Report uncovers foreign nationals channelling funds into Adani Group's offshore investments

Mumbai: Fresh questions have emerged about potential violations of Indian stock market regulations by the Adani Group following a recent investigative report published by the Organised Crime and Corruption Reporting Project (OCCRP).

The report, produced in collaboration with The Financial Times and The Guardian, sheds light on the significant investments made by two individuals closely associated with the Adani family into the conglomerate's stocks through opaque investment funds based in Mauritius.

Chang Chung-Ling from Taiwan and Nasser Ali Shaban Ahli from the United Arab Emirates, the two individuals in question, have deep-rooted ties with the Adani family and have served as directors and shareholders in Adani Group companies. They also share affiliations with Vinod Adani, the elder brother of group chairman Gautam Adani.

According to OCCRP, documents indicate that substantial amounts of money were funnelled into the Mauritius funds by Chang and Ahli, which were then used for trading shares of key Adani companies including Adani Power, Adani Enterprises, Adani Ports, and Adani Transmissions between 2013 and 2018.

While there is no direct evidence linking the origin of Chang and Ahli's investments to the Adani family, OCCRP alleges coordinated trading activities between them and the family. At its peak in March 2017, their investments in Adani Group stocks were valued at $430 million.

This revelation raises concerns about potential violations of the Securities Contract (Regulation) Act, which mandates a minimum 25% public shareholding in listed companies.

The involvement of Chang and Ahli in trading Adani stocks has also raised questions about share price manipulation and the conglomerate's compliance with ownership limits. According to Arun Agarwal, a stock market specialist and transparency advocate, holding over 75% of a company's shares could lead to artificial scarcity, thereby inflating share prices and increasing market capitalization.

OCCRP indicates that during their investment peak, Chang and Ahli controlled between 8% and 13.5% of the free-floating shares of the four Adani companies.

This report follows earlier allegations by American investment firm Hindenburg Research, which accused Vinod Adani of creating and managing a network of offshore shell entities for purposes like market manipulation and money laundering. While the Adani Group rejected these allegations, the Hindenburg report had a notable impact on the conglomerate's stock prices.

Even as these allegations and investigations came out, the Supreme Court-appointed expert panel had stated that regulatory failures could not be conclusively established. The report also uncovers a potentially significant development – a document suggesting that the Directorate of Revenue Intelligence had informed the Securities and Exchange Board of India (SEBI) about evidence related to offshore funds connected to the Adani Group as far back as 2014.

In response to the OCCRP report, the Adani Group strongly denied the allegations, describing them as "recycled" and accusing them of being part of a larger agenda. The conglomerate claimed compliance with all applicable laws, including regulations regarding public shareholdings.