Indian billionaire Gautam Adani was recently indicted in New York over a $265 million bribery scheme. In a statement, the U.S. Department of Justice (DOJ) alleged that Adani and seven of his associates, including his nephew Sagar Adani, promised Indian officials bribes to secure energy contracts being funded by international investors, including some from the U.S.
“A five-count criminal indictment was unsealed today in federal court in Brooklyn charging Gautam S. Adani, Sagar R. Adani and Vneet S. Jaain, executives of an Indian renewable-energy company (the Indian energy Ccompany), with conspiracies to commit securities and wire fraud and substantive securities fraud for their roles in a multi-billion-dollar scheme to obtain funds from U.S. investors and global financial institutions on the basis of false and misleading statements,” said the DOJ in a statement.
Adani Green Energy, which the case centers around, saw its stocks decline 8 percent in early trading and has lost around $7 billion in market value since the news of the indictment. The conglomerate’s stocks have seen their combined market value drop by $33 billion.
Who is Gautam Adani?
Gautam Adani is the founder and chairman of the Adani Group, which ranks among the top three industrial conglomerates in India. Adani Group consists of 10 publicly listed entities with a total market capitalization of over $141 billion. The businesses span energy, ports & logistics, mining & resources, gas, defense & aerospace, and airports. The group has established a leadership position in India in each of its business areas.
Adani is worth $69.8 billion and is the world’s 25th richest and India’s second-richest person.
Adani’s career began in 1978 in Bombay, where he joined the diamond industry after dropping out of school at the age of 16. In 1979, he began trading diamonds. By 1982, he had made his first million rupees. That same year, he returned to Ahmedabad to work at a plastics factory operated by his brother Mansukhlal. The family company started importing polyvinyl chloride in 1983 to meet the demands of its business. The union government’s relaxation of import licenses in 1985 proved a boon for the company.
He set up the Adani Group in 1988, beginning with commodities trading.
As foreign investment poured into India following economic liberalization policies, Gujarat state, where Adani is from, leveraged its ports to help attract business. In 1995, it began selling port projects to private companies to develop as joint ventures and this is when the Adani conglomerate received the contract to develop the port at Mundra, which became operational in 1998.
Now, Gautam Adani’s group operates several airports, ports, factories, and power plants.
How did the bribery unfold?
In June 2020, a renewable energy company owned by Adani secured a bid to supply eight gigawatts of electricity to a state-owned power company. Earlier that year, the Solar Energy Corporation of India awarded contracts for a 12-gigawatt solar energy project to Adani Green Energy and Azure Power Global, a project expected to generate billions of dollars in revenue for both companies, according to the indictment. This marked a significant milestone for Adani Green Energy, which was led by Adani’s nephew, Sagar Adani.
However, challenges soon arose. Local power companies were unwilling to pay the prices set by the state company, putting the deal in jeopardy, according to U.S. authorities. To salvage the agreement, Adani allegedly resorted to bribing local officials to convince them to purchase the electricity. The SEC claims that during this time, Sagar Adani and the CEO of Azure Power discussed the delays and implied bribes in their WhatsApp communications.
By August 2021, Gautam Adani allegedly met with an official in Andhra Pradesh and promised $228 million in bribes in exchange for securing the state’s agreement to buy the power. By December of that year, Andhra Pradesh had committed to the deal, with other states following suit for smaller contracts.
On December 14, 2021, Gautam Adani declared that the company was on track “to become the world’s largest renewables player by 2030”. The rapid rise of Azure and Adani Green sparked market speculation about how the contracts were awarded, prompting the SEC to launch an investigation.
What are the charges?
Gautam Adani, Sagar Adani and Vneet Jaain lied about the bribery scheme as they sought to raise capital from U.S. and international investors, stated Breon Peace, United States Attorney for the Eastern District of New York. Meanwhile, FBI Assistant Director in Charge James E. Dennehy said that Adani and other defendants also defrauded investors by raising capital on the basis of false statements about bribery and corruption, while still other defendants allegedly attempted to conceal the bribery conspiracy by obstructing the government’s investigation.
The DOJ added that on several occasions, Gautam Adani personally met with an Indian government official to advance the bribery scheme, and the defendants held in-person meetings with each other to discuss aspects of its execution. The defendants frequently discussed their efforts in advancing the bribery scheme, including through an electronic messaging application. The defendants also extensively documented their corrupt efforts.
The DOJ also revealed that during the same period, Gautam Adani, Sagar Adani and Vneet Jaain allegedly conspired to misrepresent the Indian energy company’s anti-bribery and corruption practices and conceal the bribery scheme from U.S. investors and international financial institutions in order to obtain financing, including to fund those solar energy supply contracts procured through bribery.
In addition, they caused the Indian energy company to make false statements in their consolidated financial statements and to the market and investors regarding the bribery scheme.
The indictment added that Cyril Cabanes, Saurabh Agarwal, Deepak Malhotra, and Rupesh Agarwal conspired to obstruct the grand jury, FBI, and U.S. Securities and Exchange Commission (SEC) investigations into the bribery scheme. Among other things, they also agreed to delete electronic materials related to the bribery scheme, including emails, electronic messages, and bribery analyses.
Adani Group denies allegations
On Thursday, Adani Group denied the allegations stating: “The allegations made by the U.S. Department of Justice and the U.S. Securities and Exchange Commission against directors of Adani Green are baseless and denied.”
Wednesday’s indictment came more than a year after a U.S. auditing firm, Hindenburg Research, accused the Adani Group of stock manipulation and accounting fraud.
In a January 2023 report, Hindenburg alleged that the Adani Group had been engaged in a “brazen stock manipulation and accounting fraud scheme over the course of decades”. Hindenburg claimed it investigated the Adani Group for two years and reviewed thousands of documents, conducted site visits in almost six countries and spoke with several individuals including former senior executives of the conglomerate.
Following the report’s release, Adani Group’s shares lost around $112 billion, and billionaire Gautam Adani went from being the world’s third-richest man to the 25th.
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What happens next?
Wednesday’s indictment in the United States serves solely as a formal statement of allegations, meaning Adani and his associates are still presumed innocent. Prosecutors now intend to pass these warrants to foreign law enforcement, as reported by Reuters.
While the U.S. could seek to extradite all defendants for trial, it remains uncertain whether the Indian government would permit this. The extradition treaty between the U.S. and India allows extradition only for charges carrying a potential prison sentence of more than one year in both nations.
The timeline for a trial in the U.S. also remains unclear, as is whether Adani’s presence would be required.
Analysts note that Adani has strong ties to U.S. President-elect Donald Trump, raising speculation that Trump might intervene in the case. However, it is uncertain whether he would choose to get involved or if his presidential authority would permit it. After Trump’s election win in November, Adani congratulated him in a post on X and pledged a $10 billion investment in U.S. energy projects.
