Adani mining giant likely to face fresh scrutiny over financial fraud allegations

The Adani Group is likely to again have to answer allegations it siphoned more than US$600m (£445m) into overseas tax havens after senior Indian finance authorities recommended an appeal of a judgment clearing the mining giant.

The Indian finance secretary has confirmed to local media the August decision clearing the Adani Group had been reviewed by senior officials in November who ordered an appeal to be lodged by 14 December.

In August the Guardian revealed details of a massive fraud investigation into the company, which is preparing to build one of the world’s largest coal mines in Australia.

According to two sets of Indian customs intelligence documents from 2014, the Adani Group was accused of inflating the cost of electricity equipment for power projects in Maharashtra and Rajasthan states using fraudulent invoices. Authorities valued the alleged scams at nearly $852m.

The company or entities linked to it are currently being scrutinised for their suitability for a $681m concessional loan from the Australian government to build a railway line linking the proposed coal mine to a Queensland port. However it is reportedly close to securing loans from a Chinese state-owned company that would make the Australian loan unnecessary.

The Adani Group has denied any wrongdoing and was cleared on one set of allegations in August and a second set in October.

But the Indian finance secretary, Hasmukh Adhia, has confirmed the August judgment – referring to fraud allegations worth around $600m – has been recommended for appeal by senior customs officials.

“As per the procedure for review of orders of the Adjudication Authority, a committee comprising of two chief Commissioners of Customs has reviewed this order of Adjudicating Authority and directed the Commissioner of Customs vide their order dated November 15, 2017 to file an appeal in the tribunal,” Adhia said.

Customs officials have until 14 December to lodge the appeal, which will be heard by the Customs, Excise and Service Tax Appellate Tribunal. Any subsequent appeals would be heard by the Indian supreme court.

Six Adani subsidiaries are among 40 companies being investigated by Indian authorities over a separate alleged fraud involving the over-invoicing of coal imports from Indonesia.

The general modus operandi of the alleged scams is that the energy companies used fake middlemen to inflate the price of equipment or coal they sourced from overseas.

The extra money allegedly paid by the businesses was allegedly channeled into offshore bank accounts out of the reach of Indian regulators or tax authorities.

The Indian Express reported on Thursday that the outcome of the allegations against the Adani Group could impact a $125m compensation package the company has been promised from electricity distribution companies in Haryana state over its “financial difficulties” in the area.

Indian opposition groups have called for a supreme court inquiry into the company over the fraud allegations which, if proved, could have pushed up power prices for local consumers.

A public-interest lawsuit has also been filed in the supreme court calling for an investigation into alleged over-invoicing by the Adani Group and other energy companies.

The Adani Group has been contacted for comment.