Welcome to the fourth Asian Crime Century briefing of 2023. It was not a good week for Indian business tycoons, with two major alleged fraud cases making the news.
India
Hindenburg Research, an activist investment research firm with a focus on short selling, claimed that the richest man in Asia “Gautam Adani, Founder and Chairman of the Adani Group, has amassed a net worth of roughly $120 billion, adding over $100 billion in the past 3 years largely through stock price appreciation in the group’s 7 key listed companies, which have spiked an average of 819% in that period.” Whilst the Adani family and company owners are losing some of the value of their wealth with the resultant decline of stock prices of the Adani companies, someone is making money. Hindenburg takes a ‘short’ position by selling borrowed stocks hoping to buy them back at a lower price later, hence if the stock price falls they make a profit.
Hindenburg Research claimed that after a two year investigation they had evidence that “the Indian conglomerate Adani Group has engaged in a brazen stock manipulation and accounting fraud scheme over the course of decades. Hindenburg Research noted that “The Adani Group has previously been the focus of 4 major government fraud investigations which have alleged money laundering, theft of taxpayer funds and corruption, totalling an estimated U.S. $17 billion. Adani family members allegedly cooperated to create offshore shell entities in tax-haven jurisdictions like Mauritius, the UAE, and Caribbean Islands, generating forged import/export documentation in an apparent effort to generate fake or illegitimate turnover and to siphon money from the listed companies.” The Adani Group claimed that the Hindenburg claims are false, but markets reacted quickly with publicly listed companies in the group losing around US$50 billion in value, with Hindenburg stating that “have taken a short position in Adani Group Companies through U.S.-traded bonds and non-Indian-traded derivative instruments.”
The Adani situation is politicised and Jairam Ramesh, a Congress MP, said the Hindenburg report “demands a response” because the Adani Group is identified with prime minister Narendra Modi, who was previously chief minister of Gujarat, Adani’s home state and biggest base of operations.
Meanwhile in Bosnia, the authorities laid criminal charges against Pramod Mittal, younger brother of Indian steel tycoon Lakshmi Mittal, relating to alleged fraud involving US$ 12 million missing from a metallurgical coke plant. Pramod Mittal has fled from Bosnia, and presumably may be wanted by the Bosnian authorities. Pramod Mittal, the younger brother of Indian steel producer Lakshmi Mittal, was charged in Bosnia with heading an organized crime group and abuse of office while he was head of the supervisory board and co-owner with the local government of a metallurgical coke plant in the town of Lukavac. The charges allege that Mittal syphoned nearly 11 million Euros (US$12 million) from Global Ispat Koksna Industrija Lukavac. Mittal and others were first arrested in 2019, but granted bail for 1 million Euros and then left Bosnia.
The police in Delhi arrested three Indian nationals alleged to be members of a cyber crime syndicate operating from China and Dubai that had cheated 11,000 people. The police investigation revealed that the Telegram ID used by the syndicate was being operated from Beijing, and the WhatsApp number used to defraud victims to invest in a fake Amazon site was also being operated from outside India. The police reported that fake websites created by the syndicate appear like genuine Amazon websites. The syndicate contacts victims through WhatsApp or social media platforms such as Instagram, Facebook and YouTube, using fake screenshots of WhatsApp chat with employees earning money from selling products online, to lure them into thinking that they can gain a lucrative income from the fake business.
China
Following the trial and guilty finding against the former CEO of Macau casino junket Suncity, there are new allegations regarding links with online betting companies that sponsor UK Premier League football clubs. An investigation by a UK newspaper found links between Isle of Man-based firm TGP, which operates betting brand websites and provides all of them with their UK betting licences, and Suncity. Prior to his arrest in 2021 he controlled an extensive gambling and betting business under various 'Suncity' brands. The UK All-Party Parliamentary Group for Gambling Harm said that they will launch an inquiry unless the Premier League and the Gambling Commission provide satisfactory answers about the alleged links. The crux of the issue is that Asian betting operators frequently advertise in Chinese, including on the hoardings at Premier League games which are watched worldwide and are hence aimed at Chinese customers around the world including in their home country. Almost all betting on sports is illegal in China except via the licensed China Sports Lottery as well as China Welfare Lottery.
North Korea
The FBI confirmed that the ‘Lazarus Group’, a cybercrime group associated with North Korea, was responsible for the theft of US$100 million from Harmony's Horizon Bridge (service used to transfer assets between Harmony's blockchain and other blockchains) that was reported recently. The FBI stated that on 13th January, North Korean cyber actors used RAILGUN, a privacy protocol, to launder over US$60 million worth of Ethereum (a blockchain platform that hosts cryptocurrency Ether) stolen during the June 2022 theft. A portion of this stolen Ethereum was subsequently sent to several virtual asset service providers and converted to Bitcoin. Part of these funds were frozen by the US authorities in coordination with some of the virtual asset service providers, and the remaining Bitcoin was moved to dispersed Internet addresses.
The case illustrates the nature of North Korea as a ‘mafia state’, and the FBI previously stated that the North Korean government uses crime, including stealing cryptocurrencies, to help fund its missile and other weapons programs. The criminal proceeds helps the North Korean government avoid economic sanctions imposed by the US and United Nations, and cryptocurrency helps cyber criminals to receive and launder the proceeds of their hacking.
Myanmar
The United Nations Office on Drugs and Crime (UNODC) reported that Opium poppy cultivation estimates increased by 33% in Myanmar in 2022, with more sophisticated farming practices and concentration of opium poppy cultivation. In 2022, the area under opium poppy cultivation in Myanmar was estimated at 40,100 hectares. This estimate is 33 per cent (about 10,000 hectares) more than in 2021, reversing the downward trend that started in 2014. National potential opium production in 2022 was estimated to be about 790 metric tonnes, nearly double the estimates for 2020 of around 400 metric tonnes. The increase in production was most pronounced in North Shan, where field data confirmed very healthy, organized and dense poppy fields. In Shan State, which accounts for 84 per cent of the total estimated area of poppy cultivation, production approximately doubled to some 670 tonnes when compared to 2021. The UNODC commented that continued political instability in Myanmar, ongoing increases in global prices of fuel and fertilizer, a weak economy, inflation, and very high farm-gate prices for opium can together provide a strong incentive for farmers to take up or expand opium poppy cultivation.
Singapore
The courts in Singapore have imposed another strong sentence on a fraudster, 38 months’ jail for senior executive at a medical equipment manufacturer who conspired with 3 others to defraud a firm into paying more than SG$7.5 million (US$5.7 million) in deals that led to SG$877,000 (US$667,000) in losses. The conspirators marked up the amounts in quotations that they submitted to the company, involving 31 invoices. The Singapore authorities continue to show strong enforcement against criminal fraud cases as they strive to demonstrate the lack of tolerance of the government to activities that could undermine confidence in the city as a financial centre.
Thailand
The scandal of official corruption in Thailand linked to Chinese criminals has continued as the Royal Thai Police announced that they will charge three former Immigration Bureau division commanders alleged to have taken bribes in exchange for approving non-immigrant visas for more than 3,000 Chinese nationals.
In addition, a Chinese businessman along with 40 alleged accomplices was charged with drug trafficking, money laundering, unregistered firearms possession, operating unauthorized entertainment venues, hiring illegal foreigners, providing shelter for illegal immigrants, and organized crime offences.