Struggling to win back credibility with investors after a devastating short-seller attack last year, India’s powerful Adani Group has repeatedly flown business partners and journalists to its showpiece “green” project: a solar and wind farm in Khavda in the northwestern state of Gujarat. . .
Now, Adani’s own renewable energy business is at the heart of more damning allegations leveled against one of India’s biggest conglomerates, a massive industrial workforce that has fueled Prime Minister Narendra Modi’s two-and-a-half-decade political rise.
US criminal and civil charges accusing the group’s founder Gautam Adani of involvement in a $265m bribery scheme have stunned Indian businessmen and given Modi’s parliamentary opponents powerful ammunition.
For international investors, they raise new questions about the probity and integrity of Indian regulators and business leaders, while casting doubts on the nation’s preferred narrative of the rising economy that offers a safe alternative to the corrupt and capricious China.
The allegations from the Justice Department and the Securities and Exchange Commission could also strain New Delhi’s relationship with Washington, which has been clouded by claims Indian officials are involved in assassination attempts on Sikh separatists in the US and Canada.
Ever since short seller Hindenburg Research last year accused the Adani Group of engaging in “stock manipulation and accounting fraud”, Modi’s opponents have criticized the prime minister for his close ties to billionaires including Adani.
On Thursday, many called on the Indian authorities to follow the example of US agencies and prosecute them.
“It is now quite clear and established in America that Mr. Adani has violated American law and Indian law,” opposition leader Rahul Gandhi said at a press conference in New Delhi.
“He has been charged in the United States and I wonder why Mr. Adani is still walking around free people in this country,” Gandhi said, sitting in front of a large picture of Adani and a laughing Modi.
Extradition requests, legal appeals and lengthy court proceedings could add an unpredictable twist to fast-growing but complicated US-India diplomatic, military and trade relations ahead of the inauguration of a new administration led by Donald Trump. An extradition treaty between India and the US has been in force since 1999, but is only occasionally used.
“There is an arrest warrant that has been issued in the US,” said Praveen Chakravarty, an official with Gandhi’s Indian National Congress party. “How’s it going? If the US asks for his extradition, will Modi protect him (Adani), and on what grounds?
Gandhi and other opposition politicians pointed specifically at one part of the US criminal indictment. It was alleged that in March Gautam Adani and his nephew Sagar Adani, chief executive of the renewable energy business Adani Green, had “made or caused” group personnel to falsely inform banks and two Indian stock exchanges that have not yet received notice from the US justice department. from the investigation.
Chakravarty described the US allegations of misleading investors as a “serious violation” that required action by the Securities and Exchange Board of India, the stock market regulator.
Sebi has previously investigated allegations made by Hindenburg and reports in the Financial Times and others alleging Adani falsified its own shares, but has not taken any action against the group. In July, Sebi said Hindenburg Research had “deliberately sensationalized and distorted certain facts”.
“This is just the tip of the iceberg,” said Mahua Moitra, another opposition lawmaker who has been highly critical of Adani in parliament. “Let’s wait for this great fraud and theft.”
Spokespeople for the Indian government and Sebi did not respond to requests for comment. The Adani Group described the US allegations as “baseless” and said that “all legal avenues will be explored”.
The allegations against Adani come at a time when India’s reliability as a business-like and diplomatic partner for western democracies has been questioned.
Canadian Prime Minister Justin Trudeau has said there are “credible allegations” of Indian involvement in the killing of Sikh separatist Hardeep Singh Nijjar in Vancouver last year. The US last month charged an Indian “senior field officer” with leading a failed plot to kill Sikh activists in New York City.
As India expels Canadian diplomats and reacts fiercely to Ottawa’s claims of extrajudicial killings, it is increasingly wary of the US, whose officials have demanded accountability from their Indian counterparts.
“So far, the United States and India have successfully separated the fallout from allegations related to India’s ‘murder-for-hire’ scheme, but allegations against several high-ranking Adani executives will create new sources of tension,” Milan Vaishnav said. , director of the South Asia Program at the Carnegie Endowment for International Peace.
“Since these charges are being brought in the middle of the presidential transition, I suspect there have been back-channel conversations going on to get the incoming Trump administration to drop the DoJ and SEC case,” Vaishnav said.
Some Indian businessmen speculated that the fallout from the charges in India would be limited, with Modi’s government likely to seek to protect friendly business groups working on projects central to the prime minister’s infrastructure from prosecution in India and the US.
One CEO, who requested anonymity, suggested it would be unfair to judge all Indian companies by a single case.
“My instinct is not to damage the Indian brand or the credibility of the regulator or the ethos of building a business in India that can thrive and thrive and survive,” the CEO said.
In a post on social media site X last week, Adani congratulated Trump on his election and said the group was committed to investing $10 billion in US energy and infrastructure projects and “aimed at creating” 15,000 jobs. The post was illustrated with an AI-made panorama showing the US and Indian flags flying over a city with ports, railways and highways.
If US-India relations “can survive the murder-for-hire accusations against New Delhi, then they can certainly survive this new revelation”, said Michael Kugelman, director of the South Asia Institute of The Wilson Center, a US think tank. “President-elect Trump may see Adani as an ally: a fellow businessman who praises Trump, is close to Modi, and promises to invest in the US and create jobs.”
