India’s Directorate of Revenue Intelligence (DRI) has published a report showing how an Adani Group subsidiary allegedly used a Dubai-based front company to over-invoice imports. It then moved US$225 million to a Mauritius-based firm controlled by Vinod Adani, the brother of the group’s chairman, Gautam Adani.
The Adani group is one of 40 companies the DRI is investigating for suspected over-invoicing of coal imports that may have cost India as much as US$5 billion, (Trade-based Financial Crime, 18 April 2016).
The report focuses specifically on the alleged over-invoicing of the Maharashtra Power Eastern Grid Power Transmission Company Limited (MEGPTCL).
It says MEGPTCL and others appear to have hatched a conspiracy to siphon off money abroad by overvaluing imports subject to low or zero rate of customs duty.
The company was able to do this by involving a closely-related Dubai-based company called Electrogen Infra FZE (EIF) and a contractor called PMC Projects (India) Private, a company controlled and managed by the Adani Group.
MEGPTCL engaged the services of EIF to procure from several suppliers in South Korea and China, equipment that would eventually be delivered to PMC.
EIF essentially acted as an intermediary invoicing agent to inflate invoice values in the procurement of equipment and machinery required for the construction of a transmission line.
So while the goods were shipped directly to PMC or MEGPTCL in India from suppliers in South Korea and China, it was made to appear as if they came from EIF in the UAE.
The DRI reckons EIF overvalued the imports by US$225 million and therefore received this amount in excess of what had been paid to the suppliers in South Korea and China.
Investigators believe that EIF is owned by another similarly named entity, Electrogen Infra Holding Pvt Ltd, which is ultimately owned by the Asankhya Resources Family Trust, which is based in Mauritius and controlled by Vinod Adani.
The Adani group has consistently and strongly denied allegations of over-invoicing in its various companies.
Categories: Trade Based Financial crimes News