DRI seeks permission to restart probe into Adani Group over overvaluation of coal imports: Report

The Directorate of Revenue Intelligence (DRI) has sought permission to restart a probe into Adani Group for alleged overvaluation of coal imports. The investigating agency has approached the Supreme Court to allow them to collect evidence from Singapore, Reuters reported on Friday.  

Since 2016, DRI has been trying to procure transaction documents related to Adani's dealings from Singapore authorities as it suspects many of the group's coal shipments imported from Indonesian suppliers were first billed at a higher price on paper to its Singapore unit, Adani Global Pte, and then to its Indian arms.

Gautam Adani-led Adani Enterprises and its subsidiaries have successfully mounted repeated legal challenges in India and Singapore to block the documents' release, court papers show, claimed Reuters. 

In an October 9 legal filing, DRI asked the apex court to quash a previous lower court order that allowed the Adani Group company to block authorities from collecting evidence from Singapore.

On its part, Adani Group has denied wrongdoing, saying that Indian authorities assessed its coal shipments before releasing them from ports.

Shares of Adani Enterprises were trading at Rs 2,227.30, up by 1.01 per cent at 9.50 AM, on Friday. 

Denying Adani's arguments that the agency did not follow "due process", DRI has said in a filing that it had approval to seek information from the Southeast Asian city-state under a mutual legal assistance treaty.

"Permission for following this route was obtained from the Ministry of Finance as well as (the) Ministry of Home Affairs," the 25-page filing said, adding that the investigation "is completely in compliance".

In a statement to Reuters, Adani Group said it had "fully co-operated" with the authorities by providing details and documents sought more than four years ago and that "no deficiency or objection" was communicated by investigators thereafter.

As per the report, DRI began looking into Adani's imports in 2014, which was part of a broader investigation into 40 companies. The agency alleged that the companies importing Indonesian coal were over-invoicing deliveries by showing bills of shipments routed through intermediaries in Singapore and elsewhere.

Indian authorities have reviewed 1,300 shipments involving Adani Group companies and alleged in court filings that it "grossly overstated" or "artificially inflated the import value of coal" as compared with the export value from Indonesia, "with the objective of siphoning off" funds to tax havens and charging higher power prices in India.

The sums involved may run into billions of rupees, DRI claimed, which has not identified any Indonesian supplier.

The evidence the investigators are seeking from Singapore authorities, which includes transaction documents from 20 of Adani's banks there, could help establish a financial trail in the case, an official told Reuters.

If the Supreme Court allows the agency's latest request, it would then need to seek an order from Singapore's Court of Appeal to release the material.

Last month, the Singapore court declined requests from Reuters to look into related case documents, saying in written responses that the files were sealed.

But a Reuters review of hundreds of pages of Indian court filings and orders reveals a tussle between India and Adani that stretched from Mumbai to New Delhi to Singapore in recent years.

In 2019, on Adani's challenge, the Bombay High Court cited procedural lapses in quashing the request by Indian investigators to collect evidence against Adani.

Days later, the agency appealed to the Supreme Court, which put the Mumbai verdict on hold "until further orders", which the agency contended in a subsequent Supreme Court filing meant "the investigation could be continued".

But the Singapore court in late 2020, after Adani's request, said the documents should not be released for now because India's top court had not reached a final decision, according to two people with direct knowledge of the matter and a Reuters review of legal orders.

FT report

In a report in October, The Financial Times stated that the Adani Group appeared to have imported billions of dollars of coal at prices above their market value. The report was based on an examination of 30 shipments of the commodity from Indonesia to India, over 32 months between 2019 and 2021.

The report claimed that the data affirmed long-standing allegations (against the company) of making consumers and businesses overpay for electricity. 

The allegations concern the group’s Integrated Resource Management (IRM) business. A credit report in March this year held it as the country’s largest importer of thermal coal catering to the requirements of its clients in both private and public sector undertakings (PSUs).

According to FT, the observed prices mentioned in the import records, of the examined shipments, were far higher than those in corresponding export declarations.

The FT report said: “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 $5billion-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 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 $70mn.”

In its defence, the Adani Group said the FT story was based on an “old, baseless allegation” and is a “clever recycling and selective misrepresentation of publicly available facts and information”.

Reacting to the article in FT, Congress leader Rahul Gandhi said customs data revealed that the Adani Group imported coal at prices above the market rate and these inflated fuel costs led millions of Indian consumers and businesses to overpay for electricity.

“Adaniji buys coal in Indonesia and by the time it reaches India, its rate doubles. By inflating coal price, over-invoicing, Adaniji has taken Rs 12,000 crore out of the pocket of the common man in India,” said Rahul Gandhi.

Gandhi pointed out that even though the Financial Times had done this expose, none of the Indian newspapers or mainstream media followed it. “The interesting question to me is - The Financial Times has a huge story. This story would bring down any government. This is direct theft by a man, who has been protected again, and again, and again by the Prime Minister of India. And the surprising thing is, not a single Indian newspaper is interested in picking up the story, not a single media channel is interested in picking up the story,” said Gandhi.

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