NEW DELHI/NEW YORK: Barely a year has passed since the financial world was rocked by Hindenburg Research’s explosive report accusing India’s Adani Group of engaging in dubious financial practices, and now the conglomerate finds itself embroiled in another scandal of a similar magnitude.
This time, the charges come from the US authorities, who have indicted Gautam Adani, the billionaire chairman of Adani Group, along with his nephew Sagar Adani and other top executives, in a vast bribery and fraud scheme that took place in India.
The indictment, announced on November 20, 2024, by US prosecutors in New York, has sent shockwaves through global markets, as the once-celebrated business empire faces new allegations that could undermine its already fragile credibility.
Bribes and fraud exposed
The charges centre around an alleged scheme in which Gautam Adani and his colleagues purportedly paid $265 million in bribes to Indian government officials.
In exchange, they secured lucrative contracts for Adani Group’s solar power ventures, including India’s largest solar power plant project, expected to generate $2 billion in profits over the next two decades.
(These actions are being prosecuted in the US because they involved securities fraud that affected US investors and violated US anti-corruption laws.)
But the allegations don’t stop there. The Adanis, in collaboration with former Adani Green Energy CEO Vneet Jaain, are accused of hiding more than $3 billion in corruption-related debts by misleading investors and lenders.
According to the indictment, the conspirators even used coded language when discussing the bribery efforts, referring to Gautam Adani as “Numero uno” or “the big man,” while Sagar Adani allegedly used his phone to track the details of the bribe payments.
SEC involvement
In addition to the criminal charges, the US Securities and Exchange Commission (SEC) has filed a civil case, targeting Adani and his associates for securities fraud and other financial crimes.
The charges include securities fraud conspiracy, wire fraud conspiracy, and violations of the US Foreign Corrupt Practices Act, which prohibits bribery of foreign officials. Furthermore, several other key individuals from Adani Group’s business dealings, along with former executives from Azure Power Global, are also named in the indictment.
The US authorities have issued arrest warrants for Gautam Adani and Sagar Adani, though neither is currently in custody. Prosecutors have stated their intention to work with foreign law enforcement to bring the Adanis back for trial.
A troubled legacy
The latest charges mark a dramatic fall from grace for Gautam Adani, who had been one of the world’s wealthiest individuals, with a fortune estimated at $69.8 billion.
Adani’s meteoric rise, which began in 1988 when he founded Adani Group as a commodities trading firm, saw the conglomerate expand into a range of sectors including energy, shipping, airports, and mining.
However, the Adani Group’s success has always been shrouded in controversy, with critics alleging excessive political connections, questionable financial practices, and environmental concerns.
The charges also come at a time when the group was trying to rebuild its image. In the wake of Hindenburg Research’s damning report, which accused Adani Group of market manipulation and use of offshore tax havens, the group had already seen a dramatic fall in stock prices, losing around $150 billion in market value in early 2023.
Despite these setbacks, Adani continued to push forward, announcing a $600 million bond sale just hours before the latest charges surfaced. He also proclaimed plans to invest $10 billion in US energy security and infrastructure.
Political implications
This new wave of allegations will only add fuel to the fire of political debate in both India and the US. In India, Prime Minister Narendra Modi’s long-standing ties with Adani have drawn sharp criticism from opposition parties, who have accused him of protecting the billionaire and his empire from scrutiny.
While Modi has vehemently denied these allegations, calling them “lies and abuses,” the political landscape remains tense.
In the US, the involvement of high-level executives and institutional investors, such as those from Caisse de Depot et Placement du Quebec, has raised further concerns over the extent of the alleged corruption and its global implications.
With the international business community already reeling from the fallout of the Hindenburg report, these new charges threaten to bring even more intense scrutiny to the Adani Group’s operations.
What’s next?
The road ahead for Adani Group appears fraught with legal, financial, and reputational challenges. As the investigation unfolds, the charges levied by US authorities will likely lead to further inquiries and could have a lasting impact on the group’s ability to secure investment and maintain its standing in global markets.
