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EXCLUSIVE: Documents show investments by Adani Group associates into the Group – Part 2
Jan 19, 2024
Documents illustrate how associated of the Adani Group used shell companies in tax havens to trade in shares of publicly-listed companies.

In part 1 of this two-part series, AdaniWatch published documents that show how associates of the Adani Group established an intermediary company to overcharge an Adani company for machinery required for large power-generating plants. Funds were then allegedly siphoned off to entities in tax-haven countries that were controlled by Vinod Adani, the elder brother of Group founder, Gautam Adani.

This second part of the series publishes documents that show how associates of the Adani Group invested funds into the Indian stock market, seemingly exclusively into Adani companies, via shell companies established in tax-haven countries such as Mauritius and the British Virgin Islands.

On 31 August 2023, the Organised Crime and Corruption Reporting Project (OCCRP), a global network of investigative journalists, published a report in collaboration with the UK-based Guardian and Financial Times alleging over-invoicing by the Adani Group for power-plant equipment imported into India (see part 1). The reports, based on documentary evidence, also alleged that funds owned by associates of the Group had been heavily invested in publicly-listed companies of the Group in India.

The Adani Group denied the allegations, but the documents that were obtained by OCCRP and reported on by journalists Anand Mangnale, Ravi Nair and N B R Arcadio tell an altogether different story. These documents show that close business associates of Vinod Adani (who is Gautam Adani’s older brother, a citizen of Cyprus and based largely in Dubai) are investing and trading in shares and other financial instruments of publicly-listed companies that are part of the Adani conglomerate.

Interestingly, spokespeople for the Adani Group have not denied the association of the Group with the two individuals who have invested in Group companies. The two individuals are UAE citizen Nasser Ali Shaban Ahli (based in Dubai) and Taiwanese national Chang Chung-Ling. AdaniWatch is disclosing here for the first time the documents that show the complex web of entities used by Ahli and Chung-Ling.

UAE and Taiwan connections

Gautam Adani’s links with Chang Chung-Ling reportedly go back to the late 1980s. In 2018, Chung-Ling’s son, Chang Chien-Ting, was reported by a Taiwanese publication to have said that, in 1986, Gautam Adani and Chung-Ling met for the first time and hit it off immediately because they both wanted to do trade. The Adani Group was subsequently founded in 1988 as a small trading company. In 1997, Adani Global Limited was incorporated in Mauritius as a subsidiary of Adani Exports Ltd (AEL – later to become Adani Enterprises Ltd). Chung-Ling and Vinod Adani were directors of Adani Global Ltd. When AEL incorporated another subsidiary, Adani Global Pte Ltd, in Singapore in April 2000, Chung-Ling became a director in that company too, along with Vinod.

The Taiwanese report also said that Chang Chien-Ting (Chung-Ling’s son) was the Adani Group’s Taiwan representative.

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AdaniWatch has previously reported that Chang Chien-Ting is the ultimate beneficial owner of PMC Projects (India) Private Ltd, and that Chang Chung-Ling’s company, Gudami International (Mauritius) Limited, is the beneficial owner of Vyom Tradelink Pvt Ltd. Both companies are closely associated with the Adani Group.

In October 2008, Chung-Ling transferred Rs 2.23 crore (approximately US $300,000 at that time) as a Foreign Direct Investment to acquire equity shares in Mundra Ports and SEZ Ltd (later renamed as Adani Ports and Special Economic Zone Ltd). Situated on the coast of west Gujarat, Mundra is one of the major hubs of the Adani Group. It is the location of India’s biggest ‘special economic zone’ (SEZ), and the country’s largest privately operated port.

In August 2010, Gudami International Pte Ltd, Chung-Ling’s Singapore registered company, transferred US $18.63 million to Vyom Tradelink Pvt Ltd as a foreign direct investment. The 2009-10 annual report of AEL stated that Vyom was an Adani Group company.

Gudami International Pte Ltd made significant investments in various Adani Group companies from 2005 to 2015. Data from the Bombay Stock Exchange and AEL’s annual reports show that Gudami held stakes in listed companies of the Adani Group until June 2015.

The archived version of the now defunct website of Adani Shipping (Cina) Company Limited lists Gudami International Pte Limited, Singapore, as part of the Adani Group (see figure 1). This information appears not to have been disclosed by the Adani Group to the Indian government’s regulatory authorities.

Figure 1. Now defunct website of Adani Shipping (China) Co Ltd used to state that Gudami International Pte Ltd is an Adani Group company registered in Singapore.

Gudami International Pte appeared in the report of an investigation by the Enforcement Directorate (ED) in the Ministry of Finance (that is responsible for enforcing the Foreign Exchange Management Act and the Prevention of Money Laundering Act or PMLA) into allegations of bribery in a cancelled deal to purchase AgustaWestland helicopters for ‘very, very important persons’ in India. A July 2018 report in the Economic Times stated: ‘Gudami International Pte [Ltd] is among the three Singapore-based companies that investigators suspect received over Euros 2 million, which was allegedly laundered by raising bogus invoices…’

In 2019, the people behind Gudami International Pte applied to the Singapore authorities to strike off the company’s name and in March 2020, Gudami’s name was removed from the register of companies.

The above documentation shows that Chung-Ling has been involved with the Adani Group since the 1980s, often as a board member on an Adani Group company, and that the Gudami entities of which he was the owner made major transactions with Adani Group companies.

Allegations of incorrect invoicing of diamonds and power equipment

Chung-Ling has been identified in show-cause notices served by the India’s Directorate of Revenue Intelligence (DRI) on Adani Group companies in relation to the alleged misdeclaration of the free-on-board (FOB) value of cut and polished diamonds exported by Adani Enterprises (then Adani Exports) during 2004-05 and the alleged over-invoicing of power equipment imported by subsidiaries of Adani Power Limited between 2010 and 2013.

Ahli’s connection with the Adani Group first appeared in the same DRI show-cause notice on alleged misdeclaration of the FOB value of diamonds exported by AEL. The DRI alleged that Ahli’s company in the United Arab Emirates (UAE), Daboul Trading, actively colluded with the Adani Group in perpetrating the alleged scam. (Figures 13, 14 and 15 show that Daboul Trading was owned by Ahli.)

In part 1 of this series, it was reported that Ahli incorporated Electrogen Infra FZE (EIF) in the UAE and Electrogen Infra Holding (EIH) in Mauritius and later transferred the ownership of these entities to Vinod Adani. The DRI alleged that the UAE company, EIF, acted as an invoicing agent and marked up the prices to enable Adani Group companies to siphon money out of India.

During the period of the transactions referred to in this article (from 2013 to 2018), Ahli also was part of an Adani company in China along with many Adani Group employees.

Ahli’s and Chung Ling's investments in Adani stocks

On 24 August 2010, Chung-Ling incorporated Lingo Investment Ltd in the British Virgin Islands (see figure 2).

Figure 2. Incumbency certificate of Lingo Investment Ltd issued on 6 December 2012, by the company’s registered agent Trident Trust Company, from Tortola, British Virgin Islands. The document shows Lingo Investment was incorporated on 24 August 2010 and Chang Chung-Ling is the sole director since the date of incorporation.

In July 2013, Lingo Investment subscribed to the Class 1 (Sub-class A429) shares of the Bermuda-based Global Opportunities Fund (GOF) (see figures 3 and 3A). The significance of GOF was documented in part 1. It was the recipient of numerous investments by shell companies controlled by Vinod Adani in 2011.

Figure 3. A screenshot from Lingo Investment’s initial subscription to Global Opportunities Fund Ltd, Bermuda, dated 14 August 2013. Chang Chung-Ling’s signature can be seen on the document.

Figure 3A. Lingo Investment Ltd invests US $5 million in Class 1 (Sub-class A429) shares of the Bermuda-based Global Opportunities Fund (GOF)

Because GOF’s administrators asked for the source of income of Lingo Investment, Chung-Ling submitted a loan agreement between Lingo Investment and Ahli’s Daboul Trading Company LLC dated 1 September 2010 (see figures 4, 5 and 6).

Figure 4. Part of the loan agreement signed between Lingo Investment and Daboul Trading.Figure 5. Part of the loan agreement signed between Lingo Investment and Daboul Trading.

 

Figure 6. Part of the loan agreement signed between Lingo Investment and Daboul Trading.

According to the agreement, Lingo Investment borrowed $350 million from Daboul to ‘invest in the Asian equity market’ (figure 6).

GOF invested this money in two Mauritius-based funds – Emerging India Focus Fund (EIFF) and EM Resurgent Fund (EMRF). To satisfy the funds’ administrators in Mauritius, Trident Trust (the same management company which was the registered agent of Lingo Investment in the BVI) submitted a letter from Daboul Trading stating that until 3 December 2013, Daboul had disbursed $48 million as a loan during that year (figure 7).

Figure 7. Daboul Trading’s letter to the administrators of EIFF and EMRF stating Daboul disbursed $48 million as loan to Lingo Investment in 2013, till December. Interestingly, the funds’ administrator Trident Trust’s BVI office was the registered agent of Lingo Investment Ltd. (Refer to Figure 2)

In simple language, just like Vinod Adani’s Assent Trade (see part 1 of this series), Lingo Investment was also a company that existed only on paper (a shell company) and had no conventional source of income. 

Ahli was also incorporating shell companies. Gulf Asia Trade & Investment Ltd was incorporated in the British Virgin Islands on 19 May 2011 (figure 8).

Figure 8. Certificate of Incorporation of Gulf Asia Trade & Investment Ltd, issued by the Registrar of Corporate Affairs, British Virgin Islands, on 19 May 2011.

A few months later, another company in the British Virgin Islands, EZY Global Pte Ltd, merged with Gulf Asia (figure 9).

Figure 9. The merger certificate of EZY Global Pte Ltd with Gulf Asia Trade & Investment Ltd, dated 19 December 2011.

The database of the International Consortium of Investigative Journalists (ICIJ) shows that the shareholder of EZY Global Pte Ltd was Pranav Sevanti Vora (figure 10). Vora was the CEO of Adani Shipping and a director of Aashna Maritime Inc., a Panama-registered entity that is part of the Adani Group. He is still a leading figure in the Adani Group’s shipping business.

Figure 10. EZY Global Pte Ltd’s connection with Pranav Sevanti Vora, CEO of Adani Shipping. Graphics Credit: ICIJ

On 23 September 2011, Ahli incorporated a company in Mauritius named Mid East Ocean Trade & Investment Limited (figure 11).

Figure 11. Incumbency certificate of Mid East Ocean Trade & Investment Pvt Ltd shows that the company was incorporated on 23 September 2011 and Nasser Ali Shaban Ahli held 100% shares.

Two years later, on 10 October 2013, Ahli registered Gulf Arij Trading FZE in the Ajman Free Zone in the UAE (figure 12).

Figure 12. Incorporation certificate of Gulf Arij Trading FZE, issued by the Director General of Ajman Free Zone Authority, United Arab Emirates, on 10 October 2013.

According to documents seen by AdaniWatch, Mid East started subscribing to GOF shares in May 2013. Within a month of the subscription, its investment in GOF stood at US $46.539 million. The entire amount invested by Mid East in GOF was channelled through EIFF and EMRF to purchase shares in Adani Enterprises Ltd and Adani Ports and Special Economic Zone Ltd – two publicly listed companies.

Loans for share trading and a failed bank

On 25 May 2011, Ahli’s Gulf Asia signed a loan Agreement with Ahli’s Daboul Trading Co LLC to borrow US $400 million to ‘invest in the Asian equity market through various mutual funds’ (see figures 13, 14 and 15). As Vinod Adani had done for Assent Trade while borrowing money from EIH (see part 1), Ahli signed on behalf of the lender as well as the borrower.

Figure 13. Part of the loan agreement between Gulf Asia Trade And Daboul Trading.

Figure 14. Part of the loan agreement between Gulf Asia Trade And Daboul Trading.

Figure 15. Part of the loan agreement between Gulf Asia Trade And Daboul Trading. Shaban Ahli signed for the lender and the borrower.On 1 August 2013, Ahli’s Gulf Asia Trade subscribed to GOF shares (figures 16 and 16A). Ahli wrote to the fund’s administrators that his source of money for investment in the fund through Gulf Asia had come as a loan from Daboul Trading, and the money could not be described as ‘proceeds of crime’ – a term used by India’s Enforcement Directorate under the Prevention of Money Laundering Act (figure 17).

Figure 16. Gulf Asia’s subscription agreement with GOF dated 1 August 2013, signed by Nasser Ali Shaban Ahli.

Figure 16A. Gulf Asia’s subscription details with GOF, including the bank account details. For correspondence, the company provided the address and phone numbers of a chartered accountant firm in Dubai.

Figure 17. Letter from Gulf Asia to Trident saying that investment funds were not the proceeds of crime.On 3 December 2013, the same day Ahli’s Daboul Trading issued a letter to GOF stating that it had disbursed US $48 million to Lingo Investment, Daboul issued another letter to the same administrator of the fund, stating that it had disbursed US $34 million to Gulf Asia in 2013 from the US $400 million loan (figure 18). Interestingly, neither GOF’s administrators nor its auditors ever asked for identification of the source of income of Daboul Trading.

Figure 18. Letter from Daboul Trading, addressing the fund administrator Trident Trust in Mauritius, stating that Daboul disbursed $34 million to Gulf Asia as part of the signed loan agreement signed between them.By June 2014, Ahli started using global depository services in the way Vinod Adani had (see part 1). On 23 June, Citco, a unit of Citco Bank Nederland N V, wrote to GOF, informing it that they would like to subscribe to the non-voting shares of GOF (figure 19). In the letter, Citco clarified that it was acting on behalf of Falcon Private Bank, of which Mid East was the ultimate beneficiary (figure 20). (Falcon Private, owned by the government of Abu Dhabi, ceased operations at the end of March 2022 following allegations of money laundering.)

Figure 19. Document of Citco Global subscription to GOF shares on behalf of Falcon Pvt Bank Ltd for Mid East Ocean.

Figure 20. Document of Citco Global subscription to GOF shares on behalf of Falcon Pvt Bank Ltd for Mid East Ocean.

On 22 August 2014, Ahli’s Gulf Asia was holding US $176 million worth of shares in three listed Adani Group companies. On 21 September 2016, Ahli’s other company, Mid East Ocean, had an investment worth US $134 million in GOF (figures 21 and 22). According to documents seen by AdaniWatch, it appears that this entire amount was invested in Adani Group listed companies through two Mauritius based funds – EIFF and EMRF. 

Figure 21. As of 19 August 2016, Gulf Asia was holding shares of four listed companies of the Adani Group – Adani Enterprises Ltd, Adani Ports and Special Economic Zone Ltd, Adani Power Ltd and Adani Transmission Ltd. The holding’s market value was $176.76 million and had an unrealised gain of $39.25 million.

Figure 22. As of 31 March 2016, Mid East had subscribed to GOF shares worth $134.13 million. As per the documents seen by AdaniWatch, this entire amount was invested in Adani Group’s listed companies through two Mauritius based funds - EIFF and EMRF.

By September 2016, Chung-Ling’s Lingo Investment held over US $76 million worth of shares in four Adani Group companies (figure 23).

Figure 23. In August 2016, Lingo Investment was holding the shares of four Adani companies worth $76.74 million. The unrealised gain on this investment as of 19 August 2016 was $33.67 million. Interestingly, Lingo’s investment in Adani Enterprises Ltd was bearing losses.

By March 2017, Ahli started to invest through Gulf Arij. He also reduced his investment through Mid East by transferring a part of Mid East’s holdings in GOF (figure 24).

Figure 24. By end of February 2017, Ahli transferred $167.47 million worth of his GOF shares held through Mid East Ocean to his third company Gulf Arij Trading FZE.

Can these transactions be described as insider trading?

The entities associated with Ahli and Chung-Ling kept buying and selling Adani stocks. In their investment and trading list (through EIFF and EMRF), there were no other companies other than four listed companies of the Adani Group. Figures 25 and 26 show samples of the trading of shares in companies of the Adani Group done by Gulf Arij. Figures 27 and 28 are further examples of transactions of the companies of Chung-Ling and Ahli trading only in stocks of Adani Group companies. Chung-Ling had the same modus operandi as Ahli. He also invested and traded only on the shares of four listed Adani companies.

Figure 25. A few of the trading of Adani shares done by Gulf Arij between January and December 2017. Ahli’s companies did not invest or trade in any other stock or financial instruments but four listed companies of the Adani Group.

Figure 26. A few of the trading of Adani shares done by Gulf Arij between January and December 2017. Ahli’s companies did not invest or trade in any other stock or financial instruments but four listed companies of the Adani Group.

 

Figure 27. Examples of transactions of the companies of Chang Chung-Ling and Ahli trading only in Adani stocks. Chang Chung-Ling had the same modus operandi as Ahli. He also invested and traded only on the shares of four listed Adani companies.

Figure 28. Examples of transactions of the companies of Chang Chung-Ling and Ahli trading only in Adani stocks. Chang Chung-Ling had the same modus operandi as Ahli. He also invested and traded only on the shares of four listed Adani companies.It’s worth asking whether Chung-Ling and/or Ahli were associated with the promoters of Adani’s publicly-listed companies. Under the Indian Companies Act, 2013, ‘a promoter is a person who has been named as such in the prospectus or is identified by the company in the annual return filed every year. The definition also covers person(s) who has control over the affairs of the company, directly or indirectly whether in the capacity of a shareholder, director, or otherwise. Further, those person(s) in accordance with whose advice, directions, or instructions the Board of Directors of the company is accustomed to act, except in case of a person acting in a professional capacity, would also be considered as a promoter of a company.’ According to an OECD assessment of company ownership in India, the term promoter or promoter group denotes those persons that were instrumental at the time of establishing the company and those who are in control of the company, for example through shareholdings and/or their management position.

Chung-Ling, through his reported relationship with Gautam Adani going back to 1986 and through his directorships on various Adani companies, appears to have been strongly associated with the promoters of Adani Power Ltd and Adani Ports and Special Economic Zone Ltd. Nasser Ali Shaban Ahli owned a company (Daboul Trading) named by the DRI as having actively colluded with the Adani Group in perpetrating an alleged scam (see the section above about over-invoicing for diamonds and power equipment). In part 1 of this series, it was reported that Ahli incorporated two companies and later transferred their ownership to Vinod Adani, who was acknowledged by the Adani conglomerate in March 2023 as part of its ‘promoter group’.

According to documents seen by AdaniWatch, a company called Excel Investment and Advisory Services Ltd, owned by Mauritius-registered Assent Trade and Investment Pvt Ltd, itself owned by Vinod Adani, regularly charged the management companies of Global Opportunities Fund for advice on the investments made by the companies owned by Chung-Ling and Ahli. As the Financial Times explained it, the accounts of Chung-Ling and Ahli ‘at the Global Opportunities Fund were overseen by an employee of Excel Investment and Advisory Services, a Vinod Adani company, and Excel was paid an advisory fee related to their investments’.

Figures 29 and 30 show that Excel is a 100% subsidiary of Vinod Adani’s Assent Trade & Investment Pvt Ltd and that Vinod Adani (using his other name – Vinod Shantilal Shah) was one of two directors (the other also being associated with the Adani Group). Documents that AdaniWatch is not at liberty to publish show that Excel was charging the fund managers of GOF for the investments made by Lingo Investment, Mid Ocean Trade and Investment and Gulf Asia Trade & Investment (which were made exclusively in publicly-listed companies of the Adani Group, as described above).

Figure 29. Share certificate of Excel Investment and Advisory Services Ltd. It shows Excel is a 100% subsidiary of Vinod Adani’s Assent Trade & Investment Pvt Ltd.Figure 30. Excel Investment’s Register of Directors show Vinod Adani and Mehul Mahesh Jani, an Adani Group Employee are the directors of the company.

As the Financial Times explained, the relationships between Vinod Adani and Chung-Ling and between Vinod Adani and Ahli matter because Vinod is ‘part of the so-called promoter group, an Indian legal term for corporate insiders whose shareholdings are not supposed to exceed 75 per cent under stock market rules’.

Also, given that Vinod Adani has been acknowledged as part of the Adani conglomerate’s ‘promoter group’, and given that he is the elder brother of group chairman Gautam Adani, and given reports of his close involvement in major deals involving companies in the Adani Group, and given his various offshore companies’ investments in the Adani Group (as described in part 1), it seems pertinent to ask whether he was in possession of insider information on those Adani Group companies in which the companies owned by Chung-Ling and Ahli were buying and selling shares. Did the advice provided by his company, Excel Investment and Advisory Services Ltd, to the funds investing in Adani Group companies which managed the investments (for which a fee was charged) pertain to sensitive market information known only to corporate insiders? These circumstances suggest that the arrangement between Vinod Adani, Excel Investment and Advisory Services Ltd, and the companies of Chung-Ling and Ahli that seemingly traded exclusively in the shares of Adani Group companies, should be investigated as a potential case of insider trading.

By the end of 2017, Chang Chung-Ling and Ahli started redeeming their investments in EIFF and EMRF. According to documents seen by AdaniWatch, towards the end of December 2017, GOF’s investment in EIFF came down by 57% from the holding it had a few months earlier. In the first half of 2018, EIFF informed its investors that the fund was closing all classes and series and winding up its operation. GOF still held 100% of the capital in EMRF and Asia Vision Fund at that juncture. 

What did Chung-Ling and Ahli do with those hundreds of millions of dollars they redeemed from EIFF and EMRF? Did they route it to the Adani Group to transact in shares through other funds? That question must be answered through an investigation by a statutory regulatory authority. 

Will the Securities and Exchange Board of India (SEBI) probe the transactions in a manner that would be more comprehensive than the journalistic investigation done by Mangnale, Nair and Arcadio? In early January 2024, the Supreme Court directed SEBI to conclude its investigation into the Adani Group within three months. (According to the Modi government, SEBI’s investigation into the Adani Group’s potential misuse of foreign investors preceded release of the explosive Hindenburg report but subsequently became enmeshed with claims and counter-claims arising from the Hindenburg allegations.)

Shooting the messenger?

Even before the OCCRP report was published, the Adani Group sought to discredit it based on a questionnaire that was sent to group Chairman Gautam Adani and others. Immediately after OCCRP sent the questionnaire to the Adani Group, Magnale’s phone was infested with the Israeli spyware Pegasus. On 31 October 2023, Apple notified Magnale and Nair that ‘state sponsored attackers may be targeting’ their iPhones.

After the OCCRP report was published, the Adani Group issued a media statement that refuted the OCCRP’s suggestions, claiming that these ‘were based on closed cases from a decade ago when the Directorate of Revenue Intelligence (the DRI is the customs intelligence wing in the Government of India’s Ministry of Finance) probed allegations of over invoicing, transfer of funds abroad, related party transactions and investments through FPIs (or foreign portfolio investors)’. However, the Group did not deny the allegation that Chang Chung-Ling and Nasser Ali Shaban Ali are closely associated with the Group and were trading in the Adani Group’s listed stocks.

In October 2023, after publication of the stories referred to above, Mangnale and Nair were summoned by the crime branch of the Ahmedabad police in Gujarat (home state of both PM Narendra Modi and Gautam Adani) to appear in person for questioning in a ‘preliminary’ investigation. This ‘investigation’ was based on a complaint by a person described as an ‘investor’ who alleged that the OCCRP investigation was ‘grossly malicious’ and aimed at tarnishing Adani’s reputation. Subsequently, a similar summons was issued to two India-based journalists working for the Financial Times, Benjamin Nicholas Brooke Martin and Chloe Nina Cornish (neither of whom had written the article published on 31 August). The Supreme Court of India intervened in favour of all four journalists in November and granted them ‘interim protection against coercive action’, including arrest, by the Gujarat police. The case is ongoing.

(End of Part 2)

The writer is a journalist based in India who chooses to be anonymous.