A US court indicted Gautam Adani, one of India's most prolific businessmen, his nephew Sagar Adani, and six others on securities fraud, conspiracy to commit securities and wire fraud. The case pertains to a deal between Adani Green Energy and a US company to deliver 12 GW of solar power to several states. The alleged payment of $265 million in bribes to Indian government officials for securing solar power contracts with state electricity distribution companies between 2020 and 2024.

What is the indictment against Adani?

The indictment unsealed by the Federal prosecutors in New York states, that Adani concealed this fact from the US banks and investors from whom the Group raised billions for its solar power projects. The $265 million in bribery was projected to rake in $2 billion in profits by securing the energy contracts in the next two decades.

According to a statement from the US Attorney’s Office, "A five-count criminal indictment was unsealed today in federal court in Brooklyn charging Gautam S. Adani, Sagar R. Adani and Vneet S. Jaain, executives of an Indian renewable-energy company, 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 US investors and global financial institutions on the basis of false and misleading statements."

The US prosecutors said that the Indian energy company and the US issuer bagged the 12 GW contracts with government-owned Solar Energy Corporation of India (SECI). The SECI couldn’t find buyers in India to purchase solar power. It was then that Adani Group and Azure Power came up with the bribery arrangements. "The Indian energy company and the US Issuer worked closely to split the bribe payments," the indictment said.

The indictment further states, "The conspirators began implementing their plans, including transferring part of the project back to the Indian energy company as a way to settle bribe obligations. The defendants fabricated reasons for returning the projects, claiming that litigation and deteriorating economics were the reasons."

To further the bribery scheme, Gautam Adani had multiple in-person meetings with Indian officials. Co-conspirators discussed execution, including while in the US, in person and over an electronic messaging app. They kept copious electronic records of their bribery activities, including taking pictures of a document that summarised the amounts offered and using mobile phones to follow the whereabouts and beneficiaries of the promised payments.

The prosecutors also claimed that by concealing their misconduct from lenders and investors, the Adanis and former CEO Vineet Jain, another executive of Adani Green Energy, raised over $3 billion in loans and bonds.

The Adani Group denied allegations by the US Department of Justice and the US Securities and Exchange Commission and termed them baseless. The Group also withdrew a $600 million bond issue in the US in response to the indictment.

Ramifications of the indictment

Financial
Adani Group stocks went into a tailspin when the market resumed this morning. Adani Energy Solutions stock took a 20% hit on the BSE (Bombay Stock Exchange). Similarly, shares of Adani Enterprises and Adani Ports and Special Economic Zone decreased by 10%. Ambuja Cements' share price also plunged 10%.

Furthermore, Adani Green Energy plunged 19%, while Adani Power and Adani Total Gas plunged 18%. All this led to the Group losing its market capitalisation by ₹2 lakh crore ($28 billion).

Moody's rating released a statement saying, “The indictment of Adani Group’s chairman and other senior officials on bribery charges is credit negative for the group’s companies." Moody's also said it will look at Adani group’s governance practices when assessing the ports-to-energy conglomerate’s ability to access capital.

Political
Adani has been linked closely to the Prime Minister of India, Narendra Modi and the BJP. The Indian businessman has increased his capital many folds since 2014, the time when BJP came into power in India, entering into the World’s richest list in recent times.

Senior Congress leader Jairam Ramesh said that the US vindicated the demand that Congress was making for a Joint Parliamentary Committee (JPC) investigation into the various alleged scams.

In return, Amit Malviya, CJP’s IT department head said, "That the Congress is willing to be a prop in the hands of George Soros and his cabal speaks volumes," in reply to Congress leader Jairam Ramesh's claim that the indictment vindicates the Congress's demand for a JPC investigation.

The leader of the Opposition, Rahul Gandhi stated, “Prime Minister Modi is protecting Adani, and he is involved in corruption with Adani. In India, if Modi and Adani are together, they are safe, no one can harm them. We are demanding Adanis’s arrest.”

Recent Allegations

Adani Group has been in the news for its scandalous operations in recent times. A report by the US-based short seller Hindenburg Research in 2023 accused the Adani Group of stock manipulation and accounting fraud. It triggered a $150 billion loss in the Adani Group's market value.

According to a 2023 Financial Times report, the Adani Group seemed to have imported coal worth billions of dollars at prices higher than their market value. An analysis of 30 shipments of the commodity from Indonesia to India during a 32-month period between 2019 and 2021 served as the basis for the report.

What's next?

If Adani and co are found guilty in the case, it could immensely prove the nexus between the BJP government and the industrialist, which the Congress has been claiming for a long time. With Maharashtra and Jharkhand voting being concluded, the BJP could face a difficult run in the elections in the coming months.

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