Indian conglomerate Adani is facing a new controversy. A report released today by the investigative group OCCRP says the group used funds to circumvent rules preventing stock price manipulation. According to the report, the conglomerate invested millions of dollars in shares of its own divisions through offshore structures. The OCCRP cites two investors it says bought and sold shares on behalf of the group. The Adani Group has rejected the allegations, calling them unfounded. The funds in question are being investigated by the Securities and Exchange Board of India (SEBI).
Investigation of Adani
The OCCRP has named two Mauritius-based offshore funds, namely Emerging India Focus Fund (EIFF) and EM Resurgent Fund (EMRF). The latter are major investors in certain Adani group companies through a Bermuda-based investment fund called Global Opportunities Fund.
The named funds bought between eight and 14 percent of the shares of four of the group’s divisions, namely Adani Power, Adani Enterprises, Adani Ports and Adani Energy Solutions, according to the investigative group. The funds named in the report are already part of a regulatory investigation and any new facts will be assessed by the regulator, sources told Reuters.
The Adani conglomerate operates in India and other countries in a wide range of sectors. It trades commodities, operates airports and ports, provides utilities and is active in renewable energy. It is headed by billionaire Gautam Adani, who ranks 20th in Blomberg’s updated billionaire ranking with an estimated fortune of $64.1 billion.
The Indian businessman is close to Indian Prime Minister Narendra Modi and has long faced accusations from opposition politicians that he benefits from his political connections. Adani, however, denies this.
Reputation is at stake
Earlier this year, the conglomerate’s reputation and value were shaken by the findings of analysts at Hindenburg Research. They alleged that Adani group companies had been involved in stock manipulation and accounting fraud for decades. They also had significant debts that put the group on shaky financial footing, according to the analysts. Again, the Adani group has denied the allegations, and moreover has described them as an attack on India.
The investigation into these allegations by SEBI is currently being overseen by a commission appointed by the Supreme Court of India.
The OCCRP report states that the two investors traded hundreds of millions of dollars worth of Adani Group shares over the years. The two men, it said, had close ties to the Adani family and were directors and shareholders of companies associated with the group.
The investigative group said there was no evidence that the funds they used for their investments came from the Adani family. But it added that the reports and documents the investigative journalists had reviewed “provide evidence” that their trading in Adani shares was coordinated with the family.