What’s Your Link With Chang Chung-Ling From China? Hindenburg Asks Adani

Chang Chung-Ling runs (or ran) an entity named Gudami International which is said to have been part of the infamous AgustaWestland scandal in India, as per the report which said "This is an important matter, not only for shareholders but also India’s national interest."

New Delhi: Even as Adani Enterprises managed to sail through (which many doubted) the Rs 20,000 crore follow-on public offer (FPO), the smoke around the ongoing clash between Adani Group and Hindenburg Research hasn’t subsided in the public eye, neither does it appear to find a logical conclusion in the near future.

While we’re not sure who among the two is expected to come up with the next big move, the short-seller in its reply to the 29 January 2023 statement given by the Adani Group, has said that the group “has not even attempted to clarify its relationship” with a Chinese national named Chang Chung-Ling.

WHO IS CHANG CHUNG-LING?

Chang Chung-Ling runs (or ran) an entity named Gudami International which is said to have been part of the infamous AgustaWestland scandal in India, as per the report which said “This is an important matter, not only for shareholders but also India’s national interest.”

The Hindenburg Research report added Gudami International Pte Ltd. was “identified as part of a government fraud investigation into the Adani Group’s alleged circular trading of gems”. It also cited corporate records to show that Chang Chung-Ling shared the same residential address as Vinod Adani in Singapore.

PC: Hindenburg Research

“We had asked: What is the nature of Chang Chung-Ling’s relationship with the Adani Group, including his relationship with Vinod Adani?,” the report said.

Hindenburg Research has alleged that Chang Chien-Ting, the son of Chang Chung Ling, is the beneficial owner of a major contractor to the Adani Group called PMC Projects to which Adani Group paid $63 billion over the past 12 years.

Chang Chung-Ling (left) with and Gautam Adani (center). | PC: Hindenburg Research sourced from Taiwanese media.According to the Hindenburg Research, Chang Chung-Ling’s name appears in a 2014 Directorate of of Revenue intelligence (DRI) report detailing a scheme alleging that the Adani Group siphoned cash from its publicly listed companies.

It cites a 2014 DRI investigation which said PMC Projects was a “dummy firm” used by the Adani Group in a coal/power equipment over-voicing scandal. The report also added pictures of “historical captures of PMC Projects website” and the “‘Adani House’ address, as per corporate records”.

PC: Hindenburg Research

“Taiwanese media covered an official government event attended by PMC Projects’ owner Chang Chien-Ting and described him as ‘Adani Group’s Taiwan Representative’,” the report said.

PC: Hindenburg Research

As a common response to Hindenburg’s questions Adani Group said the following:

“In August 2017, the Adjudicating authority of DRI i.e. which was the same authority who issued the show cause notice to Maharashtra Eastern Grid Power Transmission Limited (MEGPTCL) and PMC Projects, dealt with this issue in detail and concluded that the allegations were false, holding that all the imports were genuine and being undertaken at arm’s length.

The Authority further concluded that the value declared is correct and is not required to be re-determined. Even the Appellate Tribunal (CESTAT) in appeal has upheld the order of the adjudicating authority and rejected the challenge from the Customs Department. These findings are also concurred by Indian Income Tax authorities.

It can be clearly concluded that the allegation that PMC was managed and controlled by Adani portfolio through its entity MEGPTCL is unsustainable for the reason that the price was arrived at arm’s length. The question of MEGPTCL influencing or controlling PMC is far-fetched as both MEGPTCL and PMC are not related. This can be referenced in sub para (ii) of Para 26 at page 22 of the order of the Appellate Tribunal appended in Annexure 8. This is an independent judicial process and has withstood scrutiny of challenge and any allegations to the contrary are baseless. We have already responded above in details on the DRI investigations.”

Even though Adani Group, in its response said that the DRI, in its 2017 report concluded that all allegations it raised in 2014 were ‘false’, Hindenburg Research says that, “the investigation was shelved by one of the DRI’s own senior officials three years later in an August 2017 order.”

“The ruling overturned the organization´s own evidence assembled during the original investigation and stated that there was no proof the power equipment had been over-valued. The ruling also stated that the deal between the Adani power companies and Vinod Adani, despite being related parties, were somehow conducted at arms-length.

Proceedings against all the accused were dropped. In what amounted to an internal squabble, a different department of the DRI launched an appeal against that ruling. The appeals tribunal, CESTAT, upheld the decision to drop the charges in a ruling in July 2022,” the Hindenburg Research report said.

Even though the Hindenburg Research report has named Chang Chung-Ling multiple times in its long report, Adani Group hasn’t included the name even once in its even longer responses.