September 10, 2023

The Unfolding Adani Saga: Fig Leaf is Gone

Nilotpal Basu

IN January-February, the second richest man of the world and his companies suffered a topsy-turvy in the share market. All the Adani companies’ shares experienced intense downslide. And the valuation of his wealth was halved and his position in the global wealth list slid down below the 20th position.

The US-based short seller, Hindenburg, produced a report that wreaked havoc on Adani's wealth. Despite initially rubbishing the report as an 'attack on India' and arrogating to himself a role he thought was synonymous with and equivalent to the country itself, the report's conclusion that the Adani group had executed 'the biggest con in corporate history' stuck for quite some time. In the share market which today is essentially global in nature, the damage could not be undone through rhetorical attacks on the messenger – Hindenburg. We had published in these columns a detailed piece, Adani: Saga of Fraud, Manipulation and Unprecedented Official on February 12, 2023 explaining the circumstances and the larger ramifications.

The charges were extremely grave: use of shell companies, use of overseas funds, round tripping and institutional and regulatory amnesia to allow the implicit gigantic violations of market rules. That Hindenburg report generated so much noise was also largely due to apparent regulatory failure and reluctance on the part of Indian regulatory authorities to probe independently and comprehensively the goings on in the Adani corporate empire. It was hardly surprising that the muck had also brought prime minister’s role under sharp focus.  The prime minister’s ominous silence in Lok Sabha on the pointed question as to what is the relationship between Modi and Adani also did not help matters. The question rings loud and comes back with a vengeance!


In the latest report, the Organised Crime and Corruption Reporting Project (OCCRP) had come out to put the absent pieces in the jigsaw puzzle cutting through the veil of secrecy of Adani’s financial dealings. And obviously the official patronage from the PM, not to speak of the regulators who were statutorily mandated to maintain independence and objectivity have come back to haunt.

The Supreme Court appointed expert panel had made their report on the Adani-Hindenburg issue public. The panel was mandated by the SC to provide an overall assessment of the issues arising out of the allegations against the Adani group. This development followed the apex court’s three month extension to the Securities and Exchange Board of India (SEBI) to conclude its investigation in the case. The expert panel has not been able to come to any definitive conclusion largely because of the lack of clarity in the SEBI submission. While there was a subtle tone of implicit acknowledgment for Adani’s efforts to gloss over the mess in the financial affairs of the company which also threatened the stability of the larger Indian capital market, many questions remained unanswered. 

Hindenburg report while raising grave concerns and making serious allegations on Adani’s wrong doings, certain gaps were left in the evidence. Hindenburg report was, in that sense, incomplete and stopped short of pinning down the evidence for precise legal violations. 

An investigation by the Organised Crime and Corruption Reporting Project (OCCRP), as reported in both Financial Times and The Guardian on August 31, has found that two Mauritius based funds, namely the Emerging India Focus Fund (EIFF) and the EM Resurgent Fund (EMRF) had invested and traded in large volume of shares of four Adani companies between 2013 and 2018. Two key foreign investors of these funds were Nasser Ali Shaban Ahli from UAE and Chang Chung-Ling from Taiwan.

The money was channelled through a Bermuda-based investment fund called the Global Opportunities Fund (GOF). The value of the investments of Nasser Ali and Chang Chung-Ling in Adani stocks was around 430 million dollars in March 2017 (approximately Rs 2,795 crore at prevailing exchange rate). In January 2017, these two investors together held 3.4 per cent of total shares in Adani Enterprises, 4 per cent in Adani Power and 3.6 per cent in Adani Transmission.

The OCCRP investigation has further revealed that a UAE-based secretive firm named Excel Investment and Advisory Services Limited owned by Vinod Adani, brother of Gautam Adani and member of Adani promoter group, had received over 1.4 million dollars in “advisory” fees from management companies of EIFF, EMRF and GOF between June 2012 and August 2014. The investigators have not only uncovered transaction trail, but also internal emails suggesting that EIFF, EMRF and GOF were investing funds into the Adani group stocks as advised by Excel Investment and Advisory Services Limited of Vinod Adani.

This is new prima facie evidence establishing that entities like EIFF, EMRF and GOF are fronts through which Vinod Adani has invested massive funds into Adani group companies stocks. If one adds the shareholding of Vinod Adani in three Adani companies – through offshore individuals and entities like Nasser Ali and Chang Chung-Ling via EIFF, EMRF and GOF, with the disclosed promoter group shareholding of those companies – the promoter group shareholding of Adani Enterprises and Adani Transmission would be over 78 per cent in January 2017. This would clearly breach the 75 per cent threshold contained in 19A of the Securities Contracts (Regulation) Rules.

The OCCRP is providing additional evidence beyond the Hindenburg report which alleged a vast global web of tax haven based on shell companies run by Vinod Adani. If more shell companies and transactions are investigated, it might further reveal breaches and contraventions of rules and regulations by the Adani group through the Vinod Adani association.


Adani group’s response to the OCCRP report was predictable – terming it as “recycled allegations”. However, apart from the question of breaching the maximum limit of shares held by the promoter group and its associates, there was another aspect of the report which is vital.  It provides a clue towards the reason for the gross regulatory failure. The report has pointed out that India’s market that SEBI was informed of the group’s dubious dealings on two occasions. In 2014, the chief of Directorate of Revenue Intelligence (DRI), the country’s premier financial investigative agency, informed the chairman of SEBI on a case under its investigation concerning alleged overinvoicing of equipment to the tune of more than Rs 6,000 crores by an Adani entity.  This investigation was not pursued further by SEBI.

In 2014, there was a momentous development in India, the assumption of prime minister’s office by Narendra Modi as prime minister. Upendra Kumar Sinha, the SEBI chairman, recipient of the DRI’s forewarnings regarding the alleged wrong doing by the Adani group, received two extensions under the Modi government. He continued as the SEBI chief between 2011 and 2017. And now, after Adani group’s takeover of the media company NDTV, Sinha has been appointed as the non-executive chairman in March this year, immediately after the release of the Hindenburg report. Sinha joined the IAS in 1976 as a Bihar cadre officer and has served in many capacities, particularly in the later period of his service career in crucial positions, dealing with the financial sector. Apart from NDTV, Sinha also serves as independent director of several corporate groups like Nippon India Life Asset Management, Vedanta, Havells and HDFC. Sinha’s appointment as recent as in March 2023 clearly raises the issue of ‘conflict of interest’.

The OCCRP report quotes Najeeb Shah, the then DRI director general on what he had written to Sinha in January 2014 – “There are indications that a part of the siphoned money may have found its way to stock market in India as investment and disinvestment in the Adani group”. Earlier, a question was asked about the astronomical rise in Adani share prices consequent of ‘roundtripping’ of funds as alleged by the Hindenburg report. The question has been reiterated by OCCRP. In response, Sinha had informed The Wire in February, “to the best of my information, the fact that there is roundtripping happening and that is why the share prices are rising that has come in public domain for the first time after this Hindenburg report.”

He further alleged that neither the SEBI nor the RBI is tasked to specifically look at the prices at which shares are trading, and that without some prior information that ‘hanky panky is happening’, this is not looked at. Clearly, Sinha was suffering a lapse of memory and the 2014 letter from DRI was completely off from his regulator’s radar!

Further on this matter, Sinha told Scroll, “you should not expect me in all fairness to remember everything what happened nine years ago, given that I retired from SEBI,” while leaving himself an escape route that he cannot “recollect what the facts are”. Sinha had attempted to dispel the charge of quid pro quo and tried to launch a counter offensive, “if something was done nine years back, and you are alleging I was given this directorship for that I have nothing to comment”.

The Guardian report quoting insiders state that the regulator’s interest in investigating the Adani group reportedly dwindled after Narendra Modi became the prime minister. The Adani-Modi connection cannot be wished off.  In 2014 when Modi became the prime minister, Gautam Adani was 629th in the global wealthiest list. By the end of 2022, before Hindenburg came into the public domain, Adani had risen to the second spot.


It is not necessary to dilate on the long and closest of close associations between Modi and Adani as it was covered in the earlier piece of Peoples Democracy on February 12, 2023. How power projects, ports and airports changed hands to make Adani the most vital public face of the Indian corporate brass is well recorded.

But a very recent report from Greek City Times reported that Modi showed keen interest in the Piraeus port during his latest ‘historic’ visit to Greece. Modi’s assertion that the port could be India’s “gateway to the European Union” rings a bell. There are, of course, reports on how Piraeus clearly points out Gautam Adani’s special interest for this Greek port.

Modi and Adani and their fortunes appear to be like that of conjoined twins. One cannot survive without the other. Therefore, the clinching evidence provided by Hindenburg earlier and OCCRP now present a clear actionable basis. However, Adani and SEBI must be given the right to defend their obvious wrongdoings before initiating any final punitive measure.

Since there is more than prima facie evidence that there is a possible complicity in obfuscating Adani’s wrongdoings, no government agency can be tasked to initiate any investigation or prosecution. Therefore, clearly, all well meaning political forces who are interested in the safeguarding of the constitutional and statutory processes must collectively demand a Supreme Court monitored action. This is an absolute imperative for protecting the image of the country and integrity of our capital market. ‘Na Khaunga, Na Khane Dunga’ rhetoric can no longer convince the public mind!