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Synopsis

SEBI has concealed a January 2014 Directorate of Revenue Intelligence (DRI) alert about Adani having siphoned off money and invested it in Adani-listed companies through entities based in Dubai and Mauritius, a fresh affidavit before the Top Court in the Hindenburg-Adani case stated.

In 2014, DRI was investigating a case of import overvaluation by various entities of the Adani Group, from a UAE-based subsidiary.

A letter dated 31.01.2014 was issued to SEBI, alerting stock market manipulation by the Adani Group which was accompanied by a CD containing evidence of siphoning Rs. 2323 crores. 

It is the allegation of the petitioner that neither any action was taken on this DRI alert nor was it placed by SEBI before the Court, in any of the proceedings. 

Interestingly, Upendra Sinha, the then chairman of SEBI who allegedly ignored the DRI alert, is the present non-executive chairperson of NDTV, the affidavit added.

“As per new documents that have been unearthed through investigation by a journalist consortium (OCCRP), two Mauritius-based companies, namely Emerging India Focus Fund (EIFF) and the EM Resurgent Fund (EMRF) had invested and traded in large volume of shares of four Adani companies between 2013 and 2018. The names of these two companies figure in SEBI’s list of 13 suspected FPIs/overseas entities but SEBI has been unable to trace their ultimate beneficial owners or economic interest shareholders”, the affidavit provided.

It is further submitted that SEBI has a conflict of interest in the matter of investigating violations of law committed by the Adani Group; Mr. Cyril Shroff, Managing Partner, Cyril Amarchand Mangaldas, who is a member of SEBI’s Committee on Corporate Governance looking at offences in connection with insider trading, has his daughter married to Gautam Adani’s son, Karan Adani.

Highlighting publications with respect to Adani Group, the petitioner referred to an article reported by the Guardian titled "Modi-linked Adani family secretly invested in own shares, documents suggest” and a report by Thomson Reuters dated 31.08.2023 which describes how one Nasser Ali Shaban Ahli from Dubai and Chang Chung-Ling from Taiwan used offshore structures to buy and sell Adani shares.

“That the frequent amendments brought in to the regulations and definitions have severely violated the spirit of the SEBI Act. These amendments have in fact provided a shield and an excuse to the Adani Group, due to which their regulatory contraventions and price manipulations remained undetected. Even now, the expert committee has cited the said amendments as an excuse to declare that the investigation with regard to issues as mentioned in the Hindenburg Report may be a journey without destination”, the affidavit also added stating that the SEBI not only slept over the issue but also brought in a series of amendments only to benefit the Adani Group [Amendments to FPI regulations and in LODR regulations]

Case Title: Anamika Jaiswal v. Union of India | WP (CIVIL) No. 201 of 2023