New Delhi: On Thursday (November 21), the US’ Securities and Exchange Commission and the US Attorney for the Eastern District of New York charged billionaire industrialist Gautam Adani over his alleged role in what they have called a “massive bribery scheme”.
The scheme involved the Adani Group and its subsidiaries promising approximately $265 million in bribes to Indian government officials to secure solar energy contracts. The Adani Group has denied the charges, calling them “baseless”.
At the centre of the case is SECI, the Solar Energy Corporation of India, a public sector enterprise.
Apart from allegations that SECI may have quoted power rates higher than market rates – which was why state distribution companies did not agree to enter into contracts with SECI but did so after bribes may have been paid – a detailed analysis of the US Attorney’s indictment suggests that SECI may have shared “internal documents” with some of the people accused in the case including Sagar Adani, nephew of Gautam Adani and CEO of Adani Green Energy Limited.
What is SECI?
SECI, a public sector undertaking under the Union ministry of new and renewable energy, is “dedicated to the development and expansion of renewable energy capacity in India”. It is an implementing agency for the development of solar, wind and other renewable energy projects “as part of fulfilling the country’s Nationally Determined Contributions”.
Apart from procuring and trading power, one of its functions is accelerating the expansion of renewable energy sources through means including market investments. For this, it announces tenders to select renewable energy developers to establish projects across India. Once a bidder is selected, SECI enters into a 25-year long power purchase agreement (PPA) with them.
In 2020, SECI awarded a solar project to Adani Green Energy. In June that year, Adani Green Energy said in a press release that it had won the “world’s largest solar award”, the “first of its kind manufacturing-linked solar agreement from [SECI]”.
This manufacturing-linked solar agreement, the press release said, would see the energy company develop 8 gigawatts (GW) of solar projects, and also result in Adani Solar – an Adani Group subsidiary – establishing 2 GW of additional solar cell and module manufacturing capacity. The latter, per the release, was to be established by 2022.
Along with the existing 1.3 GW of capacity, this would “further consolidate the Group’s position as India’s largest solar manufacturing facility”, per the release. It also quoted Gautam Adani as saying that they were “honoured” to be selected by SECI for this “landmark solar award” and that this was “another step towards fulfilling our Group’s Nation Building vision”.
SECI, at the centre of it all
The note claimed that this award was “another significant step in India continuing to lead the world in battling climate change and furthering the commitment the Hon’ble Prime Minister of India made to the world at the COP 21 summit in Paris in 2015”.
But SECI had to first find buyers for this solar power – which it couldn’t do.
As per the US Attorney’s indictment of Adani and others, including former CEO of US-based Azure Power Ranjit Gupta, the “Bribery Scheme” occurred because SECI was unable to sign power supply agreements or PSAs – agreements between an electricity distribution company and SECI – with Union or state governments to purchase 12 GW of solar power.
This was due to the “high energy prices contemplated in the LOAs” or letters of award that “made it difficult for SECI to find Indian state buyers of energy under the Manufacturing Linked Project”.
The US document specifies this under the section titled “Mechanics of the Bribery Scheme”.
“SECI’s inability to find purchasers jeopardised the lucrative LOAs, and [the] corresponding revenue” that the companies involved “anticipated receiving” from the manufacturing-linked project, the “world’s largest solar award”, as Adani Green Energy Limited itself called it.
“As a result,” the indictment says, both the Adanis, along with others including Vneet Jaain – the CEO of Adani Power – went on “to corruptly offer, authorise, promise to pay and to pay bribes to and for the benefit of government officials in India to cause Indian state electricity distribution companies to enter into contracts with SECI” so that the companies involved could “obtain and retain business”.
The US document also says that sometime in 2021, Gautam Adani met with a “foreign official” in Andhra Pradesh – supposedly “a high-ranking government official” in the state – to further a PSA between SECI and Andhra Pradesh’s state electricity distribution companies.
With around Rs 1,750 crore (approximately $228 million) being offered as bribes to the “official”, Andhra Pradesh’s state electricity distribution companies agreed to purchase 7 GW of solar power from SECI under the project, the document said.
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By February 2022, more state distribution companies – those of Odisha, Jammu and Kashmir, Tamil Nadu and Chhattisgarh – had entered into PSAs with SECI under the project, the US document said.
Essentially, the bribes were paid so that state power distribution companies – which run on tax-payer money – agreed to buy solar energy for higher rates than is the norm.
As per the Indian Express, the US’ Securities and Exchange Commission in its corruption complaint against the said individuals said that SECI executed the PPAs “only after” the Adanis mentioned in the indictment “undertook a massive bribery scheme to incentivise Indian state government officials to enter into contracts with SECI to buy energy at above market rates”.
Did SECI share internal documents with the Adanis?
It also appears that an official or officials at SECI may have shared important internal documents with the Adanis and other defendants mentioned in the US Attorney’s indictment, and even enabled them to revise these documents.
After Azure Power CEO Gupta resigned in April 2022, the “US Issuer” or the US company involved in this case – which is not named in the indictment – decided to give back 2.3 GW worth of PPAs) to SECI.
“The defendants SAGAR R. ADANI and VNEET S. JAAIN and other Indian Energy Company [part of Adani Green Energy] personnel also secretly influenced the SECI process for reallocation of the 2.3 GW PPAs to the Indian Energy Company’s subsidiary, including by directing the US Issuer’s submissions to SECI and by obtaining and revising internal SECI documents,” the US document read.
Adani and Jaain could not have accessed these internal SECI documents, or revised them, with help from within SECI itself.
SECI chairman denies ‘wrongdoings’
Meanwhile, R.P. Gupta, chairman and managing director of SECI, claimed on November 21 that SECI had “not been mentioned for any wrongdoing in the Adani case”, as per a report by PTI.
“There is nothing against SECI. It has done nothing wrong. That is no where. There is no mention of any wrongdoing or irregularity on part of SECI,” PTI quoted him as saying while responding to its queries.
While the US Attorney’s indictment order does not directly mention that SECI did anything “wrong”, the line in the order about Sagar Adani, Jaain and other personnel of the energy company “obtaining and revising internal SECI documents” suggests that SECI or a senior member of the PSU may have enabled this.
The Wire has written to the managing director and chairman of SECI regarding this. This story will be updated as soon as a response is received.
Per the PTI news story, Gupta further added that since the allegations were against state governments, these governments had to take action – suggesting that it was not SECI that should take any action.
