Precisely when India’s Adani Group faced allegations in 2023 of artificially inflating its market worth to exceedingly elevated levels, financial records suggest that two of the conglomerate’s intimate partners covertly possessed equity stakes valued at billions of dollars in its publicly traded firms.
An internal memorandum circulated to senior staff at Italy’s principal bank, Intesa Sanpaolo, delineates the findings of a confidential inquiry into patrons linked to the Adani Group, subsequent to the US short seller Hindenburg Research leveling charges of “flagrant share price manipulation” against the conglomerate.
This memorandum, alongside other banking records provided to the FT by the Organized Crime and Corruption Reporting Project – a consortium of investigative reporters – illuminates previously unknown aspects of the arrangements thought to have facilitated the transient ascent of Gautam Adani to become the planet’s second wealthiest individual.
The FT and the OCCRP had earlier pinpointed a pair of partners connected to Vinod, Gautam Adani’s elder sibling, as being among the foremost covert stakeholders in Adani Group equities during prior periods.
The recently disclosed records point to the enormous magnitude of the equity interests held by the partners: Chang Chung-Ling, a Taiwanese entrepreneur, and Nasser Ali Shaban Ahli, originating from the United Arab Emirates. They also indicate these holdings were maintained until the publication of the Hindenburg report on January 24, 2023.
These documents are expected to intensify doubts regarding the rapidly escalating Adani market values in the years preceding Hindenburg’s January 2023 report. They will also exert fresh demands upon India’s oversight bodies to ascertain whether the group violated regulations designed to preclude internal parties from engineering stock valuations.
Adani Group, a conglomerate that stands as India’s foremost private enterprise in thermal power, port operations, airport management, and coal importation, vehemently refutes all allegations of illicit activity.
Last year, the Securities and Exchange Board of India, the nation’s capital markets watchdog, exonerated the conglomerate from accusations of deceit detailed in Hindenburg’s report. It has also declared its intent to probe the currently dissolved short seller for purported “unjust commercial conduct.”
Nevertheless, the Italian banking records seem to corroborate a key assertion made by Hindenburg: specifically, that partners of Vinod Adani covertly owned and transacted substantial volumes of equity in the group’s publicly traded companies, potentially contravening Indian regulations concerning insider shareholding.
A memorandum drafted for the executives of Intesa’s private banking division, Fideuram, indicates that personnel found the Dubai branch of Reyl & Cie, a Swiss private bank acquired in 2020, had three patrons owing to the identical “business referrer”: Vinod Adani, Chang, and Ahli.
The day following the publication of the Hindenburg report, Chang possessed slightly more than $1 billion, and Ahli, in excess of $2 billion, within hedge fund instruments, with “the fundamental holdings probably allocated to Adani Group corporations,” as per the memorandum.
The memorandum further stated that in the subsequent month, high-ranking bank personnel convened with Chang and Ahli. They verified their command over the accounts but stated their riches originated from occupational endeavors and that their Adani capital placements stemmed from “their confidence in the commercial astuteness of that family’s constituents.”
As stated in the memo, Chang and Ahli put their signatures to a declaration refuting Hindenburg’s accusations and disavowing any participation in the occurrences detailed by the short seller. The memo also noted they affirmed an “inclination to broaden a segment of their portfolio’s holdings in the near future . . . pursuing a precise strategy to be jointly established with the financial institution.”
The bank imposed limitations upon Chang and Ahli’s accounts and submitted reports of questionable transactions to oversight bodies, the memo indicated.
Hindenburg asserted that covert stakes managed by partners served to artificially influence Adani’s equity market worth across multiple years, a process facilitated by the group’s atypical organizational framework. Rather than maintaining a single public parent entity, Adani comprises numerous publicly traded entities, each featuring limited “free floats” of stock available to general investors.
In the two years prior to Hindenburg’s report, the aggregate market value of Adani’s ten publicly listed firms surged fourfold, reaching a zenith of $288 billion in 2022, a period during which Gautam Adani momentarily attained the status of the globe’s second wealthiest individual, as per the Forbes rich list. This year, their combined market value has amounted to approximately $160 billion.
The FT earlier brought to light complex documentary evidence illustrating how Chang and Ahli, guided by an employee of Vinod Adani, accumulated and transacted Adani equities between 2013 and 2018, employing an extraterritorial fund framework that concealed their dealings.
Intesa’s characterization of their possession of “a substantial quantity of equities within identical hedge funds” implies an analogous arrangement to what was earlier disclosed. Furthermore, the abbreviations of the British Virgin Islands-based holding firms they utilized to manage these capital placements correspond to those of entities they had employed earlier.
Chang’s account had direct dealings with Vinod Adani’s, the memo stated, even though the exchanges transacted amounted to “not notably substantial sums,” arising from the “issuance and settling of credits whose fundamental character remains undisclosed.”
The FT earlier exposed Chang’s extremely profitable function as an intermediary for the Adani group during the procurement of coal shipments whose declared worth dramatically escalated mid-voyage. In the two years ending October 2023, Chang supplied Adani with Indonesian coal valued at $2 billion through an enterprise officially domiciled at his residence in Taipei.
A governmental inquiry initiated in India in 2016 concerning claims that Adani and other importers unlawfully exaggerated the cost of coal supplied to state-run power facilities appears to have reached an impasse.
The current state of the probes by Sebi into Hindenburg’s accusations against Adani, regarding possible illicit trading by privileged individuals and breaches of equity market regulations intended to prevent those with privileged information from improperly influencing stock valuations, continues to be ambiguous.
Financial records examined by the FT lacked specific information regarding the holdings of Chang and Ahli; however, they indicated their placement within a quintet of Bermuda-based trusts, with four of these being administered by Elara Capital, situated in the UK.
Hindenburg leveled charges against Elara for operating financial vehicles “deliberately configured to hide their true proprietors,” notably, one where approximately 99 percent of the capital was channeled into Adani equities.
Shortly following the release of the report by the short-selling entity, Lord Jo Johnson, sibling of ex-UK premier Boris, stepped down from his position as chairman of Elara. The incumbent chairman, Raj Bhatt, who founded Elara, appeared in an Intesa regulatory filing as a board member for one of the financial instruments utilized by Chang and Ahli for their Adani stakes.
Last year, Reuters disclosed that Elara failed to collaborate with Sebi’s inquiries to ascertain the true proprietors of Adani equities.
In 2024, a Swiss tribunal stated that Chang was being probed by the nation’s legal authorities for purported financial illicit activities and falsification, and that he was suspected of acting as an Adani “proxy”.
Vinod Adani, Elara, and Chang offered no reply to inquiries regarding the Italian paperwork. During a discussion with a journalist in 2023, Chang asserted, “I possess no knowledge concerning this matter” when questioned about being an Adani affiliate who covertly acquired equities on their behalf. He refused to confirm whether he was acquainted with Vinod Adani. Ahli was inaccessible for contact.
When queried about the financial records, the Adani Group charged the OCCRP and FT with conspiring to re-present claims it had previously sufficiently rebutted.
According to Indian legislation, publicly traded corporations held no accountability for the origin of capital belonging to general investors beyond the declarations required by supervisory bodies, the conglomerate affirmed.
“The collection of Adani enterprises maintains full adherence to all statutes and transparency obligations in all territories and consistently places total confidence in fair legal procedures and the supremacy of law,” it asserted.
Intesa declared it was “unable to provide a statement, as any revelation is prohibited by relevant statutes”.