The Adani Group, the politically connected conglomerate that dominates large parts of India's economy, appears to have imported billions of dollars of coal at prices well above market value, according to customs records reviewed by the Financial Times (FT)
In a report, FT says the data supports longstanding allegations that Adani, the country's largest private coal importer, has been inflating fuel costs and led millions of Indian consumers and businesses to overpay for electricity.
"The records show that over the past two years, Adani used offshore intermediaries in Taiwan, Dubai and Singapore to import US$5bn (billion)-worth of coal at prices that were at times more than double the market price. One of these companies is owned by a Taiwanese businessman who was recently named by the FT as a substantial hidden shareholder in Adani companies," the report says.
The FT also examined 30 shipments of coal from Indonesia to India by an Adani company over 32 months between 2019 and 2021. In all cases, prices in import records were far higher than those in corresponding export declarations. During the journeys, the value of the combined shipments unaccountably increased by over US$70mn (million).
The Adani group denies any wrongdoing. It said the FT story is based on an "old, baseless allegation," and is "a clever recycling and selective misrepresentation of publicly available facts and information."
According to the report, the allegation of inflating fuel costs was first made seven years ago in a probe by the directorate of revenue intelligence (DRI), the Indian finance ministry's investigative unit that polices economic crime.
It says, "Five Adani companies and a further five supplied by the group were among 40 importers named by the DRI in a 2016 notice of an investigation into intelligence that they were 'artificially inflating' the value of Indonesian coal to siphon off money abroad and overcharge power companies. The notice said comparisons of export and import records 'suggest huge overvaluation to the extent of 50% to 100%'."
"The notice also said that while coal travelled straight from Indonesia to India, "supplier's invoices are routed through one or more intermediary invoicing agents based in a third country, for the sole purpose of creating layers (typical of trade based money laundering) and artificially inflating its landed value," FT says.
Earlier in March, Jairam Ramesh, member of Parliament (MP) and general secretary for communications of Congress, also questioned coal imports by the Adani group. "In 2016, DRI had alleged that 40 Indian companies including Adani Enterprises, Adani Power, Adani Wilmar, Adani Power Maharashtra and Adani Power Rajasthan, were over-invoicing imported Indonesian coal with the goal of 'siphoning-off money abroad' and 'to avail higher power tariff compensation based on artificially inflated cost of the imported coal'. This was done—in what is now a familiar story—through intermediaries in Singapore, Hong Kong, Dubai and the British Virgin Islands."
"Despite a favourable Supreme Court order on 8 January 2020 to proceed, DRI told the Bombay High Court on 13 June 2021 that Adani Enterprises is trying to 'impede' its probe by challenging the 'well-settled procedure of issuance of Letter Rogatory' sent to courts in Singapore, Dubai, Hong Kong, Switzerland and Indonesia. Given the heavy burden on consumers and taxpayers of inflated electricity prices, do you plan at any point to act in the interests of India's citizens rather than your financiers? How long will your cronies be allowed to steal from the people of India to fill your party's coffers?" Mr Ramesh asked prime minister (PM) Narendra Modi in the Congress party's 28th instalment of the series, 'Hum Adani Ke Hai Kaun' (HAHK). (Read: Congress Asks 3 Questions on Vinod Adani's Role in Adani Group's Global Transactions