US prosecutors in New York indicted Adani Group Chairman Gautam S Adani, his nephew Sagar Adani and six others on Wednesday for allegedly offering Rs 2,029 crore (US $265 million) in bribes to Indian government officials for securing “lucrative solar energy supply contracts” with state electricity distribution companies.
Gautam Adani Charged In US Over Alleged $250mn Bribery Scheme
Why In News
- US prosecutors in New York indicted Adani Group Chairman Gautam S Adani, his nephew Sagar Adani and six others on Wednesday for allegedly offering Rs 2,029 crore (US $265 million) in bribes to Indian government officials for securing “lucrative solar energy supply contracts” with state electricity distribution companies.
- “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,” a press release issued by the US Attorney’s Office, Eastern District of New York, said quoting US Deputy Assistant Attorney General Lisa H Miller.
- US attorney’s office in Brooklyn accused the executives of agreeing to pay hundreds of millions of dollars’ worth of bribes to Indian government officials between 2020 and 2024, in a bid to obtain solar energy supply contracts expected to yield $2bn in profits over 20 years.
Other Names
- The other six defendants named are: i) Vneet Jaain, who is the CEO of Adani Green Energy Ltd, ii) Ranjit Gupta (who was CEO of Azure Power Global Ltd between 2019 and 2022), iii) Rupesh Agarwal, who also worked with Azure Power (between 2022 and 2023); iv, v, vi) Cyril Cabanes, a citizen of Australia and France, Saurabh Agarwal and Deepak Malhotra, all three who worked with a Canadian institutional investor.
- In a parallel move, the Securities and Exchange Commission charged Gautam Adani and Sagar Adani, executives of Adani Green Energy Ltd., and Cyril Cabanes, an executive of Azure Power Global Ltd., with conduct arising out of a massive bribery scheme. SEC filed both the complaints in the US District Court for the Eastern District of New York.
What Was The Case
- Adani and his associates allegedly promised $265 million in bribes to Indian officials to ensure state electricity distributors signed power purchase agreements (PPAs). The agreements unlocked profits for both the Indian energy company and its U.S. partner.
- The conspirators used code names, encrypted messages, and false justifications to disguise their actions. They kept detailed notes about recipients, amounts, and regions, collaborating to split bribe payments and obscure their tracks.
- Executives reallocated parts of the project to settle bribe obligations, falsely claiming litigation and economic challenges as reasons for the changes. Gautam Adani allegedly directed this reallocation, influencing decisions at the highest levels.
- SEC alleged that the bribery scheme was orchestrated to enable renewable energy companies Adani Green and Azure Power to capitalise on a multi-billion-dollar solar energy project awarded by the Indian government.
- The complaint charges them with violating the antifraud provisions of the federal securities laws and seeks permanent injunctions, civil penalties, and officer and director bars.
- Sagar Adani (Executive Director of Adani Green Energy) is described as the Executive Director of an “Indian Energy Company” which is a publicly-listed renewable energy company in the Conglomerate’s portfolio.
- Ranjit Gupta, who was the CEO of Azure Power, and Rupesh Agarwal who was the Chief Strategy and Commercial Officer of Azure Power, are described with the same designations working for an “US Issuer”.
- Explaining what it called the “corrupt solar project”, the prosecutors said the “Indian Energy Company” and the “US Issuer” won awards to supply 8 gigawatts and 4 gigawatts of solar power at a fixed rate to state-owned Solar Energy Corporation of India.
- But since SECI could not find any state electricity distribution companies to purchase this power, it could not enter into corresponding power purchase agreements with Adani Group and Azure Power.
Which Laws Is Adani Accused Of Breaching
- An arrest warrant has been issued against Adani and his nephew, and prosecutors plan to hand the warrants to foreign law enforcement. Adani and others allegedly violated antifraud provisions of federal securities laws, including the FCPA, by misleading US investors about their anti-corruption claims. Through the scheme, they allegedly raised over $3 billion in loans and bonds for the company while hiding the corruption from lenders and investors.
The Charges
- The Bribery: The defendants conspired to pay bribes and obstructed U.S. investigations by destroying evidence, suppressing documents, and providing false information to authorities, including the SEC and FBI.
- Securities and wire fraud: Adani Group allegedly raised over $2 billion through loans and securities based on false claims, misleading U.S. investors about its anti-bribery practices and financial integrity.
- FCPA violations: The defendants obstructed an SEC investigation by deleting emails and withholding key evidence while staging an internal inquiry to create a façade of transparency.
How Is Azure Power Linked To The Case
- The SEC’s complaint also alleged that Cyril Cabanes, a former member of Azure Power’s Board of Directors, was involved in the bribery scheme. Azure Power, based in Gurugram, is another Indian energy company. “Cabanes allegedly facilitated the authorisation of bribes in furtherance of the scheme while in the United States and abroad,” the SEC said.
After Effect
- The Dollar bond prices for Adani companies fell sharply in early Asia trade on Thursday (November 21, 2024) after Adani was charged with wire and securities fraud by the U.S. attorney’s office for the Eastern District of New York.
- Prices for Adani Port and Special Economic Zone debt maturing in August 2027 fell more than five cents on the dollar, according to LSEG data. Adani Electricity Mumbai debt maturing in February 2030 fell nearly eight cents and dollar bonds issued by Adani Transmission also notched falls larger than five cents to trade just above 80 cents.
