Consideration of loan described as ‘untenable’ after allegations hundreds of millions siphoned into tax havens
The government should immediately suspend any consideration of a federal loan to Adani or an any associated entity, environmental groups have said in response to the Guardian’s reporting on Wednesday about fraud allegations faced by Adani in India.
The Adani Group allegedly fraudulently siphoned hundreds of millions of dollars from India into tax havens – a practice enabled by Indian government tax breaks. Details of the allegations, and documents from India’s directorate of revenue intelligence, have been published by the Guardian today.
The group is expecting a legal decision in the “near future” in connection with allegations it inflated invoices for an electricity project in India to shift huge sums of money into offshore bank accounts.
The mining giant is seeking a loan of up to $900m 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 $1bn 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 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 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”.
Before the Guardian reports were published, the former chief executive of the Clean Energy Finance Corporation, which functions under a very similar mandate to Naif’s, said any loan from Naif to Adani or a related company may be beyond Naif’s power. Both Naif and the CEFC are required to not act in any way that might harm the reputation of the federal or any state government.
Yates told the Guardian in July that a loan to Adani would be in breach of that requirement and would therefore be unlawful.
“It is beyond my understanding how the board of Naif can conclude that providing a subsidised loan to facilitate a project of this nature is ‘not in a way likely to cause damage to the commonwealth government’s reputation’,” Yates said in July.
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 $1bn 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.”
“The new [allegations] that a complex web of companies with connections to the Adani Group has massively inflated prices of equipment reinforces existing concerns.”
A spokeswoman for Naif said it did not comment on specific proposals in Naif’s pipeline.
“We point out that because a project has moved into a due diligence phase it does not follow that Naif is actively engaged in due diligence,” she said. “The Naif board takes its responsibilities seriously and has every intention to comply with its duties and obligations in considering and making any investment decisions.”
A spokesman for the Queensland government said: “Naif is a matter for the Turnbull government. The Palaszczuk government’s resource policy applies to all greenfield projects in the Galilee and Surat basins and the north-west minerals province. Under this policy, all proponents will pay royalties in full and with interest.”
By Michael Slezak
Published by Guardian Australia on 16 August 2017