of money laundering and terrorist financing.

This assumes significance given that under the Prevention of Money Laundering Act (PMLA), SEBI records show, Emerging India Focus Funds and EM Resurgent Fund, two of the 13 overseas Adani investors under investigation, had declared EIFM as their controlling shareholder.

The revocation of licences means EIFM, effectively, began winding down operations.

Confirming this, a spokesperson for the FSC told The Indian Express: “When a licence is revoked, it is on a permanent basis. Following the revocation… licensees are directed to initiate the necessary actions for the orderly dissolution of their business and the discharge of their liabilities.”

Asked about the implication of the revocation of EIFM’s licences, an Adani Group spokesperson said: “We will not be able to comment on matters pertaining to independent individual shareholders.”

The EIFM, incidentally, found no mention in the Hindenburg report. According to the FSC, EM  Resurgent Fund was dissolved in February 2022 while Emerging India Focus Funds is a live company.

After the publication of the Hindenburg report this January, a top official of the Mauritian FSC had said, in an interview, that an “initial assessment” of the entities associated with the Adani Group in Mauritius did not reveal any breach of law.

The Indian Express asked the FSC spokesperson whether EIFM was part of that assessment. The spokesperson said the FSC “is unable to share any further information on this matter since it is constrained by the provisions of the FSA in its ability to share confidential information about its licensees.”

Significantly, EIFM was held guilty of breaching both the 2003 and 2018 versions of Mauritius’s Financial Intelligence and Anti-Money Laundering Regulations.

During March-April 2018, as per last available records, EIFM’s two Mauritius funds held 3.9% of Adani Power Limited, 3.86% of Adani Transmission Limited, and, at least, 1.73% of Adani Enterprise Limited.

Last month, based on documents accessed by a reporters’ consortium, Organized Crime and Corruption Reporting Project (OCCRP), British daily Financial Times claimed that to pick up and trade in Adani stocks, funds from unknown sources were channelled by two British Virgin Islands shell companies – United Arab Emirates national Nasser Ali Shaban Adil’s Gulf Asia Trade and Investment Limited and Taiwan national Chang Cung-Ling’s Lingo Investment Limited — through the Emerging India Focus Funds (Mauritius) and the EM Resurgent Fund (Mauritius) under the Global Opportunities Fund (Bermuda).

Both these individuals were associates of Adani Group chairperson Gautam Adani’s brother Vinod Adani, FT reported.

Records of offshore corporate service provider Trident Trust accessed by The Indian Express as part of the Pandora Papers investigation showed that these two shell companies registered in the BVI, were, indeed, linked to the Adani Group.