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Gautam Adani U.S. indictment: What do we know so far?

A US court indicted billionaire Gautam Adani and seven others including his nephew Sagar and 3 other executives on charges of fraud and bribery. The case pertained to a deal between Adani Green Energy and a US seller for 12 gigawatts of solar power to be sold to various states. The charges came on a day when the firm planned a green bond launch in the US. The Adani subsidiary eventually cancelled the sale.
 
The U.S. Securities and Exchange Commission (SEC) has charged Mr.Adani, founder and chairman of the Adani Group, with allegedly defrauding American investors and bribing officials. The SEC alleged that the bribery scheme was orchestrated to enable renewable energy companies Adani Green and Azure Power to capitalise on a multi-billion-dollar solar energy project awarded by the Indian government. The complaint charges them with violating the antifraud provisions of the federal securities laws and seeks permanent injunctions, civil penalties, and officer and director bars.
 
Adanis stocks nosedived as reports of a possible arrest of one of India’s richest businessmen loomed large. The Congress, which has repeatedly sought a JPC probe into the “Adani Mega Scam,” said its stand has been vindicated. The BJP, however, questioned the timing of the indictment.
 
This is not the first time Mr. Adani is facing a legal tussle overseas. There are at least six other deals such as the Carmichael coal mine project in Australia, and Sri Lanka’s windpower project.
 
U.S.-based short-seller Hindenburg Research in 2023 accused the Adani conglomerate of improper extensive use of entities set up in offshore tax havens and expressed concern about high debt levels. It followed up with another report this year alleging that SEBI chairperson Madhabi Puri Buch and her husband had undisclosed investments in obscure offshore funds in Bermuda and Mauritius, the same entities allegedly used by Vinod Adani to round-trip funds and inflate stock prices.

 
Gautam Adani faces five-count criminal indictment in U.S. for bribery, security fraud

The U.S. Department of Justice (DoJ) has issued a five-count criminal indictment of Gautam Adani, chairman of the Adani Group, and several of his business associates. The charges include promising more than $250 million in bribes to Indian government officials to secure solar energy contracts, conspiracies to commit securities and wire fraud, and orchestrating “a multi-billion dollar scheme” to defraud U.S. investors and global financial institutions by giving “false and misleading statements”. The indictment was unsealed by the U.S. Attorney’s Office for the Eastern District of New York late on November 20, 2024.

In a parallel move, the U.S. Securities and Exchange Commission (SEC) has also charged Gautam Adani and Sagar Adani (Gautam’s nephew and head of Adani Green Energy), along with Cyril Cabanes, a top executive of Azure Power Global Limited, (a New Delhi-headquartered renewable energy company that used to be listed on the New York Stock Exchange), with a massive bribery scheme involving Adani Green and Azure Power.

While the Department of Justice’s indictment constitutes a criminal case, the SEC’s is a civil complaint and if proved, could result in a “permanent injunction, a civil penalty, and an officer and director bar”. The SEC’s complaints were filed in the U.S. District Court for the Eastern District of New York.

Reacting to these developments, Adani Green Energy Limited has withdrawn its proposed $600 million U.S. dollar denominated bond offering. Shares of Adani Group companies lost about $28 billion in market value in morning trade on Thursday.

The indictment concerns the actions of the defendants between 2020 and 2024. The defendants are Gautam Adani, Sagar Adani, Executive Director of Adani Green Energy, Vneet S. Jaain, former CEO of Adani Green Energy, Ranjit Gupta, former CEO of Azure Power Global, Cyril Cabanes, a former managing director at CDPQ, a Canadian pension fund which is also a majority stockholder of Azure Power, Saurabh Agarwal, former managing director of CDPQ India, Deepak Malhotra, former executive of CDPQ, and Rupesh Agarwal, former CEO of Azure Power.

Under the U.S.’s Foreign Corrupt Practices Act, 1977 (FCPA), it is unlawful to make payments to foreign government officials in a bid to obtain or retain business. It is also a criminal offence to raise money by misleading investors about key corporate governance practices, which in this case concerns compliance with the FCPA.

Further, it is unlawful to obstruct federal investigations by giving false information and destroying evidence such as electronic communications. It is also a separate offence to hide the authorisation of bribery practices in company annual reports. The defendants have been charged with offences on all these counts.

According to the indictment, starting in 2020, the defendants authorised and collaborated on a scheme to pay more than $250 million in bribes to Indian government officials in order to secure solar power purchase contracts for Adani Green Energy and Azure Power from the Solar Energy Corporation of India (SECI), a company of the Union Ministry of New and Renewable Energy whose mission is to increase the use of renewable-energy in India.

The U.S. DoJ indictment has alleged that the Adanis resorted to a bribery scheme because SECI was unable to find buyers among State distribution companies (discoms) for the Adanis’ solar power, whose price was above market rates. But many State discoms did subsequently sign sale agreements with SECI to buy the Adanis’ more expensive renewable power.

The indictment notes that “following the promise of bribes to Indian government officials — between July 2021 and February 2022 — electricity distribution companies for the States and regions of Odisha, Jammu and Kashmir, Tamil Nadu, Chhattisgarh and Andhra Pradesh entered into PSAs [Power Sale Agreements) with SECI”. Further, “Andhra Pradesh’s electricity distribution companies entered into a PSA with SECI on or about December 1, 2021” after which the State agreed to purchase approximately seven gigawatts of solar power, by far the largest amount of any Indian State or region.”

And then, to fund the operations of Adani Green Energy and its subsidiaries, the defendants committed securities fraud and wire fraud (any fraud that uses electronic communications through the U.S.) by hiding their FCPA violations to obtain bank loans worth more than $2 billion from international financial institutions and U.S.-based asset management companies. Also, by “offering more than $1 billion in securities” that were marketed and sold to investors in the U.S., Adani Green Energy and its directors “relied on the United States’ financial system to perpetrate this fraudulent scheme by….causing wires to be sent and received that passed through the United States.”

The Adani Group has denied the allegations of the U.S. Department of Justice and the SEC, terming them “baseless”.

Kenya cancels proposed deals with Adani Group after U.S. indictments

Kenyan President William Ruto said on Thursday that he had ordered the cancellation of a procurement process expected to hand control of the country’s main airport to the Adani Group following the indictment of Gautam Adani in the United States.

Ruto said he had also directed the cancellation of a 30-year, $736-million public-private partnership deal the energy ministry had signed with a unit of the Adani Group last month to construct power transmission lines.

“I have directed agencies within the Ministry of Transport and within the Ministry of Energy and Petroleum to immediately cancel the ongoing procurement,” Ruto said in his State of the Nation address, attributing the decision to “new information provided by investigative agencies and partner nations”.

Adani group tried to enter Delhi’s power sector but Kejriwal stopped them: AAP’s Sanjay Singh

The Adani group tried to enter Delhi’s power sector but was stopped by then Chief Minister Arvind Kejriwal, AAP Rajya Sabha MP Sanjay Singh claimed Thursday and stressed the need for accountability after industrialist Gautam Adani was charged in the U.S. for alleged bribery and fraud.

The billionaire industrialist has been charged by U.S. prosecutors for allegedly being part of a scheme to pay over $250 million (about ₹2,100 crore) bribe to Indian officials in exchange of favourable terms for solar power contracts.

This was concealed from the U.S. banks and investors from whom the Adani group raised billions of dollars for the project, the prosecutors have alleged. The Adani group denied the charges, saying the allegations by U.S. prosecutors are baseless and the conglomerate complies with all laws. It also said that all possible legal recourse will be sought.

In a press conference, Singh claimed that Adani Green Energy secured power supply contracts in several states, including Gujarat, Madhya Pradesh, Andhra Pradesh and Rajasthan, through unethical means.

“Adani even attempted to enter Delhi’s electricity market but failed because then chief minister Arvind Kejriwal stopped them,” he said while warning people that if the BJP gains power in Delhi, electricity costs could surge.

“We will not keep quiet and will raise this matter with full force in the upcoming session of Parliament,” Singh added.

The issue is expected to dominate discussions as Parliament’s Winter Session begins on Monday.