Adani Categorically Rejects George Soros-Backed OCCRP's Report, Says 'Recycled Allegations' After Hindeburg

Conglomerate Adani Group does not seem to find any rest from its troubled days! After the American shortseller Hindenburg's bombshell report in January which led to billions of dollars of market rout and wiped out a huge chunk of Gautam Adanu's net worth, this time new findings have taken the limelight in the allegations that were first posed by Hindenburg. It would be journalist Paul Radu-founded Organized Crime and Corruption Reporting Project (OCCRP) that has taken a jive at the Indian port-to-power empire. However, Adani Group has rejected OCCRP's report while calling it "categorically recycled allegations".

On Thursday, Adani Group in a media statement said, "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. In fact, this was anticipated, as was reported by the media last week."

Further, the conglomerate 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."

OCCRP launched a report on August 30, specifically pointing out the essence of the allegations by the US short seller, and the investigation led by the Indian regulatories after the Adani-Hindenburg case was brought to the Supreme Court. OCCRP also highlighted briefly Adani's closeness to the country's Prime Minister Narendra Modi.

In its report, OCCRP said the allegation, levelled this January by a New York-based short seller, caused Adani stock to plummet, triggered protests, and prompted an investigation by India's Supreme Court. However the expert committee convened by the court was unable to get to the bottom of the scandal, which has serious political implications because of the group's widely perceived closeness to Prime Minister Narendra Modi and its central role in his plan for developing the country.

Explaining in detail, the OCCRP report said, the essence of the allegations was that some of the Adani Group's key "public" investors were in fact Adani insiders, a possible violation of Indian securities law. But none of the agencies contacted by the committee were able to identify those investors, since they were hidden behind secretive offshore structures.

But exclusive documents obtained by OCCRP and shared with The Guardian and Financial Times - including files from multiple tax havens, bank records, and internal Adani Group emails - shed light on that very matter, it added.

According to OCCRP, these documents reveal how hundreds of millions of dollars were invested in publicly traded Adani stock through opaque investment funds based in the island nation of Mauritius.

OCCRP specifically pointed out two cases --- representing Adani stock holdings that at one point reached $430 million. It alleged that the mysterious investors turned out to have widely reported ties to the group's majority shareholders, the Adani family.

The two names that once again popped up among these investors were Nasser Ali Shaban Ahli and Chang Chung-Ling, who OCCRP alleges 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 said 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. They also show that the management company in charge of their investments paid a Vinod Adani company to advise them on their investments.

Further, the George Soros-backed OCCRP cited a quote by Arun Agarwal, an Indian market specialist and transparency advocate who said, "When the company buys its shares above 75 per cent... it's not just illegal, but it's share price manipulation." Agarwal added, "This way the company [creates] artificial scarcity, and thus increases its share value - and thus its own market capitalization."

He furthe said in the report, "This helps them gain an image that they are doing very well, which helps them get loans, take valuations of companies to a new high, and then float new companies."

Highlighting in detail about 'brazen stock manipulation', OCCRP showed that the Adani Group's rise has been staggering, growing from under $8 billion in market capitalization in September 2013 - the year before Modi became prime minister - to $260 billion last year.

Nevertheless, OCCRP did request comments for this report, to which, a representative of the Adani Group noted that the Mauritius funds investigated by reporters had already been named in the "Hindenburg report," referring to the short-seller that sparked this year's scandal. (The report did name these offshore companies, but did not reveal who was using them to make investments in Adani stock.)

Also, the representative cited the Supreme Court's expert committee, which described a financial regulator's efforts to get to the bottom of the matter as "not proved.", OCCRP said.

Moreover, an Adani representative cited by OCCRP also said, "In light of these facts, these allegations are not only baseless and unsubstantiated but are rehashed from Hindenburg's allegations," adding, "It is categorically stated that all the Adani Group's publicly listed entities are in compliance with all applicable laws including the regulation relating to public shareholdings."

Ahli and Chang did not respond to OCCRP's requests for comment.

Following the report's publication, shares in the group's companies plummeted. Gautam Adani lost more than $60 billion in just a few days, dropping from third-richest man in the world to 24th, it said.

Majority of Adani stocks are trading in red on Thursday. The report also comes after the Sebi's final probe report which indicated that a dozen of foreign companies were situated in tax-haven countries which was challenging for the investigation.

While submitting its final report to SC last week, Sebi explained that since these foreign entities are situated in tax haven jurisdictions, it has become challenging to establish the economic interest of 12 FPI shareholders. Hence, Sebi has sought information from five foreign countries to identify the true beneficiaries behind foreign investors that were dealing with Gautam Adani's group.

Hindenburg in a bombshell report on January 24, accused Adani Group of brazen stock manipulation and accounting fraud scheme over the course of decades. Adani Group has denied Hindenburg's allegations as well.

Currently, the Adani-Hindeburg is pending for Supreme Court verdict.