US charges billionaire Gautam Adani with $265 million bribery scheme, alleged investor fraud

NEW DELHI. NOV 21 : A US District Court in New York has indicted Adani Group Chairman Gautam Adani and other business executives on charges of involvement in an alleged multi-billion-dollar bribery and fraud scheme.

Adani, 62, was charged in an indictment unsealed Wednesday with securities fraud and conspiracy to commit securities and wire fraud.

According to a CNN report, authorities alleged that Adani and seven other senior business executives offered around $265 million in bribes to Indian government officials to secure solar energy contracts.

The case involves a lucrative arrangement for Adani Green Energy Ltd. and another firm to sell 12 gigawatts of solar power to the Indian government—enough to light millions of homes and businesses. These contracts were projected to generate more than $2 billion in profits after tax over an approximately 20-year period.

Reuters, citing US prosecutors, reported that the indictment accuses them of obtaining funds from US investors and global financial institutions through false and misleading statements.

Adani Group Chairman Gautam Adani addresses the Vibrant Gujarat Global Summit in Gandhinagar, India, Jan. 10, 2024.

Adani Group stocks nosedive after US indictment over alleged bribery, investor fraud

The US Attorney’s Office for the Eastern District of New York stated: “A five-count criminal indictment was unsealed in federal court charging Gautam Adani, Sagar R. Adani, and Vneet S. Jaain 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 US investors and global financial institutions on the basis of false and misleading statements.”

Sagar is the nephew of Gautam Adani and the executive director of Adani Green Energy’s board, while Vneet Jaain had been the company’s chief executive from 2020 to 2023 and remains managing director of its board.

The Justice Department alleged that Adani and his co-defendants concealed these schemes from US investors to secure financing, including funds for solar energy supply contracts obtained through bribery.

The indictment paints them as playing two sides of the deal.

It accuses them of portraying it as rosy and above-board to Wall Street investors, who poured several billion dollars into the project over the last five years, while back in India, they were paying or planning to pay about $265 million in bribes to government officials to help secure billions of dollars’ worth of contracts and financing.

Adani and his co-defendants sought to “obtain and finance massive state energy supply contracts through corruption and fraud at the expense of US investors,” Deputy Assistant Attorney General Lisa Miller said.

The Reuters report, citing the indictment, claims that some conspirators privately referred to Gautam Adani using code names such as “Numero Uno” and “The Big Man.” Sagar Adani allegedly used his cellphone to monitor details of the bribes.

The report, quoting US prosecutors, adds that Gautam Adani, Sagar Adani, and Vneet Jaain raised over $3 billion in loans and bonds for the company by concealing the corruption from lenders and investors.

Similarly, CNN reported that authorities allege Gautam Adani personally met with an Indian government official to advance the scheme, which took place between 2020 and 2024. The defendants reportedly held frequent meetings to discuss the bribery, with evidence found on multiple phones.

The US Justice Department (DOJ), as quoted by CNN, stated that evidence included a cellphone extensively used to track bribe details, a photograph of a document summarising various bribe amounts, and PowerPoint and Excel analyses outlining options for paying and concealing the bribes.

Adani Group Chairman Gautam Adani addresses the Vibrant Gujarat Global Summit in Gandhinagar, India, Jan. 10, 2024.

Vindicates demand for JPC probe: Congress on US indicting Adani over alleged bribery, fraud

The indictment also charges Ranjit Gupta and Rupesh Agarwal, former executives of a renewable-energy company whose securities were traded on the New York Stock Exchange (the US Issuer), and Cyril Cabanes, Saurabh Agarwal, and Deepak Malhotra, former employees of a Canadian institutional investor, with conspiracy to violate the Foreign Corrupt Practices Act in connection with the alleged bribery scheme.

US Attorney Breon Peace said the defendants “orchestrated an elaborate scheme,” sought to “enrich themselves at the expense of the integrity of our financial markets” and “defrauded US and global investors.”

Prosecutors allege that Adani and his co-defendants started plotting the bribery scheme in 2020 or 2021 to guarantee demand for the energy that Adani Green and another firm were under contract to produce for the national government’s Solar Energy Corporation of India.

Adani Green and the other firm’s high prices turned off India’s state-run electricity distributors, which buy power from the national government and provide it to homes and businesses. However, the companies needed those deals to make the project worthwhile and keep revenues high, so they offered bribes to get them done, prosecutors said.

After the defendants started promising bribes to government officials, in 2021 and 2022, electricity distributors in five Indian states or regions entered into agreements to purchase their energy, prosecutors said.

Adani’s company issued a statement in which he touted his deals as the “world’s largest” power purchase agreement.

At the same time, prosecutors said, the Adanis and Jaain were attesting to global investors that Adani Green was and would never be involved in bribery. Those claims enabled them to secure billions of dollars in financing for the project at terms that “did not account for the true risk” involved, prosecutors said.

Adani Group Chairman Gautam Adani addresses the Vibrant Gujarat Global Summit in Gandhinagar, India, Jan. 10, 2024.

Adani Group subsidiary cancels $600 million bond sale after US indictment

In a parallel civil action, the US Securities and Exchange Commission (SEC) accused Adani and two co-defendants of violating anti-fraud provisions of US securities laws. The regulator is seeking monetary penalties and other sanctions. Both cases were filed in federal court in Brooklyn.

Sanjay Wadhwa, acting director of the SEC’s Enforcement Division, said Gautam and Sagar Adani are accused of persuading investors to buy their company’s bonds by misrepresenting “not only that Adani Green had a robust anti-bribery compliance programme but also that the company’s senior management had not and would not pay or promise to pay bribes.”

The indictment also accuses the executives of obstructing investigations by the FBI, DOJ, and SEC. The investigation was conducted by the FBI New York’s Corporate, Securities and Commodities Fraud and International Corruption Units.

“The business executives allegedly bribed the Indian government to finance lucrative contracts designed to benefit their businesses. 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,” said FBI Assistant Director in Charge James Dennehy.

Last year, US-based short-seller Hindenburg Research accused Adani and his company of “brazen stock manipulation” and “accounting fraud.”

The Adani Group called the claims “a malicious combination of selective misinformation and stale, baseless and discredited allegations.”

The company’s stock plunged as a result and dipped again in August when Hindenburg Research levied more corruption allegations.

-PTI