Thread by @Saaf_Baat

In light of @HindenburgRes report on #AdaniScam, worth revisiting the over-invoicing scam by Adani Group.

Adani group was investigated in 2013 and served with a notice by ED for massively over-invoicing his imports. 1/n

epw.in/journal/2016/2…

Adani power bought coal from its own Indonesia subsidiaries at an avg price of $82/ton when the landed price was $40-$50.

They had Power Purchase Agreements (PPA) with electricity distributors that were based on the cost of generation..

2/n economictimes.indiatimes.com/industry/energ…

.. and therefore this higher cost was a scheme to charge more for electricity, & also siphon off these profits abroad.

Consumers pay higher tariffs. In case of any other power sales, the other shareholders see deflated profits for Adani power. 3/n

The same mechanism was used with machinery imports. Instead of paying original suppliers in China/Korea, almost all imports were routed via a Dubai-based company (Electrogen Infra FZE) owned by a Mauritius fund of Vinod Adani.

(page 1 of the DRI notice)
4/n

This investigation had meticulously established the paper trail on several big purchases by Adani Power, and found numerous examples of over-invoicing.

(page 93 of DRI report)
5/n

For Example, equipment worth $65 Million (₹535 Cr) Was bought by this Dubai company from Hyundai, but imported at a 400% over-invoiced price of $260 Million (₹2,135 Cr) into India. Thus siphoning off ~₹1600 Cr ($2 Bn) out of India.

6/n

If you thought 400% over-invoicing was bad enough, actually there were other imports that had inflated invoices of 700% and 1200%!

7/n

So, the modus operandi of the over-invoicing scam by Adani was that they layer their imports via an intermediary company in Dubai, which invoiced them 4-12 times for imports. This intermediary was controlled by the Adani group itself and siphoning off funds to Mauritius 8/n

All these investigations were swept under the carpet once Mr. Modi came to power in 2014. Not only that, but in several cases, the officials involved in the investigations were even harassed.

9/n

Effectively, this over-invoicing was defrauding the

1) power consumers - paying higher tariffs due to cost-based purchase agreements
2) Adani minority shareholders, whose profits are reduced due to these inflated costs

Money gets siphoned off abroad.

10/n

But, what happens to these funds laundered abroad?

So, that's where @HindenburgRes tells us how Vinod Adani's Mauritius-based shell companies and funds are manipulating the share price by investing these funds back into Adani companies.

https://twitter.com/Paul_Koshy/status/1620697834671734787

n/n