Australian green groups up in arms as Adani faces Indian probe

The Australian government should immediately suspend any consideration of a federal loan to the Adani Group or any associated entity, environmental groups have said in reaction to a report about fraud allegations faced by Adani in India.

The Indian customs intelligence has accused the Adani Group of embezzling around Rs1,500 crore to offshore accounts by submitting inflated bills related to an electricity project, British newspaper The Guardian reported on Tuesday.

The group allegedly fraudulently siphoned the money into tax havens – a practice enabled by Indian government tax breaks.

Details of the allegations and documents from India's Directorate of Revenue Intelligence were published by The Guardian.

The DRI has alleged that the conglomerate had ordered equipment worth several hundred millions for an electricity project in Maharashtra using a shell company in Dubai, and that the company had sold the same equipment back to the Adani Group at highly inflated prices.

Details of the 97-page document, obtained by the publication, reveal a money trail from India to Dubai through South Korea and finally to an offshore company in Mauritius, which is allegedly controlled by Adani Group chief executive officer Gautam Adani's elder brother Vinod Adani.

Vinod Adani is the director of four companies that have proposed to construct a railway line and expand a coal port in connection with the Adani Group's Carmichael mine project in Queensland, Australia. The Adani Group is currently in the process of trying to gather public funds to develop the mine, which has faced legal obstacles and intense opposition from environmental activists.

The DRI has alleged that a major portion of the money the Adani Group siphoned off to offshore accounts included loans from the State Bank of India and ICICI Bank. But the agency did not accuse either lender of any illegal activity.

The Adani Group has ''strongly denied the allegations of overvaluation''. ''All our transactions are always conducted within the framework of extant regulatory guidelines and provisions,'' it said in a statement to The Guardian. ''The Adani Group is aware of the investigations being conducted by the DRI and has fully cooperated, and shall continue to cooperate, with the investigating agencies.''

Green groups protest
The mining giant is seeking a loan of up to $900 million from the Australian government through the Northern Australian Infrastructure Facility (Naif) for a rail line between its proposed Carmichael coalmine and the Abbot Point coal terminal near the Great Barrier Reef.

Naif has said the request for the loan has been progressed all the way through to the ''due diligence'' stage.

The company has also received a tax break from the Queensland government on potential royalties due from the mining activity, the details of which the government has kept secret, despite saying the deal is ''open and transparent''.

''The revelations make it untenable for the Naif to now risk almost a $1 billion of taxpayers' money on infrastructure associated with this company,'' the executive director of the Australia Institute, Ben Oquist, said. ''Today's revelations mean the Naif should immediately suspend all consideration of Adani's railway infrastructure project.''

The loan would require the approval of the minister for northern Australia, a portfolio now held by Barnaby Joyce, whose eligibility to hold his seat in parliament has been questioned.

''It would be unsound for him to approve this project when there is so much uncertainty surrounding the project as well as his position in the parliament,'' Oquist said.

The leader of the Australian Greens, Richard Di Natale, said, ''Even beyond the obvious environmental catastrophe that would be unleashed by the Adani mine, these allegations should make the Liberals immediately rule out handing over $1 billion of public money to a multinational corporation with such serious questions to answer.''

The director of campaigns at the Australian Conservation Foundation, Dr Paul Sinclair, said, ''These allegations raise serious questions for the Naif and the Turnbull government to answer. Acting northern Australian minister Barnaby Joyce and Naif management must explain whether the corporate history and appalling environmental record of Adani is being properly scrutinised before any public money is tipped into its dirty new coal project.''

GetUp described the revelations as ''stunning'' and said they demonstrated the enormous risk to Australian public money from any Naif funding.

''PM Turnbull and Queensland premier Palaszczuk must immediately rule out public money being given to this disgraced company for its dangerous coal project,'' GetUp's environment campaign director, Sam Regester, said.

''Naif is an infamously opaque body but even its mandate makes it abundantly clear it could never fund a company facing allegations like these.''

Environmental Justice Australia's chief executive, Brendan Sydes, said, ''This information should put the brakes on the proposal that the Australian public should finance Adani's coal railway through the Northern Australia Infrastructure Facility.

''Our research into the Adani Group's legal compliance history and environmental record identified a number of serious issues that should be of concern to potential financiers.''

A spokeswoman for Naif said it did not comment on specific proposals in Naif's pipeline.The Adani Group said it ''strongly denies the allegations of overvaluation''.

 ''It is a standard procedure for the group to follow international competitive bidding route for major capital expenditures to ensure transparency and competitiveness in the process,'' it said. ''All our transactions are always conducted within the framework of extant regulatory guidelines and provisions.

''The fact that our projects have incurred the lowest cost across central, state and private utility players has gone to establish the robustness of the processes followed by our group.''

It said it ''has fully cooperated and shall continue to cooperate with the investigating agencies''.