Swiss prosecutors freeze $310 million as part of Adani investigation

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Swiss prosecutors have frozen $310 million (CHF263 million) held at six Swiss banks by a person they suspect to be “a frontman” for Adani, the controversial Indian conglomerate fighting accusations of fraud. 

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A decision of the Federal Criminal Court published this week, which rejected an appeal against the “sequestration” orders, revealed that allegations of criminal activity and money laundering in relation to Adani have been under investigation in Switzerland since at least December 2021.

The probe predates a January 2023 report by the US short selling firm Hindenburg Research, which accused Adani of running the “largest con in corporate history” by using front men to manipulate the conglomerate’s stock market valuation. 

Swiss prosecutors suspect the alleged frontman is “not the actual beneficial owner” of the company holding the sequestered $310 million, the judgment said.

Prosecutors instead suspect that substantial sums were entrusted to him by the Adani group, which were then invested in Adani’s listed companies in violation of stock market rules to artificially inflate their value, according to the ruling.

It did not make any findings beyond deciding to maintain the freezing order based on the suspicions.

Adani, a politically connected group with widespread interests in transport infrastructure, energy and media, has vigorously denied any wrongdoing. 

While Swiss criminal courts do not identify participants by name, its descriptions of the parties by reference to Hindenburg’s dossier and subsequent reporting by the Financial Times match Adani and its suspected frontman, the Taiwanese businessman Chang Chung-Ling. 

A lawyer who represented the alleged frontman’s company, which filed the Swiss appeal, did not immediately respond to requests for comment. 

Adani said it had not received any requests for information or clarification from the Swiss authorities and that its “overseas holding structure is transparent, fully disclosed, and compliant with all relevant laws”.

It added: “These allegations are clearly preposterous, irrational, and absurd. We have no hesitation in stating that this is yet another orchestrated and egregious attempt by the same cohorts acting in unison to inflict irreversible damage on our group’s reputation and market value.”

Chang is a long-standing associate of the Adani group. The FT has previously reported that he was one of two investors who traded Adani stocks using layers of offshore entities that obscured Chang’s identity, in a structure overseen by a person working for Vinod Adani, brother of the conglomerate’s founder. 

At the time Chang said “I know nothing about this” when asked if he was an Adani associate who secretly purchased shares for them. He suggested the reporter “might be AI”, and eventually hung up. Vinod Adani did not respond to requests for comment.

The FT has also reported that in recent years Chang sold $2 billion of coal to Adani at what appeared to be above-market prices, using a business registered to his home address in Taiwan.

The Swiss judgment said Geneva’s public prosecutor opened an investigation into suspicions of money laundering and forgery of documents in December 2021, following a report from the Money Laundering Reporting Office, and that federal prosecutors took over the case in July 2023. 

Prosecutors also found it suspicious that the company attempted to use such Adani investments as collateral for a credit line “which would be likely to constitute an attempted fraud given the suspected overvaluation of the securities”, the decision said.

News of the judgment was first reported by online magazine Gotham City.

The appeal was filed in March this year by the company holding the sequestered assets.

The court found that the facts were sufficient to maintain the order, and noted that “the appellant is clearly unable to provide the [federal prosecutor’s office] with the explanations — in the form of supporting documents — which it should be able to provide in order to dispel the doubts legitimately raised”.

Copyright The Financial Times Limited 2024