The story so far: Federal prosecutors in New York on Wednesday (November 21, 2024) indicted Adani Group Chairman Gautam S. Adani, his nephew Sagar Adani, and six others on multiple counts of fraud. The charges stem from an alleged multibillion-dollar scheme to bribe Indian officials in exchange for favorable terms on solar power contracts, which are expected to generate more than $2 billion in profits.
“This indictment alleges a scheme to pay more than $250 million in bribes to Indian government officials, defraud investors and banks to raise billions of dollars, and obstruct justice,” a press release issued by the US Attorney’s Office, Eastern District of New York said. , said quoting Deputy Assistant US Attorney Lisa Miller.
Gautam Adani charged in US Update LIVE bribery scheme
The defendants
The people named as defendants, along with Gautam Adani and his nephew Sagar Adani, include Vneet Jaain, CEO of Adani Green Energy Ltd; Ranjit Gupta, who is the CEO of Azure Power Global Ltd from 2019 to 2022; Rupesh Agarwal, who will join Azure Power from 2022 to 2023; and Cyril Cabanes, dual Australian-French citizen, along with Saurabh Agarwal and Deepak Malhotra – all affiliated with Canadian institutional investor CDPQ.
The solar power project at the heart of the indictment
The indictment alleges that Gautam Adani and his associates paid more than $250 million in bribes to Indian government officials between 2020 and 2024. The payments were reportedly to secure contracts that were projected to generate $2 billion in revenue over 20 years and to develop the largest solar power plant in the world. India. project.
US prosecutors claim that the seeds of the bribery scheme were sown between December 2019 and July 2020 when Adani Green Energy and other renewable energy companies listed on the New York Stock Exchange won contracts from the Solar Energy Corporation of India, a state-owned company. a special entity to promote the adoption of renewable energy throughout the country. At the time, Adani Green Energy announced in a press statement that it had won “the world’s biggest solar award”.
According to the indictment, the $6 billion investment is projected to generate more than $2 billion in after-tax profits over 20 years. However, the project encountered an unexpected setback – high energy costs made India’s countries unaffordable, so Solar Energy Corporation of India struggled to attract customers to sign up.
Between 2021 and February 2022, several states including Odisha and Jammu and Kashmir have agreed to participate in the solar power initiative. At the same time, more people were involved in the bribery scheme, including former CDPQ employees – Cyril Cabanes, Saurabh Agarwal and Deepak Malhotra.
Allegation
Violation of the Foreign Corrupt Practices Act
The indictment accuses Adani and its associates of conspiring to bribe Indian officials to secure energy contracts in violation of the Foreign Corrupt Practices Act (FCPA). Although enacted in 1977, the law has been more strictly enforced in recent decades resulting in large fines for large companies, including Germany’s Siemens, Brazil’s state-owned Petrobras, and subsidiaries of oil services giant Halliburton.
President-elect Donald J. Trump reportedly wanted to strike down the rules in the first term since he considered it “unfair” for American companies. Another critic of the law, Jay Clayton, who was appointed by Trump as US Attorney for the Southern District of New York, argued in a 2011 paper that US anti-bribery policies disproportionately burden American companies in international transactions, thus undermining US competitiveness.
Prosecutors said the defendants meticulously tracked bribes and offers to Indian officials using messaging apps, phone calls and PowerPoint presentations, often using “code names” in their communications. It is alleged that the two defendants even engaged in discussions to remove “disturbing electronic materials, including emails, electronic messages and PowerPoint analyses.”
Securities fraud
Gautam Adani, Sagar Adani, and Vneet Jaain are accused of conspiring to defraud investors by issuing bonds backed by falsified and misleading financial data. According to the indictment, the scheme involved using fraudulent tactics, such as withholding important information and fabricating corporate resolutions, to lure US investors into bond sales. The indictment alleges that Adani Green Energy Ltd. attempted to raise funds from US and international investors in connection with the 2021 bond offering by making false and misleading claims about the company’s anti-corruption and anti-bribery measures.
Wire fraud
The defendants also face charges of conspiracy to commit wire fraud by making false promises and false claims to secure loans and investments for energy ventures. According to the indictment, Adani and his nephew defrauded investors when their business took a $1.35 billion loan and issued $750 million in bonds in 2021 and 2024.
Obstruction of justice
Former CDPQ employees – Cyril Cabanes, Saurabh Agarwal, and Deepak Malhotra – were charged with obstructing an investigation into the bribery scheme by deleting emails and agreeing to provide false information to the US government. CDPQ, a shareholder in the company Adani, invests in infrastructure projects.
In response to the allegations, CDPQ issued a statement saying, “CDPQ is aware of the charges filed in the US against certain former employees. The employees were all terminated in 2023 and CDPQ is cooperating with US authorities. In regards to the pending case, we have no further comment.” at this time.
Civil lawsuit
The Securities and Exchange Commission (SEC) has filed a parallel civil suit against Gautam Adani, Sagar Adani, executives of Adani Green Energy Ltd., and Cyril Cabanes. The SEC alleged that the bribes were paid to “secure (the Indian government’s) commitment to purchase energy at the top of the market that would benefit Adani Green and Azure Power,” two renewable energy companies in India. The SEC filed the complaint in the U.S. District Court for the Eastern District of New York.
What happens next?
The indictment calls for the forfeiture of assets obtained through criminal conduct, including the proceeds of bribery, fraud, and obstruction schemes. The case will now proceed in court, where Gautam Adani and the other accused will defend themselves.
The allegations could lead to a reputational crisis for conglomerate Adani, which was previously accused of “brazen accounting fraud, stock manipulation and money laundering” by Hindenburg Research, a small investment firm in New York. Although the Adani Group denied the claim, the share price fell after the release of the report.
On Thursday, Adani Green Energy Ltd, the company at the heart of the allegations, canceled the sale of $600 million in bonds, the proceeds of which were intended to pay off foreign currency loans. Several stocks of the Adani Group, including its flagship company Adani Enterprises, also suffered heavy losses and hit the lower circuit in early trade. In response to the allegations, a spokesperson for the Adani Group denied the allegations made by the US Department of Justice and the SEC, marking them as “baseless.”
Published – November 21, 2024 14:17 IST
