India Finance
Exclusive: Was Adani’s associate in China involved in violating UN Security Council sanctions against North Korea?
Mar 02, 2023
People and companies associated with the Adani Group are also connected to a vessel documented by the UN Security Council as having violated sanctions against trading with North Korea in 2017. Image Kim Jong-un, Wikimedia Commons

There is evidence indicating that an entity linked to the Adani Group financially supported a company that violated sanctions imposed by the United Nations Security Council (UNSC) on trade with North Korea. The sanctioned company was owned by sons of Chang Chung-Ling, an Adani Group associate who appeared in the Hindenburg report due to his directorship of Adani entities under scrutiny in that report. At the heart of this issue is a tanker that transferred oil products to a North Korean ship in violation of UNSC sanctions in December 2017. A 2018 report by the UNSC on illegal trade with North Korea identifies this vessel and associated people and companies. This article analyses other official materials to show that those people and companies have documented ties to the Adani Group.

Gautam Adani’s business empire has had a long-standing relationship with the People’s Republic of China. From the time he started his career as a trader in the late 1980s to becoming one of the richest men in the world, he maintained a close connection with Chinese firms. Just before Narendra Modi became the Prime Minister of India in May 2014, the Directorate of Revenue Intelligence (DRI) in the Ministry of Finance served two show-cause notices on his companies alleging over-invoicing of power-generation equipment from China. The cases are in court. The latest revelations about his Chinese associate are likely to generate a controversy.

Summary

Chang Chung-Ling, also known as (aka) Lingo-Chang, is closely associated with the Adani Group through various directorships. According to the Hindenburg report, Lingo-Chang’s son, Chien-Ting Chang (aka Morris Chang), is the representative of the Adani Group in Taiwan. (This is NOT the Morris Chang who is a well-known American-Taiwanese businessman known for his work in the field of semiconductors.) Lingo-Chang has another son, Chien-Huan Chang, aka Norris (!) Chang. Together, Morris and Norris Chang are involved in shipping companies that have violated sanctions against trading with North Korea and which also are involved with shipping companies using the Adani brand.

One such entity is Adani Shipping (China) Co Ltd, whose website said it was catering for the international trade of Adani Global Ltd (a direct subsidiary of Adani Enterprises Ltd – the flagship company of the Adani Group) and Hi Lingo Co Ltd (a trading company owned by Lingo-Chang). Until 2019, Adani Shipping (China) owned another Adani-branded company, Shanghai Adani Shipping Co Ltd (liquidated in 2019 for reasons that will become clear), which in turn owned a company called Firstec Maritime. Interestingly, Firstec Maritime also lists Morris and Norris Chang as owning 80% of its shares.

In late 2017, Firstec Maritime paid for the time charter of a tanker called the Koti, owned by the M.T. Koti Corporation, registered in Panama. The registered address of two of the three directors of Koti Corporation (before it was wound up) was the same address as for Hi Lingos, the trading company owned by Lingo-Chang. Two of the three directors of the Koti corporation are Morris and Norris Chang.

In December 2017, on a voyage partially paid for by Firstec Maritime, the Koti was seized by South Korean authorities after allegedly making an at-sea transfer of oil / petroleum products to a North Korean tanker. This transaction violated UN Security Council sanctions against North Korea. Details of the violation were documented by a UNSC report that named Koti, Firstec and Morris and Norris Chang. The Koti was impounded for at least two years before being scrapped by the South Korean government. No apparent effort was made in the courts to save or retrieve the Koti by the vessel’s owners. At around the same time, the Shanghai Adani Shipping company was wound up.

Map published in Maritime Executive showing the area of violation of sanctions and the Koti.

The links between this breach of UNSC sanctions and the Adani Group are as follows:

  • Firstec (that partially funded the voyage) was owned by the Shanghai Adani Shipping company, an entity engaged in servicing the requirements of Adani Global and Hi Lingos (owned by Lingo-Chang);
  • Morris and Norris Chang were directors of Koti Corporation, owner of the vessel that made the illegal ship-to-ship transfer. Morris Chang is described as the Adani Group’s representative in Taiwan;
  • Morris and Norris are the sons of Lingo-Chan, who has been a director of several Adani entities, and whose role features in the Hindenburg report;
  • Lingo-Chang, who has been a director of several Adani entities, is the owner of Hi Lingos, serviced by the Adani Shipping (China) company. Hi Lingos has the same registered address as for the Koti Corporation, owner of the vessel that violated the sanctions.

The details, including all sources, of this saga follow below.

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Lingo-Chang

In July 2021, the lead author of this article wrote a detailed two-part investigation that was published by AdaniWatch about foreign portfolio investors (FPIs) associated with the Adani Group. In one of the articles, it was revealed that a Chinese national, Chang Chung-Ling, also known as (aka) Lingo-Chang, is closely associated with the Adani Group, and was a director in many group companies together with Gautam Adani’s older brother, Vinod Adani (aka Vinod Shantilal Adani aka Vinod Shantilal Shah; over the past six weeks, Vinod Adani has himself become a figure of great notoriety).

Documents accessed by the DRI indicated that Lingo-Chang and Vinod Adani had a close business association. The article explained how one of the FPIs, Gudami International, was struck off the companies’ registry of Singapore after its name appeared on a list of companies that had allegedly laundered money in a scandal to purchase helicopters for VVIPs (Very Very Important Persons) by the Indian government.

The report by Hindenburg Research that was published on January 24 2023 threw more light on the intricate relationship between Lingo-Chang and the Adani Group. A reference was made in the Hindenburg report to another report published in Taiwan in 2018 wherein it was written that Lingo-Chang’s relationship with the Adani Group goes back to the second half of the 1990s.

Besides Gudami International, Lingo-Chang was a director in another Adani Group company, Adani Virginia Inc. The 2006-07 annual report of Adani Enterprises Ltd describes Adani Virginia as a ‘wholly owned subsidiary’ of Adani Global FZE, Dubai, that, in turn, is a subsidiary of Adani Global Pte. Ltd., registered in Singapore, which has been owned by Adani Global Ltd, a private ‘holding company’ incorporated in Mauritius. Adani Enterprises Ltd is the ‘ultimate holding company’ of Adani Global FZE, Adani Global Ltd and Adani Global Pte. Ltd.

Vinod Shantilal Shah (aka Vinod Adani) signed the directors’ report for Adani Global FZE for that financial year.

A screenshot from AEL’s annual report for 2003-04 showing both Chang Chung Ling (aka Lingo-Chang) and the notorious Vinod Adani as directors.

According to the data published by Open Corporate, the largest open database of companies in the world, Lingo-Chang was the chairman of Adani Virginia Inc. In July 2021, the month that AdaniWatch published its findings on Lingo-Chang’s connections with the Adani Group, the company was dissolved.

Lingo-Chang’s name also appeared in the 2017-18 Panama Papers that contained a list of entities in tax havens connected with rich and powerful people across the world. The list was published by the International Consortium of Investigative Journalists (ICIJ). Lingo-Chang has been mentioned in the list as a director and shareholder of the British Virgin Islands-registered Freeman Holding Investment Co. Ltd. The ICIJ mentions his address as 9F, No.65, Jianguo N Rd, Jhongshan District, Taipei, Taiwan, ROC (or Republic of China, the official name of Taiwan). 

Caption: Chang Chung-Ling (commonly known as Lingo-Chang) in group that includes Gautam Adani in picture featured in Hindenburg ReportMorris and Norris Chang

The Hindenburg Research report, quoting reports in the Taiwanese and mainland China media, states that Lingo-Chang’s son Chien-Ting Chang (aka Morris Chang), is the representative of the Adani Group in Taiwan. The report also says that Morris Chang is the significant beneficial owner of an Indian company, PMC Projects (India) Pvt. Ltd., a brainchild of Malay Mahadevia, who has been with the Adani Group since 1992 and is currently a wholetime director of Adani Ports and Special Economic Zone and the CEO of Adani Airport Holdings Limited. Gautam Adani and Mahadevia are close friends as well as professional associates.

Chang Chung-Ling’s family members are connected with the Adani family on the social media platform Facebook. Chien-Huan Chang aka Norris Chang, has a son who is Facebook friends with four members of the Adani family, including Priti Adani and Karan Adani (the wife and son of Gautam Adani). The daughter of Morris Chang is ‘friends’ on Facebook with many members of the Adani family, including Priti.

On Twitter, Norris Chang has retweeted posts by Gautam Adani and has ‘liked’ multiple posts from Adani family members and group company handles. Some of these Tweets were as recent as October 2022.

The Koti's illegal transfer of fuel to a North Korean ship

Reuters and The Guardian of the UK have reported that, in December 2017, South Korea seized a Panama-registered oil tanker named Koti on suspicion that it was transferred oil products to a vessel from North Korea (officially, the Democratic People’s Republic of Korea or DPRK) in violation of sanctions imposed by the United Nations Security Council (UNSC). In 2017, the UNSC imposed sanctions on North Korea to limit its access to crude oil and refined petroleum products. (For the violation of these sanctions, the South Korean government dismantled and scrapped the KOTI in 2020.)

The UNSC report on sanctioned ships/vessels, published on 5 March 2018, says that the Koti with an IMO number 9417115 – the International Maritime Organisation or IMO issues a unique identification number for each ship – was engaged in a ship-to-ship transfer of oil products with the North Korean tanker named Kum Un San 3 (IMO: 8705539).

A screenshot of the 2018 United Nations Security Council report detailing violations of sanctions against North Korea.The owner of the ship named Koti was an entity named M. T. Koti Corporation, registered as an ‘anonymous society’ in Panama. Why an anonymous society?

A firm providing legal services in Panama explains what this means: ‘Every time you want to start a business in Panama, the first step is the creation of an anonymous society, or S.A. The corporation is named S.A. (in Spanish: Sociedad Anónima) because the owner, or owner thereof, is held under complete anonymity as this does not appear on the public registry of Panama; it is something that only appears in the shareholders’ documents, which are private documents of each business.’

It was further disclosed in the UNSC report that the actual owners of the Koti are based in Taiwan and that the owner’s address is 7F, No. 85, Sec. 2, Chenggong Rd., Taoyon District, Taoyuan City, Taiwan. Koti Corporation’s three directors were ‘Chien-Ting Chang, Chien-Huan Chang (aka Norris Chang) and Shih-Chuan Kao.’ The first two are Morris and Norris, sons of Lingo-Chang. 

The UN Security Council Consolidated Sanctions list indicates that Koti Corporation was sanctioned by the UNSC. In the United States Trade Consolidated Screening List (CSL) of the Department of Commerce of the US government, both the ship named Koti and the Koti Corporation are sanctioned entities. 
The Open Corporate database also describes Chien-Ting Chang (aka Morris Chang), Chien-Huan Chang (aka Norris Chang) and Shih-Chuan Kao as directors of M. T. Koti Corporation of Panama. 

Firstec Maritime

According to the UNSC report, M.T. Koti Corporation leased the Koti to Auria Resource Co. Ltd., registered in Samoa, with its office in Taipei at 6F-2, No. 51 Hengyang Road. Auria claimed it leased the vessel on a ‘time charter’ to Sailing Petrochemical Inc. in Taiwan just before the ship-to-ship transfer occurred. According to footnote 58 of the UNSC report, the payments made to Sailing Petrochemical for the cost of this voyage came from two companies – Firstec Maritime Ltd. and Xin Miao Co. Ltd.

Screenshot of detail from the 2018 report of the UN Security Council on violations of sanctions on trade with North Korea that identifies Morris and Norris Chang and their formal connection to the Koti.(In Time Charter, the shipowner is responsible for the vessel’s running expenses, i.e. crew, repairs and maintenance, stores, master’s and crew’s wages, hull and machinery insurance, etc. The owner operates the vessel technically, but not commercially. The owners bear no cargo-handling expenses and do not normally appoint stevedores.)

A Google search on Firstec Maritime shows the address of the company as ‘c/o Shanghai Adani Shipping Co, Haiya Villa, 46, Lane 97, Songlin Lu, Pudong Xinqu, Shanghai, 200120.’

Balticshipping.com, the web portal of a company that caters to seamen and provides information on employment opportunities in the shipping sector, states that Firstec Maritime is registered in Hong Kong and owned by the Shanghai Adani Shipping Co. Ltd (SASCL), Shanghai, China. This is not the only shipping company in China with the word ‘Adani’ in its name; there is also Adani Shipping (China) Co. Ltd (ASCCL) aka Dalian Adani Shipping Co Ltd. Interestingly, these three companies are not mentioned anywhere in the list of group companies or subsidiaries in the official records of Adani Group companies in India.

This was not the first financial interaction between an Adani company and Firstec Maritime Ltd. A show cause notice issued by the DRI (the Customs intelligence wing of India government’s Ministry of Finance) in May 2014 to Adani Power in a case of alleged over-invoicing has claimed that there was a transaction of US$ 372,000 between Electrogen Infra FZE, an Adani Group company registered in the United Arab Emirates (UAE), and Firstec Martime during the 2011-2013 time period (see screenshot below).

So, how can we establish that these companies are part of the Adani Group? Documents filed in the Hong Kong company registry show that Lingo-Chang’s sons, Morris Chang and Norris Chang, hold 80% of the shares of Firstec Maritime Limited. (The Chinese name of the company is Shoutianke Shipping Co., Ltd., and its Company Number is 909529.)

The Chinese enterprise information-searching platform qcc.com was searched, yielding the information that both Adani-branded shipping companies in China, SASCL and ASCCL, have the same directors and that they are Chinese nationals. The link to the websites of both companies has been given as www.dasco.com.cn, but the link seems to be broken (‘dasco’ stands for Dalian Adani Shipping Company, the other name of ASCCL). Archived pages of the website indicate that these entities are part of the Adani Group and are involved with ‘the Asia-wide trading business of Adani Global Ltd and Hi Lingos Co. Ltd.’

Screenshot of archived page of Adani Shipping (China)

As previously stated, Adani Global Ltd is a direct subsidiary of Adani Enterprises Ltd – the flagship company of the Adani Group.

The Taiwan Business Database has details of Hi Lingos Co. Ltd. The company’s address is shown as 7F, No. 85, Sec. 2, Chenggong Rd., Taoyon District, Taoyuan City, Taiwan – the same address identified by the UNSC as the address of the owners of the ship named Koti, which carried out the sanctioned trade in oil products. Various business database websites show Hi Lingos as Lingo-Chang’s company.

According to qcc.com database, the Industrial and Commercial Bureau on illegal enterprises in China imposed an administrative penalty on SASCL and revoked its licence in 2019 after the UNSC report was published. The company was liquidated that year.

Another UNSC report, released on 4 March 2021, states that a Panama-flagged vessel named Koya (aka Hatch with an IMO: 9396878), conducted ship-to-ship transfers with the designated tankers from North Korea, Chon Ma San (IMO: 8660313) and Kum Un San 3 on or around 19 November 2017. 

The report notes: ‘The Koya made a port call at Yeosu port, Republic of Korea, (the official name of South Korea) on and around 15 to 16 November 2017 (EST [or Eastern Standard Time in the US]), with a reported destination of Taichung before dropping its AIS [or automatic information system that tracks other ships in the vicinity of a particular vessel] transmission and conducting its ship-to-ship transfers. According to Yeosu port records, a Bill of Lading dated 16 November 2017 showed 5,999.151 tons of Gasoil was loaded onto the Koya for the purpose of transhipment. A Republic of Korea-incorporated company was listed as the consignor, with its consignee as the company’s Singapore office. The Panel has yet to receive a response from Panama. During the time of the reported ship-to-ship transfer, the Koya’s registered owner, ship manager and the operator was Koya Corp. The Panel notes that the Panama-registered Koya Corp appeared to have shared the same directors as Koti Corp, the registered owner of the designated Koti (IMO: 9417115) that was engaged in a ship-to-ship transfer with the DPRK tanker Kum Un San 3 (IMO: 8705539) on 9 December 2017. The Koti was impounded by the Republic of Korea in 2017 and scrapped in 2020.’

The Open Corporate database shows that both Koti Corporation and Koya Corporation were incorporated in Panama on 19 April 2017. Both these companies were subsequently dissolved, possibly after the UNSC reports highlighted their involvement in violations of international sanctions.

Three critical questions arise:

  1. Why did Firstec Maritime, a company which is related to the Adani Group, pay Sailing Petrochemical of Taiwan for engaging in ship-to-ship transfer of petroleum products for North Korea in violation of UN sanctions?
  2. Did the Adani Group’s long-standing business associate Chang Chung-Ling and/or his family members, including the group’s Taiwan representative, Morris Chang, indulge in illegal activities?
  3. If Sailing Petrochemical Inc did not inform Firstec of the destination and route of the Koti in advance, why did Firstec not fight South Korea in the courts for its vessel during the period of its impoundment before it was eventually scrapped?

A questionnaire was emailed to the head of the Adani Group’s corporate communications department on 22 February 2023. No response had been received at the time of publication; this article will be updated as and when a response is received.

The questions raised were:

  1. What is the connection of Mr Chang Chung-Ling (also known as Mr Lingo-Chang) with the Adani Group?
  2. Was Lingo-Chang the chairman of Adani Virginia Inc., a wholly-owned subsidiary of Adani Global FZE, Dubai?
  3. Did Mr Lingo-Chang’s name appear in the Panama Papers published by the International Consortium of Investigative Journalists (ICIJ) in which he has been described as a director and shareholder of the British Virgin Islands-registered Freeman Holding Investment Co. Ltd.?
  4. Does Lingo-Chang’s son Chien-Ting Chang (also known Morris Chang), represent the Adani Group’s interests in Taiwan?
  5. Does the Adani Group own Shanghai Adani Shipping Co. Ltd., Firstec Maritime Ltd. and Adani Shipping (China) Company Ltd.?
  6. If yes, are the above-mentioned entities stand-alone companies or subsidiaries of any company in the Adani Group?
  7. If these entities are indeed subsidiaries of Adani Group companies, why are their names not on the list of subsidiaries of Adani Group companies?
  8. Is the Adani Group aware that a report of the United Nations Security Council identified Firstec Maritime Ltd. as paying Sailing Petrochemical, a company accused of indulging in illicit trade with North Korea in violation of UNSC sanctions?
  9. Has the Adani Group been involved in trade with North Korea? If not, why did Firstec Maritime Ltd. transfer money to Sailing Petrochemical?
  10. Is the Adani Group aware that the Adani Group’s Taiwan representative Chien-Ting Chang (aka Morris Chang) and his brother Chien-Huan Chang (aka Norris Chang), were directors of Koti Corp, which was sanctioned by the UNSC for indulging in illicit trade with North Korea?

The authors are independent journalists.