All Adani Shares Under Pressure After Pandora Confirms Group's Link To Shell Firms; 2 Investors Involved?

The majority of Adani stocks traded under pressure on Friday as the latest to join the league of linking the port-to-energy conglomerate with shell companies would be Pandora Papers. As per a report, Pandora Papers confirms Adani Group's linking to BVI shell firms named in the OCCRP report. The names of two men keep popping up when Adani is linked with shell firms. These would be Nasser Ali Shaban Ahli and Chang Chung-Ling.

At the time of writing, flagship firm Adani Enterprises dropped by 2% in today's early trading bell, while Adani Ports also slipped by 1.53%. Adani Power shed nearly 2.7%, Adani Energy Solutions also dipped by 2.3%, Adani Green Energy tumbled by 2.5%, while Adani Total Gas even neared its 52-week low with a drop of 1.9%. But it was FMCG player Adani Wilmar who was the worst hit in Adani's portfolio, falling 3.3%.

Among cement stocks, both ACC and Ambuja Cements dropped by over 1% each, although, they have gained momentum and recovered their early losses as of now in the day. Meanwhile, media stock NDTV dropped by over 1.5%.

The Indian Express reported that according to records of offshore corporate service provider Trident Trust which has been accessed by them as part of the Pandora Papers investigation with the International Consortium of Investigative Journalists, the two offshore shell companies registered in the British Virgin Islands (BVI), named by Financial Times as vehicles that invested in Adani stocks, are linked to the Adani Group.

On Thursday, the Financial Times reported that two men were using the fund for a specific purpose - to amass and trade large positions in shares of the Adani Group, one of the biggest and most politically connected private conglomerates in India.

FT revealed the names of the two men namely Nasser Ali Shaban Ahli from the United Arab Emirates and Chang Chung-Ling from Taiwan who are allegedly associated with Vinod Adani, brother of the conglomerate's founder Gautam. The media house revealed that 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.

Documents were shared with the Financial Times and The Guardian by the George Soros-backed OCCRP (Organized Crime and Corruption Reporting Project).

On August 30, OCCRP released its own research on the scandals-trapped Adani Group. OCCRP's research took a closer look into 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.

OCCRP eventually revealed that two men who secretly invested in the massive conglomerate turned out to have close ties to its majority owners, the Adani family, raising questions about violations of Indian law.

According to OCCRP, new documents obtained by reporters reveal two men who spent years trading hundreds of millions of dollars worth of Adani Group stock: Nasser Ali Shaban Ahli and Chang Chung-Ling. Both have close ties to the Adani family, including appearing as directors and shareholders in affiliated companies.

It added records show that the investment funds they used to trade in Adani Group stock received instructions from a company controlled by a senior member of the Adani family.

Explaining further in detail, OCCRP also said that Ahli and Chung-Ling 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.

"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 in their investments," it added.

Further, documents obtained by reporters show that a large percentage of the money was placed into these funds by two foreign investors - Chang from Taiwan and Ahli from the United Arab Emirates - who used them to trade large amounts of shares in four Adani companies between 2013 and 2018, as per OCCRP.

Also, OCCRP pointed out there were four companies used in the investments Lingo Investment Ltd (BVI), owned by Chang; Gulf Arij Trading FZE (UAE), owned by Ahli; Mid East Ocean Trade (Mauritius), of which Ahli was the beneficial owner; and Gulf Asia Trade & Investment Ltd (BVI), of which Ahli was the "controlling person."

Nasser Ali Shaban Ahli is from the United Arab Emirates and Chang Chung-Ling is from Taiwan.

OCCRP questions whether this arrangement is a violation of the law and whether Ahli and Chang should be considered to be acting on behalf of Adani "promoters," a term used in India to refer to the majority owners of a business holding and its affiliated parties.

If so, OCCRP said, "their stake in the Adani Group would mean that insiders altogether owned more than the 75 per cent allowed by law."

It's not like these two names are coming to light for the first time for their reported involvement with Adani Group. In fact, both Chang and Ahli's connections to the Adani family have been widely reported over the years. OCCRP said, "The men were linked to the family in two separate government investigations into alleged wrongdoing by the Adani Group. Both cases were eventually dismissed."

Both Chang and Ahli have come under the radar of authorities in India.

OCCRP mentioned that the first case involved a 2007 investigation into an allegedly illegal diamond trading scheme by the Directorate of Revenue Intelligence (DRI), India's premier investigative agency under the Ministry of Finance. Further, it cited a DRI report that described Chang as the director of three Adani companies involved in the scheme, while Ahli represented a trading firm that was also involved.

During the 2007 investigation, it was alleged that Chang shared a Singapore residential address with Vinod Adani, the low-profile older brother of the Adani Group's chairman.

The second time the two names appeared was when an alleged over-invoicing scam was revealed in a separate 2014 DRI investigation. OCCRP said the agency claimed that Adani Group companies were illegally funneling money out of India by overpaying their own foreign subsidiary by as much as $1 billion for imported power generation equipment.

When Hindenburg accused Adani of brazen stock manipulation in its report dated January 24, the US short seller also stated that Chang was either a director or shareholder in a Singapore company that was listed as a "related party" in a disclosure by an Adani company.

However, it needs to be noted that Adani Group has categorically rejected OCCRP's report while calling it "recycled allegations" after Hindenburt's report.

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