FirstFT: Adani suspected of fraud by selling low-grade coal as high-value fuel

Good morning. We start today with an exclusive story on Indian billionaire Gautam Adani’s business empire.

Adani Group allegedly passed off low-quality coal as far more expensive cleaner fuel in transactions with an Indian state power utility, according to evidence seen by the Financial Times that throws fresh light on allegations of a long-running coal scam.

The documents, secured by the Organized Crime and Corruption Reporting Project and reviewed by the FT, add a potential environmental dimension to accusations of corruption associated with the Indian conglomerate. They suggest that Adani may have fraudulently obtained bumper profits at the expense of air quality, since using low-grade coal for power means burning more of the fuel.

Adani has denied allegations of fraud, with the group saying the coal had gone through “an elaborate quality check process by multiple agencies at multiple points”. Here’s more on the latest revelations about the Indian conglomerate.

And here’s what I’m keeping an eye on today:

• UK politics: Deputy prime minister Oliver Dowden will launch a new campaign to encourage public preparedness for emergencies at the London Defence Conference. Former Post Office chief Paula Vennells is set to take the witness stand in the Horizon IT scandal inquiry.

• Central banks: The US Federal Reserve publishes minutes from its most recent rate-setting meeting. European Central Bank chief Christine Lagarde will deliver a recorded address at a European Securities and Markets Authority online event, while Bank of England deputy governor Sarah Breeden speaks at an EU policy workshop in Brussels.

• Companies: Traders are braced for big swings in Nvidia shares when it reports earnings today, after Amazon yesterday said it changed plans to use the chipmaking giant’s “superchip” to wait for an updated model. The clock is ticking down to the deadline for BHP, the world’s biggest miner to raise its takeover bid for London-listed rival Anglo American or walk away from the potential blockbuster deal. It has until 5pm in London (12pm EDT) to make the call.

Five more top stories

1. Exclusive: The UK’s deputy prime minister made a secret trip to the United Arab Emirates last week after increasing frustration from Emirati officials over comments by British politicians about a blocked UAE-linked bid to buy the Telegraph. Tensions between both countries have also risen recently after a perceived snub by the UK at the UN. Here’s more on Oliver Dowden’s attempt to repair frayed ties.

• US-Middle East: Washington and Riyadh are close to finalising deals on defence and a civilian nuclear programme, while the Biden administration has signalled it will work on possible sanctions against the International Criminal Court over its recent arrest warrants for Israeli leaders.

2. The US should lift its “absolutely unfair” ban on Ukraine using American-supplied weapons to strike targets inside Russia, Kyiv’s top national security official has said. While the US has argued the ban is needed to avoid escalation, Oleksandr Lytvynenko told the FT lifting it could help thwart Moscow’s new offensive. Read his full interview with Christopher Miller in Kyiv.

3. UniCredit’s chief executive has welcomed Emmanuel Macron’s support for consolidation in Europe’s fragmented banking sector but warned big cross-border deals are still some way off. European bank executives and policymakers have long called for closer ties between the continent’s banks to help them compete better with US and Asian rivals. Andrea Orcel told the FT it was “good to have this . . . commitment from a major European leader”.

4. UK inflation falls to 2.3%, but this significant drop in the consumer price index was not as great as the Bank of England or economists expected, leading markets to scale back bets on the BoE’s monetary policy committee cutting the cost of borrowing in June.

• UK policy: Prime Minister Rishi Sunak has backed away from radical reform of the graduate visa route after a fierce cabinet backlash and warnings that it could undermine Britain’s universities.

5. PwC is facing a crisis in China over its audit of Evergrande as partners braced for penalties and some clients reconsider their relationship with the firm. Beijing regulators earlier ruled that Evergrande had inflated its mainland revenues by almost $80bn in the two years before it defaulted on its debts in 2021, despite PwC giving the accounts a clean bill of health. Here’s what insiders say is happening at the Big Four firm.

• Chinese economy: Beijing has unlocked Rmb300bn ($41bn) of funding to buy up unsold housing, but much more is needed to right the stricken sector, analysts say.

Profile

This week’s arrest warrants against Israeli and Hamas leaders have sent shockwaves through the region. The move by the International Criminal Court is the first time it has pursued the leader of a western-backed state and stands to define not just The Hague court but also the legacy of its prosecutor. Who is Karim Khan, the British barrister at the heart of this pivotal moment for international law?

We’re also reading . . . 

• ‘Keystone’ species: Debates about the concept of lifeforms with an outsize environmental impact often forget a species that has driven ecological change globally: humans, writes Anjana Ahuja.

• The cult of Modi: India’s prime minister is likely to win a third term, but today’s Big Read asks: is his authoritarian style starting to lose its lustre?

• Reality checks await investors enjoying Mexico’s party: Bankers and companies are optimistic but there are some critical areas of concern, writes Michael Stott.

• Monetary policy: As the US and European economies diverge, central bankers’ assessment of policy risks should also be radically different, writes Chris Giles.

Chris has more on rate-setters and inflation in his weekly Central Banks newsletter. Sign up here if you’re a premium subscriber, or upgrade your subscription here.

Chart of the day

The EU’s trade deficit in goods with China has shrunk to its lowest quarterly level for almost three years, despite fears about the bloc being flooded with cheap Chinese products.

Take a break from the news

You’ve seen the TV show, perhaps even voted for the man to be president, now watch the film about the rise of The Don. The Apprentice, a powerful portrait of Donald Trump’s beginnings, is one of the most keenly anticipated films in Cannes this year. Click here to read the FT review by my colleague Raphael Abrahams.

Additional contributions from Tee Zhuo and Benjamin Wilhelm