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The Adani Group, a powerful Indian conglomerate with close political ties, allegedly imported coal worth billions of dollars at significantly inflated prices, according to customs records examined by the Financial Times. The data appears to support longstanding accusations that Adani, India’s largest private coal importer, artificially inflated fuel costs, causing millions of Indian consumers and businesses to overpay for electricity.
Over the past two years, Adani reportedly used offshore intermediaries in Taiwan, Dubai, and Singapore to import $5 billion worth of coal at prices that, at times, exceeded the market rate by more than double. One of these intermediary companies is owned by a Taiwanese businessman who was recently revealed as a hidden shareholder in Adani companies.
Adani’s response to these allegations has been to deny any wrongdoing, stating that the FT’s story is based on “old, baseless allegations” and represents a “clever recycling and selective misrepresentation of publicly available facts and information.” This accusation of inflating fuel costs was first made seven years ago during an investigation by the Directorate of Revenue Intelligence, an investigative unit of the Indian finance ministry.
In 2016, the DRI named five Adani companies, along with five companies supplied by the group, among 40 importers under investigation for “artificially inflating” the value of Indonesian coal to siphon off money abroad and overcharge power companies. The DRI’s notice suggested overvaluations of 50% to 100%. Additionally, it was noted that coal traveled directly from Indonesia to India, while “supplier’s invoices are routed through one or more intermediary invoicing agents based in a third country, for the sole purpose of creating layers (typical of Trade-based Money Laundering) and artificially inflating its landed value.”
In Adani’s home state of Gujarat, opposition politicians have accused the group of overcharging for electricity since 2018, citing a letter from the state utility that claimed Adani procured coal at prices not reflecting the actual market value of Indonesian coal.
Despite these allegations, Adani points to the DRI’s decision to withdraw an appeal to the Supreme Court in a case against one of the 40 importers named in 2016 as evidence of their innocence. However, the DRI’s investigation remains unresolved, leaving questions about the relationship between Adani and Prime Minister Narendra Modi’s administration.
The Adani Group, led by founder Gautam Adani, has become a dominant force in India’s economy, controlling 10 listed companies and becoming the country’s largest private thermal power company and port operator. Still, it faced controversy earlier this year when it was accused by a US short-selling firm, Hindenburg Research, of running “the largest con in corporate history,” alleging that Adani used offshore shell companies and front men to manipulate its books and inflate share prices.
Adani vehemently denied these allegations and saw the value of its group decrease significantly. Despite these challenges, the Adani Group’s profitability and influence remain substantial.
The FT’s investigation has raised new questions about the alleged practices of the Adani Group and its relationship with the Indian government. It suggests that coal was imported at prices well above market rates, potentially affecting electricity prices for Indian consumers and raising concerns about corruption in the energy sector. As the unresolved DRI investigation continues, the Adani Group’s actions and their impact on the economy remain under scrutiny.
