Citing a report from
Swiss media outlet Gotham City, US short-seller Hindenburg Research alleged that the Swiss authorities had frozen more than US$310mn (million) in funds across multiple bank accounts as part of a money laundering and securities forgery investigation into the Adani group, dating back as early as 2021. Adani group, however, has rejected the allegations. While Swiss criminal courts do not identify participants by name,
Financial Times (FT) says its (the Court's) descriptions of the parties by reference to Hindenburg's dossier and subsequent reporting by
FT match Adani and its suspected frontman, the Taiwanese businessman Chang Chung-Ling.
In a
post on X, Hindenburg says, "Prosecutors detailed how an Adani frontman invested in opaque British Virgin Islands (BVI), Mauritius and Bermuda funds that almost exclusively owned Adani stocks, according to newly released Swiss criminal court records reported by Swiss media outlet Gotham City."
A spokesperson of the Adani group, however, denied the claims as baseless.
Speaking with IANS, the spokesperson says, "We unequivocally reject and deny the baseless allegations presented. The Adani group has no involvement in any Swiss court proceedings, nor have any of our company accounts been subject to sequestration by any authority."
"Furthermore, even in the alleged order, the Swiss court has neither mentioned our group companies nor have we received any requests for clarification or information from any such authority or regulatory body. We reiterate that our overseas holding structure is transparent, fully disclosed, and compliant with all relevant laws," the spokesperson added.
The report from Gotham City says a ruling by the federal criminal court (TPF) reveals that the public prosecutor's office of Geneva was investigating the alleged embezzlement of Adani long before Hindenburg Research issued the first charges. "More than US$310mn belonging to a man, the alleged frontman of billionaire Gautam Adani, are sequestered in five Swiss banks. The public prosecutor's office of the confederation (MPC) resumed the investigation once the case was revealed in the press."
According to
the court document , A Ltd has filed the case to vacate the freezing of its funds.
In its order, the TPF observed that in the case of criminal sequestration, the measure must be proportionate in its amount, duration and relation to the situation of the person concerned. "In this case, given the complexity of the proceedings, the amount of the allegedly unlawful assets has not yet been determined, and the office of the attorney general of Switzerland (OAG) cannot be expected to decide this issue at a relatively early stage of an investigation that includes a significant foreign component. Since it is not excluded that a compensatory claim may be issued, the OAG was right to sequester all of the assets belonging to the applicant. As regards the duration of the sequestrations, it should be noted that the oldest was ordered two and a half years ago and the most recent less than a year ago. In view of the difficulty of the case, this duration does not violate the principle of proportionality."
"Finally, with regard to the attitude of the MPC in the proceedings, the court notes that it had only limited access to the procedural documents, given that the applicant is not a party to them but a third party seized. That being said, upon reading the redacted list of documents, it can be seen that the respondent authority is not remaining passive as the applicant maintains, but is actually engaged in an activity in order to elucidate the facts," the TPF says.
The TPF observed that "to support its allegations, the MPC relied in particular on press articles and a report published on 24 January 2023 by the company I, based in New York and specialising in financial crime investigations, which report close links between B and J, the brother of the founder and chairman of the H group, and the fraudulent scheme..."
"The hypotheses presented therein were then compared with information from various banking institutions. Thus, in its communication to the money laundering reporting office (MROS) on 28 December 2021, Bank C stated that the appellant's equity capital, according to its balance sheet, was set at zero and had no visibility on the company's investors. In particular, the information at its disposal did not allow it to establish a direct link between the distribution of dividends from the dissolved company K LLC, the company at the origin of B's fortune, and the contributions that would have enabled the latter to subscribe to investment products through the appellant. It also notes that the applicant's portfolio is composed of more than 99% of shares in two opaque funds, namely the L fund, registered in the British Virgin Islands and domiciled in Mauritius, which is not a member of the FATF, and the M fund, registered in Bermuda. The L fund is said to have invested exclusively in securities of the H group. It also points out that it has noted a suspicious performance of the L fund shares due to a merger, the motivations behind which are difficult to understand. Finally, the applicant made a request for a line of credit of between US$10mn and US$15mn – which was refused by bank C – which would have had as collateral the shares held in the L and M funds, which could constitute an attempted fraud given the suspected overvaluation of the securities," the order says.
Last year in August, Organised Crime and Corruption Reporting Project (OCCRP), a non-profit global network of investigative journalists, said in an article that crores of rupees were invested in listed stocks of India's Adani group via 'opaque' funds from Mauritius that 'obscured' the involvement of alleged business partners of the Adani family.
The controversial Hindenburg Research report alleged that the Adani group of companies has manipulated its share prices, failed to disclose transactions with related parties and other relevant information concerning related parties in contravention of the regulations framed by SEBI and violated other provisions of securities laws.
In its report, Hindenburg alleged that offshore shell entities directed by or associated with Vinod Adani, the older brother of chairman Gautam Adani, have been used for stock parking or stock manipulation or engineering Adani's accounting. These entities included 38 entities in Mauritius, along with others in the UAE, Cyprus, Singapore and various Caribbean islands.
In January 2024, the Supreme Court refused to form any special investigation team (SIT) or group of experts to conduct an investigation into the Adani-Hindenburg controversy, saying that media and third-party reports were not conclusive proof.
"Reliance on newspaper reports and third-party organisations to question the statutory regulator does not inspire confidence. They can be treated as inputs but not conclusive evidence to doubt the Securities and Exchange Board of India (SEBI) probe. This Court has not interfered with the outcome of the investigations by SEBI, which should take its investigation to its logical conclusion in accordance with the law. The facts of this case do not warrant a transfer of investigation from SEBI," held a bench presided over by chief justice Dr DY Chandrachud. (
Read: Adani-Hindenburg Row: SC Rejects SIT Probe, Says Media Reports Not Conclusive Proof)
