India’s Customs Intelligence Agency Accuses Adani Group Of Laundering Rs 1500 Crore To Offshore Accounts
August 16th, 2017
[Update: After the article was written, a representative from Adani group reached out to us saying that the business group has denied all allegations but it has been and will be cooperating with the investigations in future. They also added the fact that their projects have incurred the lowest cost across central, state and private utility players has gone to establish the robustness of the processes followed by the group. Alleged cost escalation contradicts the success in supplying cost effective power to the public utilities that procure electricity through competitive bids. It is a standard procedure for the Group to follow International Competitive Bidding (ICD) route for major capital expenditures to ensure transparency and competitiveness in the process. All our transactions are always conducted within the framework of extant regulatory guidelines and provisions. The article, however, had already included the fact that Adani Group had denied all allegations and would cooperate with the investigation]
The Adani Group has been accused by the Indian customs intelligence of embezzling a huge sum of around Rs 1500 crore to offshore accounts by submitting inflated bills to an electricity project.
The Directorate of Revenue Intelligence (DRI) has alleged that the Adani Group had ordered equipment worth several hundred millions for a power project in Maharashtra using a shell company in Dubai and that the company had sold the same equipment back to a subsidiary of Adani Group at highly inflated prices. This was reported by The Guardian on August 15.
The 97-page document lays down the various channels through which the money was laundered. The money trail extends from India to Dubai through South Korea and finally to an offshore company in Mauritius. This company in Mauritius is allegedly in control of the Adani Group Chief Executive Officer Gautam Adani’s elder brother Vinod Adani.
Vinod Adani is the director of four companies that have proposed the construction of a railway line and expansion of a coal port in connection with the Adani Group’s Carmichael mine project in Queensland, Australia.
The Adani Group is currently aiming at garnering public funds to develop the mine, which has faced legal obstacles and intense opposition from environmental activists.
It is in the midst of all this that the Adani Group is facing allegations of the embezzlement.
A significant portion of the money that the Adani Group had siphoned off to offshore accounts in Mauritius included loans from State Bank Of India and ICICI Bank, the DRI alleged. However, neither of the lenders have been accused of any illegal activity.
The business conglomerate has, however, denied all allegations against itself relating to the recent case of money laundering. Speaking to The Guardian, the Adani Group said, “The Adani Group is aware of the investigations being conducted by the DRI and has fully cooperated, and shall continue to cooperate, with the investigating agencies.”
The Logical Indian take
This is not the first time that the Adani Group has faced allegations of fraud. Six Adani subsidiaries were listed among 40 other companies being investigated for allegedly running a similar price-inflation scheme last year. The companies had been accused of inflating the price of coal imports from Indonesia to hide profits in overseas tax havens.
The academic journal Economic and Political Weekly (EPW) had been served a defamation notice by the Adani Group recently. The notice was served over a story EPW ran on how the government altered rules for special economic zones (SEZs), which led to the Adani Group reaping a profit of Rs 500 crore. (The editor of EPW was subsequently forced to step down following this.)
The Logical Indian community urges the concerned authorities to look into the matter, ensure an unbiased investigation and punish those guilty accordingly.