By Krishna Jha
‘…In a more or less developed form, fascist tendencies and the germs of a fascist movement are to be found almost everywhere,’ said Georgi Dimitrov, while presenting his report in the annual conference of Communist International (Comintern) in 1936, and then, cautioned, “With the development of the very deep economic crisis, fascism has embarked upon a wide offensive.”
The late thirties in the last century had witnessed fascism spreading its steely hold all over. History repeats itself. Economic crisis, one of its precursors ruling over, corporate sector is the one that reaps the benefits. Financial Times, in its investigative report said that Adani group has raised the price of coal imports exorbitantly, with the aim of getting back huge profits.
It points towards the use of the “offshore intermediaries” once again which it had done earlier also in January this year. This time it is to get back five million dollar worth of coal at prices that were at times more than double than the market price. The owner of one among these firms is a Taiwanese and shareholder in Adani firms.
The report published in Financial Times is called “The mystery of the Adani Coal imports that quietly doubled in value,” and discovered that Adani is not only one among the biggest coal importers, but also is instrumental in raising the fuel cost. It has been targeting keenly the numerous crowd of country’s leading “millions of Indian consumers and businesses overpaying for electricity.”
Gautam Adani is the owner of India’s biggest private thermal power company and biggest private port operator. And hence, the FT report has described him ‘Modi’s Rockefeller’, referring to his sharply rising fortunes in the past ten years, when his 10 listed companies had blossomed and Adani himself emerged as “India’s biggest private thermal power company and biggest private port operator.”
Back in January, Hindenburg Research report had brought up queries about functioning of Adani and why the questions that are quite serious are raised all over the world, not only about Adani, but globally about the regulatory mechanism in India. Stock market watchdog Securities and Exchange Board of India (SEBI) came under fire even when the Supreme Court expert committee pointed to certain changes in rules that may have made it easier for Adani to escape scrutiny.
Denying the charges, both those levelled by Hindenburg and then of coal import over-pricing by the Financial Times, Adani has said that all of it has been vindicated by the Directorate of Revenue Intelligence (DRI’s) decision this year to withdraw an appeal to the Supreme Court in a case against one of the 40 importers named in 2016. It said, “The issue of overvaluation in the import of coal was conclusively settled by India’s highest court of law.”
Financial Times cites the “unresolved nature of the DRI investigation and the apparent continuation of the alleged practices” raises “fresh questions about the relationship between Adani and the administration of Prime Minister Narendra Modi.”
It is a fact that India has complex regulations on disclosing related-party transactions have been in place for eight years, but it is also as true as that the spirit of the law may still not be filtering into corporate behaviour.
When tendencies of finance capital mature, fascist tendencies and the germs of a fascist movement are to be found almost everywhere. That is perhaps the explanation for spirit of law not getting filtered into the corporate behaviour.
Adani Group, India’s top infrastructure player, that has been embroiled in governance issues, should have been more forthcoming about doing business with a legal firm where the chairman’s daughter-in-law is a partner. The Adani Group has rejected charges of wrongdoing. Adani has termed the investigation as being based on an “old, baseless allegation”, and is “a clever recycling and selective misrepresentation of publicly available facts and information.”
The inflation in imported coal that Financial Times alleges Adani has been doing may have sometimes, per the report, allowed it to make 52 percent profit margins in an industry where profit margins are otherwise considered low.
In all cases that Financial Times examined, it says “prices in import records were far higher than those in corresponding export declarations.”
During the journeys, from where they were imported back to a port in India, usually owned by Adani, “the value of the combined shipments unaccountably increased by over 70 million dollars.”
Among the specific instances the Financial Times London-based financial daily has found, it says that in January 2019, coal meant for Adani, departed “the Indonesian port of Kaliorang in East Kalimantan carrying 74,820 tonnes of thermal coal destined for the fires of an Indian power station. During the voyage, something extraordinary occurred: the value of its cargo doubled.”
While “in export records the price was 1.9mn dollar, plus 42,000 dollar for shipping and insurance. On arrival at India’s largest commercial port, Mundra in Gujarat run by Adani, the declared import value was 4.3mn dollar.”
This allowed for “52 percent profit margins” as a result of over-invoicing, and leading to unusual profits.
Financial Times says, “annual profits at Adani Enterprises quadrupled over the past five years, to earnings before interest, tax, depreciation and amortisation of 1.2bn dollar in the most recent financial year.”
The London based daily says that Adani Enterprises, the group’s oldest and most valuable company, generates the lion’s share of its sales and profits from its coal trading division called Integrated Resources Management (IRM).
This division, “boasts of its expertise in logistics and commodity trading” based in four global offices and 19 Indian locations.
Meanwhile, Gautam Adani’s brother steps down from three companies linked to Australia coal mine.
These resignations, which have not previously been reported, happened just days before the SC ordered a committee to probe if regulators had failed to oversee Adani Group. Meanwhile, Sebi is examining whether some transactions between the group and Vinod Adani were properly disclosed. (IPA Service)