New Delhi: Billionaire Gautam Adani's port unit has failed to win security clearances needed to expand operations because it is being investigated by the Indian government for possible money laundering, according to three people familiar with the matter.
The Ministry of Home Affairs has for more than a year been probing Adani Ports & Special Economic Zone and the source of money transferred to the company from Mauritius, said two government officials. All three people declined to be identified as they aren't authorised to release the information.
The investigation has derailed or disrupted the Ahmedabad, India-based company's bids to operate at least three port projects, the people said. That has hindered the Adani Group's push to boost port capacity about fourfold by 2020 as it imports coal from Australia and Indonesia for its power stations.
Adani Ports "categorically deny all allegations of money laundering", the Adani Group said in an emailed statement. "The company also wishes to state that it has not received any intimation from the Indian government nor is it under any kind of government investigation."
The company last month won government approval to develop a bulk-cargo terminal in Kandla on the west coast, it said. It has also begun building an import terminal in the eastern port of Visakhapatnam. Adani Ports also operates Mundra Port in western Gujarat state, the nation's busiest non-government run harbour.
Internal security
Ira Joshi, a spokeswoman at the Ministry of Home Affairs, didn't reply to emailed questions about the probe. The Ministry of Home Affairs is responsible for India's internal security. The port operator fell 7.1 per cent to Rs135 (Dh10) at close of trading in Mumbai on Friday, after slumping as much as 11 per cent. Parent Adani Enterprises fell 0.5 per cent.
The projects that Adani Ports has been unable to win security approval for include a multipurpose facility in Vizhinjam in the southern state of Kerala, the people said. The company was also shut out of the bidding for a bulk-cargo export terminal in Visakhapatnam in Andhra Pradesh last year, they said.
Adani Ports is 77 per cent owned by Adani Enterprises, Gautam Adani's main holding company and India's biggest coal importer. The group, founded in 1988, also has investments in mining and edible oils in countries including India, Australia and Indonesia.
The 49-year-old Gautam Adani, who owns 57 per cent of Adani Enterprises, has a $5.4-billion (Dh19.81 billion) fortune, according to Forbes. The billionaire's business is based in Gujarat state.
The country's Enforcement Directorate imposed a penalty on Rajesh Adani, managing director of Adani Enterprises and Gautam's brother, for violating the Foreign Exchange Regulation Act and the Customs Act, according to the 2007 prospectus for the port unit's initial public offering.
The penalty was set aside on appeal and the matter was returned to the Directorate, it said. It is common for Indian companies to receive funds from Mauritius. The island nation was the single largest source of foreign direct investments into India in the year ended March 31.
