The Hindenburg Research report alleging the existence of shell companies of Adani Group in Mauritius was termed as ‘false and baseless’ by Mauritius’ Financial Services Minister Mahen Kumar Seeruttun in Parliament. He added that Mauritius follows the tax rules prescribed by the OECD.
In its report released on January 24, American investment research firm Hindenburg Research said that billionaire Gautam Adani used shell companies created in Mauritius to rig the share prices of his listed companies.
Mauritius remains a popular destination among foreign investors because of its low tax structure. ‘Shell’ i.e. fake company is an inactive firm that is used to carry out many types of financial frauds. A member of Parliament from Mauritius questioned the government about this allegation made in the Hindenburg report. In response, Financial Services Minister Mahen Kumar Siruttan said that Mauritian law does not allow the existence of shell companies.
Siruttun said I wish to inform the House that the allegations of the existence of shell companies in Mauritius are false and baseless. Shell companies are not permitted in Mauritius as per the law. He said that all global trading companies licensed by the Financial Services Commission (FSC) have to meet the required conditions on an ongoing basis and the commission keeps a close watch on it. No such violation has been found so far, he added.
Mauritius’ financial services minister said the FSC had looked into the Hindenburg report but could not disclose its details due to confidentiality clauses in the law. He said, “The Financial Services Commission can neither deny nor confirm that an investigation has been or is being conducted.” Thus disclosing information about global trading companies would violate section 83 of the Financial Services Act and may adversely affect the reputation of our jurisdiction.
Earlier, FSC Chief Executive Officer Dhaneshwarnath Vikas Thakur had said that a preliminary assessment of all units belonging to the Adani Group in Mauritius had found no deficiencies in compliance with the regulations.
The case of alleged shell companies linked to the Adani group is in the news after the allegation made in the Hindenburg report. The Securities and Exchange Board of India (SEBI) is assessing the relationship between the Adani Group and two Mauritius-based firms – Great International Tusker Fund and Ayushman Limited. These firms had participated as lead investors in the FPO floated by Adani Enterprises in late January.
The Hindenburg-Adani case is going to come up for hearing in the Supreme Court as well. An expert committee was constituted by the Court to look into the regulatory issues in this matter. But SEBI has appealed to the court to extend the tenure of this committee by six months, which is to be considered. The market capitalization of the group companies had at one point plummeted to $140 billion following allegations of fraud and stock price rigging against the Adani group. However, the Adani Group has denied all these allegations from the very beginning, saying that Hindenburg’s allegations are false and made with ulterior motives.