When U.S. prosecutors unveiled fraud and bribery charges against Gautam Adani, they were charging not just one of India’s top businessmen and wealthy individuals but also someone seen as a key figure in India’s domestic and foreign policy, and even a proxy for Prime Minister Narendra Modi.
On Wednesday, the U.S. Justice Department and the Securities and Exchange Commission (SEC) accused Adani and others of promising more than $250 million in bribes to Indian government officials to win solar energy contracts and concealing the practice when raising funds from U.S. investors.
Shares in Adani’s companies plunged 20% on Thursday. The full impact of the case on Adani’s business is unclear, but Kenya’s president on Thursday canceled a multimillion-dollar airport modernization and energy project deal with the tycoon. Meanwhile, Adani Group decided not to proceed with a planned dollar-denominated bond offering.
Analysts said the federal charges could complicate U.S.-India relations just weeks before the start of Trump’s second term, given Adani’s close ties to Indian Prime Minister Narendra Modi.
U.S. prosecutors said they brought the charges to protect investors. Deputy Assistant Attorney General Lisa Miller said in a statement that the Justice Department "will continue to aggressively prosecute corruption, deception and obstruction that violate U.S. laws, no matter where in the world it occurs." Prosecutors also said that no one charged in the United States has been arrested.
Background
In June 2020, a renewable energy company owned by Indian billionaire Gautam Adani won what was said to be the largest solar development contract ever: supplying 8 gigawatts of electricity to a state-owned power company. However, the agreement subsequently fell into crisis. According to US authorities, the local power company was unwilling to pay the price offered by the state-owned company, putting the deal at risk of being stranded. To save the deal, Adani allegedly decided to bribe local officials to persuade them to buy the electricity.
Adani is not in U.S. custody and is believed to be in India. Adani Group said the charges are "without merit" and will seek "all available legal remedies." Adani and five of the other six defendants live in India, which has an extradition treaty with the U.S. Another defendant lives in Singapore, which also has an extradition treaty.
Last year, short-selling firm Hindenburg Research accused Adani of “performing the biggest scam in modern corporate history,” triggering a massive sell-off in the group’s shares that wiped out $68 billion from Adani’s market value. Hindenburg accused Adani of stock price manipulation and fraud just as the group began a share offering designed to raise $2.5 billion.
Adani dismissed Hindenburg's allegations at the time, saying none of them were "based on independent or journalistic fact-finding". Adani's response included documents and data sheets and said the group had made all necessary regulatory disclosures and complied with local laws.
The "hundreds of millions of dollars in bribes" involved in the case have attracted attention
Adani is accused of promising to pay hundreds of millions of dollars in bribes to local Indian officials in order to encourage local power companies to buy solar power. This behavior attracted the attention of the US Department of Justice and the Securities and Exchange Commission because Adani's company raised funds from US investors several times starting in 2021.
The charges are based largely on electronic communications between the defendants, according to the U.S. Attorney General’s 54-page criminal complaint and two parallel civil complaints filed by the SEC.
In early 2020, the Solar Energy Corporation of India awarded a 12 GW solar project to Adani Green Energy and another company, Azure Power Global. The project is expected to generate billions of dollars in revenue for both companies. For Adani Green Energy, the contract was a major breakthrough because the company had historical revenue of only about $50 million and had not yet achieved profitability.
However, the project soon ran into obstacles. Local power distributors were reluctant to sign procurement contracts in anticipation of future electricity price declines. According to the SEC, Adani's nephew, Sagar Adani, the head of the company, discussed these delays with former Azure CEO Ranjit Gupta via the encrypted app WhatsApp, and even mentioned bribery.
Allegation: Corruption involving multiple parties
In November 2020, Azure's CEO mentioned in a message that local power companies "are being incentivized," to which Sagar Adani responded: "Yes... but the 'appearance' is hard to hide." In February 2021, Sagar further wrote: "We have doubled the 'incentives' to push them to accept."
The Justice Department alleges that in August 2021, Gautam Adani met with an official from the southern Indian state of Andhra Pradesh and eventually promised to pay a $228 million bribe in exchange for Andhra Pradesh's agreement to buy electricity. By December, the state signed a purchase agreement, and other states with smaller contracts followed suit. The U.S. alleges that officials in those states also received bribe promises.
SEC documents show that Azure's management discussed "rumors that the Adani family had somehow facilitated the signing" at a meeting in December 2021. Subsequently, Gautam Adani said on December 14 that Adani Green Energy plans to become "the world's largest renewable energy company" by 2030.
However, the sudden "good luck" of these contracts raised questions in the market about their legitimacy. The SEC subsequently sent an investigation letter to Azure in March 2022, asking it to explain the circumstances related to the recent contracts and asking whether any foreign officials had requested any items of value.
US investigations and market turmoil
In March 2023, the FBI seized Sagar Adani's electronic devices during his visit to the United States. The United States subsequently accused the Adani Group of providing false information to investors and concealing bribery in financing transactions completed in December 2023 and March 2024.
On October 24, 2023, federal prosecutors in Brooklyn, New York, filed a secret grand jury indictment against Gautam Adani, Sagar Adani, Gupta and five others. After the indictment was unsealed on November 20, the market value of Adani Group companies plummeted by $27 billion, and Adani Green Energy immediately canceled a bond issuance that planned to raise $600 million.
Rahul Gandhi, the most prominent leader of India's political opposition, called for Adani's immediate arrest.
“I wonder why Mr Adani is still running around in this country as a free man?”
Article forwarded from: Jinshi Data
