New York/New Delhi (CNN) — Indian billionaire Gautam Adani and several executives have been indicted by US prosecutors in New York for their alleged involvement in a multi-billion-dollar fraud scheme tied to the development of a large-scale solar power project.
The Department of Justice (DOJ) accused Adani, a prominent ally of Indian Prime Minister Narendra Modi, and seven others, including his nephew Sagar Adani, of orchestrating a bribery scheme that involved over $250 million in payments to Indian government officials to secure lucrative solar energy contracts. These contracts were projected to yield more than $2 billion in profits over two decades.
The allegations come on the heels of earlier claims of stock manipulation and accounting fraud made against the Adani Group by US short-seller Hindenburg Research in 2023. The latest revelations have sent shockwaves across Adani’s sprawling business empire, with shares in its publicly listed firms plummeting between 10% and 20% on Thursday. The political fallout in India has also been significant, as opposition parties like the Indian National Congress have renewed calls for a parliamentary investigation into the Adani Group’s activities.
Bribery and Concealment Allegations
According to US authorities, the alleged scheme unfolded between 2020 and 2024 and involved frequent meetings among the defendants to discuss bribes. Gautam Adani himself is accused of personally meeting with an Indian government official to advance the plan. Evidence gathered includes records from cell phones, photographs of documents detailing bribe amounts, and PowerPoint and Excel files outlining strategies for concealing the payments.
Deputy Assistant Attorney General Lisa Miller emphasized the gravity of the case:
“This indictment alleges schemes to pay over $250 million in bribes to Indian government officials, to lie to investors and banks to raise billions of dollars, and to obstruct justice,” she said.
“These offenses were allegedly committed by senior executives and directors to secure massive state energy supply contracts through corruption and fraud at the expense of US investors.”
Impact on the Adani Group
The Adani Group, valued at over $85 billion, has acknowledged the indictments in a letter to India’s major stock exchanges. Adani Green, a subsidiary focused on renewable energy and responsible for building the world’s largest solar energy plant in western India, announced it would suspend plans for a $600 million USD bond offering due to the developments.
US authorities claim that Adani and his associates deliberately misled investors to secure funding for contracts obtained through bribery. Documents detailing the bribes and efforts to conceal them have been submitted as evidence, pointing to extensive efforts to hide the scheme from investors.
Parallel SEC Charges
The US Securities and Exchange Commission (SEC) has also filed a civil case against Adani and others, including Cyril Cabanes, an executive of Azure Power Global, for their alleged roles in the scheme. The SEC alleges that these actions allowed the companies to capitalize on lucrative Indian government contracts while raising $175 million from US investors under false pretenses.
A Tarnished Reputation
This latest scandal is another blow to the Adani Group, which has been working to rebuild its reputation following a January 2023 report by Hindenburg Research. The report accused the conglomerate of stock manipulation, inflated valuations, and substantial debt that put the company on shaky financial ground. Following the allegations, Adani’s net worth, which once exceeded Jeff Bezos’s, dropped by more than $80 billion.
In response to the Hindenburg report, the Adani Group released a 400-page rebuttal dismissing the claims as baseless. However, the new charges have reignited scrutiny, further damaging the group’s global standing.
Adani’s Rise to Power
Gautam Adani began his career in diamond trading before establishing a commodity trading business in 1988, which eventually grew into Adani Enterprises. Today, his business empire spans critical sectors, including ports, power, media, and renewable energy. Despite his meteoric rise, the recent allegations have cast a shadow over his legacy and raised questions about the group’s practices and governance.
Adani Stocks Plummet
Meanwhile, Indian billionaire Gautam Adani, chairman of the Adani Group, was indicted in the United States on November 20, 2024, for his alleged involvement in a $265 million bribery and fraud scheme. This development led to a significant decline in the stock prices of Adani Group companies.
The indictment accuses Adani and seven other individuals, including his nephew Sagar Adani, of paying substantial bribes to Indian government officials to secure contracts for India’s largest solar power project, projected to generate $2 billion in profit over 20 years. Additionally, they are charged with raising over $3 billion through fraudulent means. The charges include securities fraud and wire fraud conspiracy.
Following the indictment, Adani Group’s flagship company, Adani Enterprises, saw its shares plummet by 22.3%, while Adani Ports experienced a 20% drop. Other subsidiaries, such as Adani Green Energy, Adani Total Gas, and Adani Power, also faced significant declines, with losses ranging between 9% and 20%. Overall, the group lost approximately $30 billion in market value.
The indictment has raised concerns about the governance and ethical practices within the Adani Group, potentially affecting its ability to secure future contracts and financing. The group’s credibility has been severely impacted, which could lead to increased borrowing costs and challenges in maintaining investor confidence.
This situation follows previous allegations from Hindenburg Research in January 2023, which accused the Adani Group of stock manipulation and accounting fraud. While the group denied those allegations, the current indictment has intensified scrutiny of its operations and financial practices.
In response to the charges, Adani Green Energy withdrew a planned $600 million bond sale, indicating the immediate financial repercussions of the indictment. The group has yet to issue a public statement addressing the charges.
The Indian stock market also felt the impact, with the NSE Nifty 50 and BSE Sensex indices declining by 0.78% and 0.66%, respectively, largely due to the sharp drop in Adani Group stocks. This downturn affected various sectors, including banking and energy, highlighting the broader economic implications of the indictment.
Courtesy:CNN
