Adani Group Allegedly Siphoned Rs 1,500 Crore to Mauritius_ Report u s anti money laundering laws

Adani Group Allegedly Siphoned Rs 1,500 Crore to Mauritius_ Report u s anti money laundering laws

Adani power company’s plant at mundra in gujarat. Credit: reuters

New delhi: over-invoicing of power equipment by just one adani group subsidiary may have resulted in rs 1,500 crore being moved to an offshore tax haven, according to a directorate of revenue intelligence (DRI) report made public by the guardian on wednesday.

The artificial inflation of invoices – especially when it comes to import of electricity transmission equipment – is a well-known, if under-investigated phenomenon.

Multiple publications, including the economic and political weekly (EPW), have reported how the DRI issued show-cause notices in 2014 and 2015 to a number of companies for the alleged over-invoicing of power plant equipment.

In 2016, EPW reported on how the adani group had had allegedly overvalued capital goods imported by three adani firms (adani power maharashtra limited, adani power rajasthan limited and maharashtra power eastern grid power transmission company limited), with the DRI estimating an alleged over-invoicing to the tune of rs 6,000 crores.U s anti money laundering laws

“these companies were alleged to have indulged in a “trade based money laundering scheme” by mispricing equipment and by routing invoices through an intermediary in the united arab emirates, which is allegedly a “front company” of the group,” the EPW story had reported at the time.

From maharashtra to dubai via south korea

The customs intelligence report made public on wednesday focuses specifically on the alleged over-invoicing of the maharashtra power eastern grid power transmission company limited (MEGPTCL).

“from the investigations, as brought out in the foregoing paragraphs, MEGPTCL, EIF, PMC, shri vinod shatilal adani… appear to have hatched a conspiracy to siphon off money abroad by way of indulging in over-valuation in imports for projects subject to low or nil rate of customs duty…,” the DRI report states.

But how did this alleged conspiracy take place?U s anti money laundering laws according to the report, there were three primary parties: MEGPTCL, a “closely-related” dubai-based company called electrogen infra FZE (EIF) and a contractor called PMC projects (india) private. The DRI refers to PMC as a company “controlled and managed” by the adani group.

What appears to have allegedly happened is that MEGPTCL engaged the services of EIF to arrange for procurement of equipment from several oems which would eventually be supplied to PMC.

The role of EIF, the report notes, was to act as an “intermediary invoicing agent to inflate the invoice value in procurement of equipment and machinery required for installation in the transmission line system from the respective south korean and chinese oems”.

Or in other words, while the goods were shipped directly to PMC or MEGPTCL in india from oems in south korea and china, it was “made to appear” as if they came from EIF in the UAE.U s anti money laundering laws

According to the guardian , indian customs investigators “calculated the total assessable value of the allegedly marked-up invoices to be nearly 15 billion (1,500 crore) rupees.

Siphoning the money off

The key questions question that then remain: where did this rs 1,500 crore go? Who controls EIF? The DRI report has alleged that the EIF was directly controlled by the adani group and some if its associates and that EIF was staffed in part by former adani group employees.

However, according to the guardian , which cites a letter from the company to an indian bank (letter is cited in the DRI notice) EIF is owned by another firm called electrogen infra holding pvt ltd (EIH). EIH’s ownership eventually leads to a trust based in mauritius headed by vinod adani.

“from the above information given to the bank by EIF, it appears that vinod adani had a direct control over the activities of EIF through the asankhya resources family trust,” the DRI investigators concluded.U s anti money laundering laws

Over the last three years, the adani group has consistently and strongly denied “allegations of over-valuation. “all our transactions are always conducted within the framework of extant regulatory guidelines and provisions,” the company said in a statement to the guardian . “the adani group is aware of the investigations being conducted by the DRI and has fully cooperated, and shall continue to cooperate, with the investigating agencies.”

Adani power company’s plant at mundra in gujarat. Credit: reuters

New delhi: over-invoicing of power equipment by just one adani group subsidiary may have resulted in rs 1,500 crore being moved to an offshore tax haven, according to a directorate of revenue intelligence (DRI) report made public by the guardian on wednesday.

The artificial inflation of invoices – especially when it comes to import of electricity transmission equipment – is a well-known, if under-investigated phenomenon.U s anti money laundering laws

Multiple publications, including the economic and political weekly (EPW), have reported how the DRI issued show-cause notices in 2014 and 2015 to a number of companies for the alleged over-invoicing of power plant equipment.

In 2016, EPW reported on how the adani group had had allegedly overvalued capital goods imported by three adani firms (adani power maharashtra limited, adani power rajasthan limited and maharashtra power eastern grid power transmission company limited), with the DRI estimating an alleged over-invoicing to the tune of rs 6,000 crores.

“these companies were alleged to have indulged in a “trade based money laundering scheme” by mispricing equipment and by routing invoices through an intermediary in the united arab emirates, which is allegedly a “front company” of the group,” the EPW story had reported at the time.

From maharashtra to dubai via south korea

u s anti money laundering laws

The customs intelligence report made public on wednesday focuses specifically on the alleged over-invoicing of the maharashtra power eastern grid power transmission company limited (MEGPTCL).

“from the investigations, as brought out in the foregoing paragraphs, MEGPTCL, EIF, PMC, shri vinod shatilal adani… appear to have hatched a conspiracy to siphon off money abroad by way of indulging in over-valuation in imports for projects subject to low or nil rate of customs duty…,” the DRI report states.

But how did this alleged conspiracy take place? According to the report, there were three primary parties: MEGPTCL, a “closely-related” dubai-based company called electrogen infra FZE (EIF) and a contractor called PMC projects (india) private. The DRI refers to PMC as a company “controlled and managed” by the adani group.

What appears to have allegedly happened is that MEGPTCL engaged the services of EIF to arrange for procurement of equipment from several oems which would eventually be supplied to PMC.U s anti money laundering laws

The role of EIF, the report notes, was to act as an “intermediary invoicing agent to inflate the invoice value in procurement of equipment and machinery required for installation in the transmission line system from the respective south korean and chinese oems”.

Or in other words, while the goods were shipped directly to PMC or MEGPTCL in india from oems in south korea and china, it was “made to appear” as if they came from EIF in the UAE.

According to the guardian , indian customs investigators “calculated the total assessable value of the allegedly marked-up invoices to be nearly 15 billion (1,500 crore) rupees.

Siphoning the money off

The key questions question that then remain: where did this rs 1,500 crore go? Who controls EIF? The DRI report has alleged that the EIF was directly controlled by the adani group and some if its associates and that EIF was staffed in part by former adani group employees.U s anti money laundering laws

However, according to the guardian , which cites a letter from the company to an indian bank (letter is cited in the DRI notice) EIF is owned by another firm called electrogen infra holding pvt ltd (EIH). EIH’s ownership eventually leads to a trust based in mauritius headed by vinod adani.

“from the above information given to the bank by EIF, it appears that vinod adani had a direct control over the activities of EIF through the asankhya resources family trust,” the DRI investigators concluded.

Over the last three years, the adani group has consistently and strongly denied “allegations of over-valuation. “all our transactions are always conducted within the framework of extant regulatory guidelines and provisions,” the company said in a statement to the guardian . “the adani group is aware of the investigations being conducted by the DRI and has fully cooperated, and shall continue to cooperate, with the investigating agencies.”