Mint breaks down the allegations, the people involved, and what this could mean for the Adani Group.
What is this bribery case?
The US Attorney’s office in New York indicted eight executives, including billionaire Gautam Adani, over an alleged multi-billion-dollar scheme to pay $250 million in bribes. The US prosecutors allege that Gautam Adani and seven other executives allegedly paid bribes to unnamed Indian Government officials between 2020 and 2024 to obtain solar energy supply contracts.
What are the charges?
US Prosecutors have charged the executive executives, including Gautam Adani, with securities fraud and wire fraud. Separately, the US market regulator, the Securities and Exchange Commission, has charged over the Adani group’s conduct resulting from what it calls a “massive bribery scheme”.
Who has been indicted?
Eight executives were involved, including three from the Adani Group, two former CEOs of Azure Power, and three former executives of Caisse de dépôt et placement du Québec or CDPQ, a Canadian pension fund with $450 billion in assets under management.
Gautam Adani, the Chair of Adani Group, his nephew, Sagar Adani, who oversees the building of Adani Green Energy and Vneet S. Jaain, the chief executive officer of Adani Green Energy, are the three executives of the Adani Group.
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Ranjit Gupta was the CEO of Azure Power between July 2019 and April 2022. His successor, Rupesh Agarwal, was the CEO between August 2022 and July 2023.
The three other executives are Cyril Cabanes, formerly managing director of infrastructure at Asia Pacific and Middle East CDPQ; Saurabh Agarwal, former Managing Director at CDPQ India; and Deepak Malhotra, former director of infrastructure for South Asia at CDPQ.
Which companies are involved?
Two companies, including Adani Green Energy Ltd and Azure Power, a New Delhi-headquartered company. Adani Green Energy Ltd is one of the ten listed companies of the Adani Group. It went public in 2017 and has a market cap of ₹2,23,625 crore. Azure Power was founded in 2008 by Inderpreet Wadhwa, an Indian-American renewable energy entrepreneur.
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In October 2016, Azure Power became the first homegrown energy company to be listed on the New York Stock Exchange. However, in November last year, it decided to delist itself, although shares of Azure Power continue to trade on the over-the-counter (OTC) market.
Were Indian officials named?
The court documents filed by the US prosecutors do not name any Indian government official. However, the document mentions the Solar Energy Corp. of India (SECI).
A government agency under the ministry of new and renewable energy, SECI facilitates developing and implementing solar energy projects in the country by issuing tenders. It also procures power from developers and sells it to state power distribution companies. SECI acts as the intermediary between project developers (Adani Green and Azure Power ) and state distribution companies (half a dozen state power distribution companies, including Tamil Nadu Generation and Distribution Corp. Ltd, Chhattisgarh State Power Distribution Co. Ltd, Jammu Kashmir Power Corp. Ltd and Andhra Pradesh Central Power Distribution Corp. Ltd)
Why are US prosecutors involved?
Over the last four years, Adani Green raised over $2 billion from investors, including American investors. The US Attorney’s office claims that Adani concealed the bribery scheme from investors despite being probed by multiple government agencies, including the Dept of Justice and the Federal Bureau of Investigation.
How did the US prosecutors arrive at their conclusion?
One of the revelations made by the prosecutors is about a development in the summer of 2023. On or about March 17, 2023, the prosecutors stated that FBI special agents served Sagar Adani when he was in the US with a grand jury subpoena. They also searched Sagar Adani’s office in the US. The next day, Gautam Adani emailed himself “photographs of each page of the search warrant executed and grand jury subpoena served”. “Despite knowing certain of the subject offenses and individuals under investigation by the United States government, the defendants Gautam S Adani and Sagar R Adani not only concealed the Bribery Scheme from financial institutions and investors in the United States and elsewhere but also caused others to make false and misleading statements regarding their awareness and knowledge of the United States government’s investigation and its subjects,” said the US prosecutors.
What happens next?
The Adani Group has yet to respond to the indictment, but the fallout is already impacting its financial plans. Adani Group stocks lost as much as 20% when trading began in Indian equity markets on Thursday, reflecting heightened investor concerns.
According to media reports, the group scrapped a $600 million dollar bond offering on Thursday following the charges against Gautam Adani. Existing US-currency notes issued by the conglomerate plunged in Asian trading, signalling investor concerns.
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Historically, such cases have often resulted in companies and individuals paying fines without admitting wrongdoing. However, this latest episode could reignite the reputational crisis for the Adani Group, which had previously managed to move past allegations of stock market manipulation and accounting fraud levelled by US short-seller Hindenburg Research in January last year.
The charges may also create fresh challenges for the group’s foreign fundraising efforts, compounding the reputational damage caused by the Hindenburg allegations.