‘UAE, Taiwan nationals with links to Adani brother bought shares in group companies’: FT report based on OCCRP documents

The relationship of these two men — Nasser Ali Shaban Ahli from the United Arab Emirates and Chang Chung-Ling from  Taiwan —with Vinod Adani holds significance since he is part of the ‘promoter group’. Market regulator Securities and Exchange Board of India (SEBI) requires that the shareholding of the ‘promoter group’ in listed companies should not exceed 75 per cent, or in other words, at least 25 per cent of the equity of a company should be compulsorily held by the public.

If the two men were to be treated as proxies for Vinod Adani and hence part of the promoter group, it would have meant Adani companies repeatedly breached the rules designed to prevent artificial inflation of share prices, the FT report indicated.

The Supreme Court of India is already hearing a case on the allegations made by the Hindenburg Research report; giving a status update, market regulator Securities and Exchange Board of India (SEBI) told the court last week that its investigation report on alleged violations of minimum public shareholding in Adani Group companies is interim in nature. It is gathering details pertaining to “economic interest shareholders” of 12 FPIs which are public shareholders of the Adani Group companies, and is awaiting information from external agencies/ entities, SEBI said.

Nasser Ali Shaban Ahli from UAE and Chang Chung-Ling from Taiwan, the FT report said, used a series of bespoke investment structures within the Global Opportunities Fund in Bermuda to exclusively trade in Adani stocks. The report is based on the documents shared by the Organized Crime and Corruption Reporting Project (OCCRP), a network of investigative journalists, with FT.

“The two men… have longtime business ties to the family and have also served as directors and shareholders in Adani Group companies and companies associated with one of the family’s senior members, Vinod Adani,” OCCRP reported separately. “The documents show that, through the Mauritius funds, they spent years buying and selling Adani stock through offshore structures that obscured their involvement — and made considerable profits in the process,” OCCRP said.

“They also show that the management company in charge of their investments paid a Vinod Adani company to advise them in their investments,” OCCRP said. FT said their investments were overseen by a Vinod Adani employee, raising questions over whether they were frontmen used to bypass rules for Indian companies that prevent share price manipulation.

The FT report also raises questions on the vigilance of India’s regulatory institutions including SEBI, and indirectly points a finger at UK Sinha who was the SEBI Chairman between 2011 and 2017. “SEBI’s chair at the time left in 2017. In March this year he became non-executive chair of New Delhi Television, owned by the Adani Group, which said he was an individual of ‘impeccable integrity’.” When contacted, UK Sinha told The Indian Express that his name was not mentioned in the report.

Pointing to two separate investigations into Adani that were underway in January 2014, the FT reported that the head of the Department of Revenue Intelligence wrote to his counterpart at SEBI since it was investigating “the dealings of the Adani Group of companies in the stock market.” The DRI head’s letter was accompanied by a CD of evidence from a probe into alleged inflated invoices at Adani power projects, and said, “There are indications that a part of the siphoned off money may have found its way to stock markets in India as investment and disinvestment in [the] Adani Group.”

“The DRI sent demands for information just before (Prime Minister Narendra Modi) Modi took office in May 2014… Three years later, the directorate’s adjudicating authority cleared Adani and closed the case,” the FT report said.

The Adani group on Thursday denied the report published by the Financial Times and OCCRP. “We categorically reject these recycled allegations. These news reports appear to be yet another concerted bid by Soros-funded interests supported by a section of the foreign media to revive the meritless Hindenburg report,” the Adani Group said in a statement.

Shares of Adani Group traded weak on Thursday. While Adani Enterprises closed the day witnessing a fall of 3.8 per cent, share price of Adani Ports and SEZ fell 3.4 per cent. Barring ACC, which saw its share price rise 0.5 per cent during the day, all other Adani Group companies witnessed a decline between 2.2 per cent and 4.5 per cent.

In January 2017, Ahli and Chang secretly controlled at least 13 per cent of the free float — the shares available to be traded by the public — in three of the four Adani companies listed at the time, including the group’s flagship Adani Enterprises, FT said.

Quoting documents, FT said that Ahli and Chang began their investments in Adani stocks in 2013, when the group sold equity to private investors to increase the public shareholding at three listed companies as regulator SEBI tightened enforcement of the 75 per cent rule.

At a press conference in Mumbai, Congress leader Rahul Gandhi said India’s reputation was at stake and questioned Prime Minister Narendra Modi’s “uncomfortable” silence and denial to order a Joint Parliamentary Committee probe into the matter. “It seems like an institutional network whereby foreign money is being pumped into buying ports, airports and infrastructure projects of India. Why is Prime Minister Narendra Modi quiet about this? Why is there no probe? Why are agencies like CBI and ED not probing into this?” asked Gandhi.

Refuting the FT report, the Adani statement said, “These claims are based on closed cases from a decade ago when the Directorate of Revenue Intelligence (DRI) probed allegations of over invoicing, transfer of funds abroad, related party transactions and investments through FPIs.”

The group said that an independent adjudicating authority and an appellate tribunal had both confirmed that there was no over-valuation and that the transactions were in accordance with applicable law. “The matter attained finality in March 2023 when the Supreme Court of India ruled in our favour. Clearly, since there was no over-valuation, there is no relevance or foundation for these allegations on transfer of funds,” it said.

These FPIs (foreign portfolio investors) are already part of the investigation by the SEBI, it said, adding that as per the Expert Committee appointed by the Supreme Court, there is no evidence of any breach of the minimum public shareholding (MPS) requirements or manipulation of stock prices.

“These attempts are aimed at generating profits by driving down our stock prices and these short sellers are under investigation by various authorities. As the Supreme Court and SEBI are overseeing these matters, it is vital to respect the ongoing regulatory process,” the group said in the statement.