New Delhi: One of the PIL petitioners in the Adani-Hindenburg row has gone on record before the Supreme Court alleging that the market regulator SEBI suppressed important facts from it and "slept over" Directorate of Revenue Intelligence’s (DRI) letter on stock manipulation by the Adani firms.
In an affidavit filed before the top court, Anamika Jaiswal, one of the petitioners, has said SEBI has concealed a January 2014 DRI alert about Adani having siphoned off money and invested them in the Adani listed companies through entities based in Dubai and Mauritius. “That in 2014, DRI had been investigating a case of overvaluation of import of equipment and machinery by various entities of Adani Group from a UAE-based subsidiary. In this regard DRI had also issued a show cause notice against Adani Group dated May 15, 2014”, said the affidavit.
The affidavit said it is shocking that the SEBI has concealed this important information from the court and never conducted any investigation based on the DRI alert.
The affidavit said that it is shocking that SEBI has not disclosed the receipt of the said letter and evidence from the DRI to date. “Rather, they have categorically stated before the Expert Committee that the investigation into possible contraventions of rules and regulations by the Adani group of companies started on 23.10.2020 after receipt of complaints in June-July 2020”, said the affidavit.
The affidavit claimed that the letter was accompanied by a CD containing evidence of siphoning off Rs 2,323 crore and two notes on the case being investigated by the DRI. It further added that the letter also stated that more documents may be obtained from the Mumbai Zonal Unit of the DRI.
The affidavit contended that it is evident from the letter of the DRI that SEBI has suppressed facts and provided false information which amounts to perjury. “The then SEBI chairperson Mr. U.K. Sinha instead of acting on the DRI letter preferred to close the ongoing investigations into the Adani group. It is pertinent to mention herein that the said SEBI chairperson in January 2014, was appointed on February 18, 2011 and retired on March 01, 2017. Interestingly, he is currently serving as ‘non-executive independent director-chairperson of NDTV, which has been acquired by the Adani group in 2022”, said the affidavit.
The affidavit alleged, "Not only has the SEBI suppressed important facts from this court and slept over DRI alerts, but there is also an apparent conflict of interest in Sebi conducting Adani investigation”.
The affidavit said, “Cyril Shroff, Managing Partner, Cyril Amarchand Mangaldas has been a member of Sebi's Committee on Corporate Governance, which looks at offences like insider trading. It is pertinent to also mention here that 5 out of the 24 SEBI investigation reports are on insider trading allegations against the Adani’s group companies".
It added that Shroff’s daughter is married to Gautam Adani's son. The affidavit said it shows a clear conflict of interest. Citing documents unearthed during an investigation by a journalist consortium 'Organized Crime and Corruption Reporting Project', the affidavit said two Mauritius-based companies - Emerging India Focus Fund (EIFF) and the EM Resurgent Fund (EMRF)- had invested and traded in a large volume of shares of four Adani companies between 2013 and 2018.
The affidavit claimed the names of these two companies figure in SEBI's list of 13 suspected Foreign Portfolio Investments /overseas entities but SEBI has been unable to trace their ultimate beneficial owners or economic interest shareholders.
The apex court seized of a batch of PILs in connection with the Adani-Hindenburg controversy including those by lawyers M L Sharma and Vishal Tiwari, Congress leader Jaya Thakur and Anamika Jaiswal.
On August 25, SEBI in a status report informed the Supreme Court that out of its 24 investigations in the Adani-Hindenburg controversy, 22 are final in nature and 2 are interim. SEBI said the interim investigation covered 13 overseas entities of Adani's companies and it has sought details from five countries on FPIs and said, "as many of the entities linked to these foreign investors are located in tax haven jurisdictions, establishing the economic interest shareholders of the 12 FPIs remains a challenge ".
