India’s billionaire businessman Gautam Adani’s family secretly invested millions of dollars in its own companies via “opaque” Mauritius funds, reported the Organised Crime and Corruption Reporting Project (OCCR) in its latest article.
These funds “obscured” the involvement of alleged business partners of the Adani family. Notably, the allies of the Adani family may have spent years discreetly investing in Adani Group’s own companies in the stock market during its rise in India, reported The Guardian referring to offshore financial records.
Adani associates “seemingly” controlled an “undisclosed and complex offshore operation in Mauritius” to allegedly “support the share prices of its group of companies from 2013 to 2018,” according to The Guardian report based on Organised Crime and Corruption Reporting Project (OCCR) article.
Adani shares traded via ‘opaque’ Mauritius funds twice
The OCCR review of files from multiple tax havens and internal Adani Group emails, reveals that Adani shares were bought and sold by investors through such offshore structures twice. In response to the report, Adani Group said that the Mauritius funds investigated by the report had already been mentioned in the Hindenburg report. “Allegations are not only baseless and unsubstantiated but are rehashed from Hindenburg’s allegations,” claimed Adani Group.
“Contrary to your claim of new evidence/proofs, these are nothing, but a rehash of unsubstantiated allegations levelled in the Hindenburg report. Our response to the Hindenburg report is available on our website. Suffice it to state that there is neither any truth to nor any basis for making any of the said allegations against the Adani Group and its promoters and we expressly reject all of them,” said Adani Group in response to the fresh allegations.
Brother Vinod Adani’s connection with Gautam Adani’s secret trading
The report also suggested the involvement of Gautam Adani’s brother Vinod Adani’s involvement in secret trading via Mauritius funds, reported The Guardian. However, the Adani Group has rejected the claim and clarified that Vinod Adani has “no role in the day-to-day affairs” of the company.
OCCR reported that two of Vinod Adani’s close associates emerged as sole beneficiaries of offshore companies through which the money appeared to flow, reported Guardian. Another connection of the secretive offshore trading was with Vinod Adani’s known employee. Financial records and interviews point that the investment made into Adani stock from two Mauritius-based funds was overseen by a Dubai-based company, run by a known employee of Vinod Adani.
Breach of 75% limit of stock holdings by promoters
The alleged offshore enterprise of the Adani associates signals a possible breaching of Indian market rules that prevent stock manipulation and regulate public shareholdings of companies.
As per rules, 25% of a company’s shares must be kept “free float”, which means they are available for public trade on the stock exchange. On the other hand, 75% can be held by promoters, who have declared their direct involvement or link with the firm. Vinod Adani has been acknowledged by the Adani group as a promoter.
The OCCR investigation reveals that Adani’s close allies Chang Chung-Ling and Nasser Ali Shaban Ahli owned 8% and 13.5% of the free-floating shares of four Adani companies. If those shares were classified as being controlled by Vinod Adani proxies, the Adani Group’s promoter holdings would surpass the 75% limit of promoter shareholding in a firm, set by SEBI.
The article has come after the controversial US-based short-seller Hindenburg Research which came early this year. It accused Gautam Adani’s group of improper business dealings, including the use of offshore entities in tax havens such as Mauritius from where it said certain offshore funds “surreptitiously” owned stock in Adani’s listed firms.
Adani Group has called Hindenburg’s claims misleading and without evidence and said it always complied with laws. Despite rejecting its claims, Hindenburg’s report resulted in a loss of $150 billion to the company in terms of market value. The company managed to recover from its losses after it repaid some debt and regained some investor confidence.
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Updated: 31 Aug 2023, 08:08 AM IST
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