At the very moment India’s Adani Group was accused in 2023 of manipulating its public valuation to extreme highs, two of the conglomerate’s close associates secretly held billions of dollars’ worth of shares in its listed companies, bank documents indicate.
A memo to executives at Italy’s largest bank, Intesa Sanpaolo, sets out the conclusions of an internal investigation into clients associated with Adani Group after US short seller Hindenburg Research accused the group of “brazen stock manipulation”.
The memo and other bank documents shared with the FT by the Organized Crime and Corruption Reporting Project, a network of investigative journalists, shed new light on the structures suspected of helping to briefly make Gautam Adani the world’s second-richest man.
The FT and the OCCRP previously identified two associates of Gautam Adani’s older brother Vinod as among the most significant secret investors in Adani Group shares in earlier years.
The newly revealed documents indicate the vast scale of the shareholdings of the associates, Taiwanese businessman Chang Chung-Ling and Nasser Ali Shaban Ahli from the United Arab Emirates, and also that they held the stakes up to the release of the Hindenburg report on January 24 2023.
The documents will fuel suspicions about soaring Adani valuations in the years before Hindenburg’s January 2023 report and put renewed pressure on Indian regulators to establish whether the group broke rules intended to prevent insiders manipulating share prices.
Adani Group, which is India’s biggest private thermal power company, biggest private port operator, biggest private airport operator and biggest private coal importer, strongly denies any wrongdoing.
The Securities and Exchange Board of India, the country’s capital markets regulator, last year cleared the conglomerate of fraud allegations included in Hindenburg’s report and has said it is investigating the now-disbanded short seller for “unfair trade practices”.
But the Italian bank documents appear to support one of Hindenburg’s central claims: that associates of Vinod Adani secretly held and traded large amounts of stock in the group’s listed companies, in potential violation of Indian restrictions on ownership by insiders.
According to a memo prepared for the leadership of Intesa’s private bank, Fideuram, staff discovered that the Dubai branch of the Swiss private bank it took over in 2020, Reyl & Cie, had three clients courtesy of the same “business introducer”: Vinod Adani, Chang and Ahli.
On the day after the Hindenburg report’s release, Chang held just over $1bn and Ahli just over $2bn in hedge fund units with “the underlying assets likely invested in Adani Group companies”, according to the memo.
The memo said that the following month senior bank staff met Chang and Ahli, who confirmed they controlled the accounts, but said their wealth derived from professional activity and their Adani investments were “based on their trust in the business acumen of the members of that family”.
Chang and Ahli signed a statement rejecting Hindenburg’s allegations or denying any involvement in the events the short seller described, according to the memo. It said they also confirmed a “willingness to diversify a portion of the investments in their portfolio in the short term . . . following a specific path to be defined together with the bank”.
The bank placed restrictions on Chang and Ahli’s accounts, and filed suspicious transaction reports with regulators, the memo said.
Hindenburg alleged that secret holdings controlled by associates were used to manipulate Adani’s stock market valuation over several years, helped by the conglomerate’s unusual structure. Instead of operating a public holding company, Adani is composed of multiple listed companies with small “free floats” of shares sold to public investors.
In the two years before Hindenburg’s report the total market capitalisation of Adani’s 10 listed companies quadrupled, to hit a peak of $288bn in 2022, when Gautam Adani briefly became the world’s second-richest man, according to the Forbes rich list. This year their capitalisation has totalled around $160bn.
The FT previously uncovered intricate paper trails revealing how Chang and Ahli, advised by an employee of Vinod Adani, amassed and traded Adani stocks between 2013 and 2018 using an offshore fund structure that obscured their activities.
Intesa’s description of them as holding “a very significant amount of shares in the same hedge funds” suggests a similar structure to that previously reported. The initials of the British Virgin Islands holding companies they used to control those investments also match those of companies they used previously.
Chang’s account interacted directly with Vinod Adani’s, the memo said, though the transfers involved were for “not particularly significant amounts” resulting from “disbursement and repayment of loans whose underlying nature is not yet known”.
The FT previously revealed Chang’s highly lucrative role as a middleman for the Adani group when importing cargoes of coal whose reported value rose sharply while at sea. In the two years to October 2023, Chang sold Adani $2bn worth of Indonesian coal from a business registered to his home in Taipei.
An Indian government investigation launched in 2016 into allegations that Adani and other importers illegally inflated coal prices charged to state-owned power stations appears to have stalled.
The status of Sebi investigations into Hindenburg allegations against Adani of potential insider trading and violations of the stock market rules designed to stop insiders manipulating share prices remains unclear.
The bank documents reviewed by the FT did not include precise details of Chang and Ahli’s investments, but said they were held in five Bermudian funds, four of which were managed by Elara Capital in the UK.
Hindenburg accused Elara of maintaining funds “intentionally structured to conceal their ultimate beneficial ownership”, including one in which about 99 per cent of the investments were in Adani stocks.
Days after publication of the short seller’s report, Lord Jo Johnson, brother of former UK prime minister Boris, resigned as chair of Elara. The current chair, Elara’s founder Raj Bhatt, was listed by Intesa in a compliance document as a director of one of the funds used by Chang and Ahli for their Adani holdings.
Reuters reported last year that Elara had not co-operated with Sebi requests to identify the beneficial owners of Adani shares.
A Swiss court said in 2024 that Chang was under investigation by prosecutors in the country for alleged money laundering and forgery, and that they suspected him of being an Adani “frontman”.
Vinod Adani, Elara and Chang did not respond to requests for comment on the Italian documents. In a 2023 exchange with a reporter, Chang said, “I know nothing about this” when asked if he was an Adani associate who secretly purchased shares for them. He declined to say if he knew Vinod Adani. Ahli could not be reached.
Asked about the bank documents, Adani Group accused the OCCRP and FT of colluding to rehash allegations it had already adequately addressed.
Under Indian law, listed companies did not have responsibility for the source of funds of public shareholders beyond disclosures mandated by regulators, the group said.
“The Adani portfolio of companies remain fully compliant with all laws and disclosure requirements across jurisdictions and continues to have complete faith in due process and the rule of law,” it said.
Intesa said it was “not in a position to comment, as any disclosure is not permitted by applicable laws”.