New Delhi: The Securities and Exchange Commission and the Attorney’s Office of the United States have charged billionaire industrialist Gautam Adani over his alleged role in what they have called is a “massive bribery scheme.” The Adani Group has called the charges “baseless” and denied them.
US law allows foreign corruption allegations to be investigated if they involve links to US markets.
The Attorney’ Office has it in its statement that Adani is accused of personally being involved in the scheme, that he met with an Indian government official to advance the scheme, which took place between 2020 to 2024. “The defendants frequently met and discussed the bribery scheme, including evidence on several phones,” it says.
“More than $250 million was promised in bribes to Indian government officials, to secure solar energy contracts,” it says.
Adani, who heads the Adani Group, and his nephew Sagar have been indicted for their roles as executives of Adani Green Energy Ltd. Cyril Cabanes, an executive of Azure Power Global Ltd, has also been charged.
The SEC’s complaint against Gautam and Sagar Adani charges them with violating the antifraud provisions of the federal securities laws. The complaint seeks permanent injunctions, civil penalties, and officer and director bars.
In parallel action, the Attorney’s Office’s five-count criminal indictment in a federal court in Brooklyn charges along with Gautam and Sagar Adani, Vneet S. Jaain, with “conspiracies to commit securities and wire fraud and substantive securities fraud for their roles in a multi-billion-dollar scheme to obtain funds from U.S. investors and global financial institutions on the basis of false and misleading statements.” The indictment also charges Ranjit Gupta and Rupesh Agarwal, former executives of a renewable-energy company with securities that had traded on the New York Stock Exchange, and Cyril Cabanes, Saurabh Agarwal and Deepak Malhotra, former employees of a Canadian institutional investor, with conspiracy to violate the Foreign Corrupt Practices Act in connection with the bribery scheme.
“Gautam S. Adani and seven other business executives allegedly bribed the Indian government to finance lucrative contracts designed to benefit their businesses. Adani and other defendants also defrauded investors by raising capital on the basis of false statements about bribery and corruption, while still other defendants allegedly attempted to conceal the bribery conspiracy by obstructing the government’s investigation,” stated FBI assistant director in charge James E. Dennehy.
Bloomberg had reported in March this year that such an investigation was afoot. The Adani Group had then told the news outlet that it was not aware of any such probe against chairman Adani. “As a business group that operates with the highest standards of governance, we are subject to and fully compliant with anti-corruption and anti-bribery laws in India and other countries,” it had said.
Adani group stocks faced a heavy drubbing during early trade today, with Adani Energy and Adani Enterprises tumbling 20%.
Before the Adani Group officially responded, Adani Green Energy Ltd announced the decision to halt its proposed $600-million dollar-denominated bond issue. “The company announced its decision to scrap the bond issue in a regulatory filing, citing the indictment as the reason for its subsidiaries’ plans to defer the bond offering,” a report said.
Adani response: ‘We are a law-abiding organisation’
In a media statement, the group has said that allegations made by the US Department of Justice and the US Securities and Exchange Commission against the directors of Adani Green are “baseless and denied.”
It sought to remind readers that the charges were allegations at present, quoting the US Department of Justice’s own disclaimer:
“As stated by the US Department of Justice itself, “the charges in the indictment are allegations and the defendants are presumed innocent unless and until proven guilty.” All possible legal recourse will be sought.”
The group said that it has always upheld and is steadfastly committed to “maintaining the highest standards of governance, transparency and regulatory compliance across all jurisdictions of its operations.”
“We assure our stakeholders, partners and employees that we are a law-abiding organisation, fully compliant with all laws,” it added.
Attorney’s office charges
The Attorney’s Office breaks down the charges as such:
“…[B]etween approximately 2020 and 2024, the defendants agreed to pay more than $250 million in bribes to Indian government officials to obtain lucrative solar energy supply contracts with the Indian government, which were projected to generate more than $2 billion in profits after tax over an approximately 20-year period (the Bribery Scheme).”
Noting, as mentioned above, that on several occasions, Gautam Adani personally met with an Indian government official to advance the bribery scheme, and the defendants held in-person meetings with each other to discuss aspects of its execution, the indictment says that defendants “frequently discussed their efforts in furtherance of the bribery scheme, including through an electronic messaging application.”
Notably, in 2021, the Communist Party of India (CPI) had demanded the Andhra Pradesh government disclose the details of a secret meeting between then chief minister Y.S. Jagan Mohan Reddy and Adani, following which the Andhra Pradesh state cabinet adopted resolutions to allow Adani group to set up 9,000 megawatt solar power plants in the state. The party had asked why the contract was given to Adani alone when several contractors, and some closer home, could be divided the project.
The Adanis and the other indicted executives also extensively documented their corrupt efforts, the Attorney Office indictment alleges. “For example, Sagar R. Adani used his cellular phone to track specific details of the bribes offered and promised to government officials; Vneet S. Jaain used his cellular phone to photograph a document summarizing various bribe amounts the U.S. Issuer owed the Indian Energy Company for its respective portion of the bribes; and Rupesh Agarwal prepared and distributed to other defendants multiple analyses using PowerPoint and Excel that summarized various options for paying and concealing bribe payments (Bribery Analyses).”
Adani, Sagar Adani and Jaain also allegedly conspired to misrepresent Adani Green’s anti-bribery and corruption practices and conceal the bribery scheme from US investors and international financial institutions in order to obtain financing, including to fund those solar energy supply contracts procured through bribery.
Indian stock exchanges mentioned
It is noteworthy that the US Attorney’s Office noted that in March this year, Individual #2 [names of some individuals and financial institutions have been anonymised in the public copy of the indictment] “emailed employees of Financial Institution #2, Financial Institution #3 and Financial Institution #4 letters that the Indian Energy Company had sent to the National Stock Exchange of India and BSE Limited, both Indian stock exchanges.”
It said, “The letters falsely stated, among other things, that the Indian Energy Company “has not received any notice from the Department of Justice of U.S. in respect of the allegation referred to in the [2024 News Article]” and that the Indian Energy Company was “aware of an investigation” into potential violations of United States anti-corruption laws by a “third party.””
SEC charges
According to the SEC’s allegations, the bribery scheme was orchestrated to enable the two renewable energy companies to capitalise on a multi-billion-dollar solar energy project that the companies had been awarded by the Indian government. “During the alleged scheme, Adani Green raised more than $175 million from US investors and Azure Power’s stock was traded on the New York Stock Exchange,” the statement by the SEC said.
According to the SEC’s complaint, Gautam and Sagar Adani “orchestrated a bribery scheme that involved paying or promising to pay the equivalent of hundreds of millions of dollars in bribes to Indian government officials” to secure their commitment to purchase energy at above-market rates that would benefit Adani green and Azure Power.
The scheme was allegedly in play in 2021, when in a note offering, Adani Green claimed that it raised $750 million, including approximately $175 million from US investors. “The Adani Green offering materials included statements about its anti-corruption and anti-bribery efforts that were materially false or misleading in light of Gautam and Sagar Adani’s conduct,” the SEC has said.
The charge against Cyril Cabanes, a former member of Azure Power’s Board of Directors, is under the US’s Foreign Corrupt Practices Act (FCPA). According to the SEC’s complaint, Cabanes allegedly facilitated the authorisation of bribes in furtherance of the scheme while in the United States and abroad.
“As alleged, Gautam and Sagar Adani induced US investors to buy Adani Green bonds through an offering process that misrepresented not only that Adani Green had a robust anti-bribery compliance program but also that the company’s senior management had not and would not pay or promise to pay bribes, and Cyril Cabanes participated in the underlying bribery scheme while serving as director of a US public company,” said Sanjay Wadhwa, Acting Director of the SEC’s Division of Enforcement said.
“We will continue to vigorously pursue and hold individuals, including senior corporate officers and directors, accountable when they violate our securities laws.”
This article is being updated with details as they come in.
