Financial Times refuses to take down report on Adani Group’s offshore funding

Days after the Adani Group termed a ‘Financial Times’ report on the conglomerate's offshore funding as "inaccurate", "mendacious" and "making insinuations that are false and damaging", and demanded that the report should be taken down, the London-based publication rejected calls from the Adani Group to remove the report from its website.

On Monday, the Adani Group wrote a strongly worded letter to the editor of the publication asking it to take down the story. The group said that the article has created a “misleading narrative, misunderstanding in the markets, created a reputational impact on the Adani Group companies” and has become a political issue.

The report, “Indian data reveals Adani empire’s reliance on offshore funding”, appeared on March 22, 2023, and is available online on the FT website. An FT spokesperson told The Telegraph that the article is accurate and was carefully prepared. “We stand by our reporting,” the spokesperson said.

The report gave details of an analysis of India's FDI remittance statistics and claimed that almost half of all foreign direct investment into the conglomerate in recent years came from offshore entities linked to the Gautam Adani family.

The FT analysis showed statistics that offshore companies linked to the Adanis invested at least $2.6 billion in the group between 2017 and 2022, accounting for 45.4 per cent of the more than $5.7 billion received in total FDI during the same period.

"A quarter of the FDI flows into the Adani group of companies came from connected shell companies through a series of small and frequent investments. More recently the transactions have become larger and less recurrent," the report said.

“The data underlines how funds of unclear provenance have helped Adani build his sprawling group as he expanded a trading and plastics operation into an infrastructure giant while aligning himself with Prime Minister Narendra Modi’s development agenda,” the report stated further.

“The full extent of money flows from connected offshore entities into Adani Group is likely to be even higher given FDI data only captures a portion of overseas investment."

The FT has been reporting on the Adani Group and printed a few stories on the conglomerate. It has stated: “In the year to September 2022, Adani Group was one of India’s biggest recipients of money officially recorded as FDI, receiving 6 per cent of inflows into the country. Of the group’s $2.5 billion in catalogued FDI over the 12-month period, $526 million came from two Mauritius companies linked to the Adani family while nearly $2 billion came from Abu Dhabi’s International Holding Company.”

The report said that industry experts said the role of offshore entities makes an already Byzantine corporate structure even more opaque. Adani Group has hundreds of subsidiaries and has disclosed thousands of related-party transactions.

Jonas Heese, associate professor at Harvard Business School’s accounting and management unit, who was quoted in the report, said: “Why do you make it so complex that it’s very difficult for outsiders to understand? I think that is a legitimate question to ask.”

The FT has further said: “Adani, which strenuously denies Hindenburg’s allegations, declined to comment on why such a large proportion of its overseas funding came from companies whose ultimate source of funds was not clear. It also said ‘all these transactions are fully disclosed in our accounts and have been since 2015’.”

Also quoted in the report, Bala Vissa, professor of entrepreneurship and family enterprise, Insead, said that the opacity surrounding the Adani Group’s offshore entities is unusual for a company. “Experts say the opacity surrounding the Adani Group’s offshore entities is unusual for a company that relies on institutional capital for growth because established investors prefer to back companies they understand. Typically, ‘with this lack of transparency, you can’t grow that fast.”

The Adani Group response

In its response, the Adani Group said: “This story has driven misunderstanding in the market and with other media, and has become a political issue, we are compelled to share this information publicly at this time. That is regrettable but could have been avoided by your reporters taking a careful and objective approach.”

It added: “Our statement to your reporter, that all the transactions about which the Financial Times inquired have been publicly disclosed, is accurate, and the story amply demonstrates that your reporters conveniently chose not to look in a meaningful way at those public disclosures or even at the related media releases (including ones that the Financial Times covered at the time).”

It claimed: “The facts are easily available and transparent. They are available through relevant securities regulatory filings that were made at the time and are a matter of public record.”

The group said it was fully compliant with securities laws and have not obscured any information regarding promoter ownership and financing.

It further added: "We understand the competitive race to tear down Adani can be alluring. But we are fully compliant with securities laws and are not obscuring promoter ownership and financing. Through the creation of a misleading narrative, your story has created a reputational impact on Adani Group companies. We ask you to take down the story immediately from your website."

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