By Krishn Kaushik, Aditya Kalra and Scott Murdoch
NEW DELHI (Reuters) -Millions of dollars were invested in publicly traded Adani Group stocks through funds in Mauritius, the Organised Crime and Corruption Reporting Project (OCCRP) reported on Thursday, saying this "obscured" the involvement of alleged business partners of India's Adani family.
Citing a review of files from tax havens and internal Adani Group emails, the non-profit global network of investigative journalists said two individual investors with "longtime business ties" to the Adani family used such offshore structures to buy and sell Adani shares between 2013 and 2018.
The Adani Group, which is controlled by billionaire Gautam Adani, said it categorically rejected what it called recycled allegations in the OCCRP report "in their entirety".
Nasser Ali Shaban Ahli from Dubai and Chang Chung-Ling from Taiwan, the two investors named in the OCCRP report, did not respond to Reuters requests seeking comment.
Reuters has not independently verified the allegations made in the OCCRP report, which comes after U.S.-based short-seller Hindenburg Research accused the Adani Group in January of improper business dealings.
Shares in Adani Group companies fell on Thursday amid renewed corporate governance concerns. Adani Enterprises, the group's flagship company, closed down 3.7%, while Adani Ports, Adani Power, Adani Green, Adani Total Gas, Adani Energy Solutions and Adani Wilmar slid between 2% and 4.3%.
"If true, it could mean a violation of Indian financial market regulator SEBI laws for publicly listed stocks, that could sway the outcome or push SEBI to dig deeper in its ongoing investigation into the group," CreditiSights senior research analyst Lakshmanan R. said.
The Securities and Exchange Board of India (SEBI), did not officially respond to Reuters' requests for comment.
Sources told Reuters that SEBI has examined the two Mauritius-based funds and one Bermuda-based fund cited by OCCRP as part of the regulator's larger probe into the Adani Group.
The investigation into possible violation of public float norms by the Adani Group is still ongoing and any new facts will be considered, those sources added.
In the days following the January report, Adani Group stocks lost $150 billion in market value and remain down around $100 billion following a recovery in recent months after it repaid some debt and regained some investor confidence.
Between them, at the peak of their investment in June 2016, Ahli and Chang held free-floating shares of four Adani Group units - Adani Power, Adani Enterprises, Adani Ports, and Adani Energy Solutions (formerly known as Adani Transmission) - ranging from 8% to about 14% stakes in the companies through two Mauritius-based funds, the OCCRP report said.
At one point, their investment in Adani funds was worth $430 million, the report said.
Under Indian laws, every company needs to have 25% of its shares held by public shareholders to avoid price manipulation.
While OCCRP said there was no evidence Chang and Ahli's money for their investments came from the Adani family, its reporting and documents - including an agreement, corporate records and an email - showed there "is evidence" that their trading in Adani stock "was coordinated with the family."
It said that Ahli and Chang were associated with companies of the group as well as with Vinod Adani, who is a brother of Gautam Adani. Vinod Adani did not respond to a Reuters request for comment.
"The question of whether this arrangement is a violation of the law rests on whether Ahli and Chang should be considered to be acting on behalf of Adani 'promoters,' a term used in India to refer to the majority owners of a business," OCCRP said.
If so, OCCRP said, the stake of promoters in Adani holdings would exceed the 75% limit allowed for insider ownership.
Indian asset management services provider 360 One Wam, whose Mauritius arm managed the Emerging India Focus Fund and EM Resurgent Fund that were cited by OCCRP, said the funds sold their investments in Adani stocks in 2018.
Hindenburg said on platform X on Thursday that the OCCRP report closed the loop on issues it had flagged with respect to the offshore funds owning at least 13% of the public float in multiple Adani stocks through "associates of Vinod Adani".
Adani Group had called Hindenburg's claims misleading and without evidence and said it always complied with laws.
In a statement to OCCRP, Adani Group said the Mauritius funds investigated by reporters had already been named in the Hindenburg report and the "allegations are not only baseless and unsubstantiated but are rehashed from Hindenburg's allegations".
India's Supreme Court has appointed a panel to oversee a SEBI probe based on the Hindenburg report. The panel in May said the regulator had so far "drawn a blank" in investigations into the suspected violations.
Last week, SEBI said its report was nearing completion and its investigation on some offshore deals was taking time as some entities were located in tax haven jurisdictions. The regulator "shall take appropriate action based on outcome of the investigations," it said.
SEBI also said it examined one Adani group transaction for violation of minimum public float rules, an issue that the OCCRP report also flagged.
In an interview with a reporter from the Guardian, OCCRP said Chang said he knew nothing about any secret purchases of Adani stock. He asked why journalists were not interested in his other investments and said, "We are a simple business."
Meanwhile, India’s main opposition leader Rahul Gandhi repeated demands for a parliamentary probe given the latest allegations, asking Prime Minister Narendra Modi to clear "his name and categorically explain what is going on".
Indian opposition parties allege that Gautam Adani has benefited from what they say are his close ties with Modi for over two decades, a charge rejected by both Modi and Adani.
(Reporting by Aditya Kalra, Krishn Kaushik, Scott Murdoch, Sethuraman NR and Jayshree P Upadhyay; Editing by Lisa Shumaker, Muralikumar Anantharaman, Dhanya Skariachan, Raju Gopalakrishnan and Alexander Smith)