A letter from the Directorate of Revenue Intelligence (DRI) that has come to light recently reveals that the Securities and Exchanges Board of India (SEBI) was aware of the siphoning of funds as far back as 2014. According to the letter, the DRI had found that the Adani Group had siphoned off approximately Rs 6,278 crore abroad through “gross over-valuation” in the import of machinery and infrastructure material. Further, the DRI letter also points to the siphoning of Rs 2,323 crore, discovered while investigating the Adani Group’s stock market dealings. The letter was sent in 2014 by Najib Shah, the then director general of the DRI, to SEBI.
The letter was brought to light by activist and Supreme Court advocate Prashant Bhushan. In the letter, the DRI director general writes, “Briefly, the issue relates to gross over-valuation of import of equipment and machinery by various entities of Adani Group from UAE based intermediary. The extent of money siphoned off abroad using the modus operandi of over-valuation by the Adani Group is estimated at approximately Rs 6,278 crores.” The letter also says, “Investigations have further revealed that a substantial portion of the siphoned money has been transferred to Mauritius from Dubai, and there are indications that a part of the siphoned money may have found its way to stock markets in India as investment and dis-investment in Adani Group.”
Najib Shah further says, “It is understood that SEBI is investigating the dealings of the Adani Group of companies in the stock market. Accordingly, a CD containing the evidence regarding the siphoning of Rs 2,323 crore is enclosed herewith.”
This revelation comes after The Guardian published a report on Thursday, August 31, based on findings by the Organised Crime and Corruption Reporting Project (OCCRP). According to The Guardian, exclusive documents obtained by OCCRP — including files from multiple tax havens, bank records, and internal emails of Adani Group — shed light on stock manipulation. According to the documents, Chang Chung-Ling and Nasser Ali Shaban Ahli, who have both been directors of Adani-linked companies, began setting up offshore shell companies in Mauritius, the British Virgin Islands and the United Arab Emirates in 2010.
Four such shell companies invested hundreds of millions of dollars into an investment fund in Bermuda called Global Opportunities Fund (GOF). From 2013 onwards, money from GOF flew into two funds to which GOF subscribed: Emerging India Focus Funds (EIFF) and EM Resurgent Fund (EMRF). From 2013 onwards, EIFF and EMRF repeatedly bought Adani stock low and sold it high.
Between them, at the peak of their investment in June 2016, the two funds held free-floating shares of four Adani Group companies ranging from 8 to nearly 14%—Adani Power, Adani Enterprises, Adani Ports, and Adani Transmissions.
This report by The Guardian follows earlier allegations made against the Adani Group in the Hindenburg Report. In January this year, Hindenburg published a report accusing the Adani Group of widespread manipulation and malpractices to inflate their stock prices. In response to these allegations, the Adani Group, in a 413-page response, likened the allegations made by Hindenberg to a “calculated attack” on India, its institutions and its growth story, and called it “nothing but a lie.”
The revelation of the DRI letter from 2014 to SEBI, has led to opposition leaders asking why no action has been taken so far.