U.S. prosecutors have indicted Gautam Adani on bribery charges. His company, the Adani Group, has denied the allegations. (Nikkei montage/Source photos by Reuters and Ken Kobayashi)
MUMBAI/NEW DELHI — An indictment against Indian business tycoon and Asia’s second-richest man Gautam Adani on bribery charges in a U.S. federal court on Wednesday has sent shockwaves through India.
The charges have brought scrutiny back on his empire, less than two years after accusations of financial improprieties by short-seller Hindenburg Research had wiped out $130 billion from the group’s public market value.
Here are five things to know about the indictment:
Who is Gautam Adani?
Gautam Adani is the founder and chairman of the Adani Group, which has businesses spanning renewable energy, seaports, airports, building materials, food commodities and the media. Fellow defendants in the indictment often refer to him as “Numero uno” and “The big man.”
Hailing from a middle-income textile family in India’s western state of Gujarat, Adani, 62, set up his group in 1988 to engage in commodities trading. Over time, Adani grew his business with an aggressive leverage-based strategy, expanding into multiple sectors essential to the country’s infrastructure. The group was worth about $170 billion before the indictment sparked a sell-off in its listed entities.
Adani’s rise mirrors that of Indian Prime Minister Narendra Modi, who is also from Gujarat. Modi’s political rivals have often alleged that he showed favoritism toward the billionaire, as Adani has hugely benefited from winning contracts on public projects through the Modi government’s infrastructure development push. Both Adani and the government have denied any special treatment.
What are the charges?
U.S. prosecutors say that Gautam Adani, his nephew Sagar Adani and six other defendants allegedly schemed to pay bribes worth $265 million to Indian government officials to execute “lucrative solar energy supply contracts.” The defendants also allegedly “concealed” the bribery from U.S.-based investors to “obtain billions of dollars in financing.”
The bribing scheme, named “The Corrupt Solar Project” in the indictment, was focused on multiple solar power contracts awarded by the state-owned Solar Energy Corporation of India to Adani’s renewable energy unit and another Indian company, Azure Power.
Adani and others were also charged separately by the U.S. Securities and Exchange Commission for making “materially false or misleading” statements about their anti-bribery practices when raising $750 million from investors in September 2021, of which $175 million was raised from U.S. investors.
How will the indictment affect the group’s business?
Eleven out of the 12 listed companies under the conglomerate collectively lost almost $27 billion in market value on Thursday after the indictment came to light, echoing the crash from January 2023 when Hindenburg Research had accused the group of stock manipulation and improper usage of offshore tax havens, among other allegations.
Shares of the holding company, Adani Enterprises, dropped over 22%, while Adani Green Energy, which is the focus of the investigation, saw its stock fall nearly 19%. Only New Delhi Television (NDTV), the conglomerate’s news media arm, closed marginally higher. Shares of most Adani companies continued to drop in early Friday trading.
The indictment could impact Adani’s upcoming fundraising plans. Already, Adani Green Energy canceled a reportedly $600 million sale of U.S.-dollar denominated bonds. “The biggest near-term impact of the development is that the Adani Group may find it difficult to raise fresh funds, particularly from marquee financial institutions, until his name is cleared,” said Abhishek Basumallick, founder of investment advisory Intelsense.
Late on Thursday, Kenyan President William Ruto said he would cancel Adani’s procurement of a controlling stake in the country’s main airport, as well as a $736 million public-private partnership deal with the company to construct power transmission lines.
How have the Adani Group and Indian government responded?
The Adani Group denied the charges in the indictment, calling them “baseless” in a statement on Thursday.
“As stated by the U.S. Department of Justice itself, ‘the charges in the indictment are allegations and the defendants are presumed innocent unless and until proven guilty’,” the group said in the statement. “All possible legal recourse will be sought.”
The Indian government had not officially reacted to the development as of Thursday night.
Ministry of External Affairs Secretary (East) Jaideep Mazumdar refused to comment when asked about the Adani issue during a press conference on Modi’s visit to Guyana in South America. “This is a press conference for the visit of the prime minister of India to Guyana and for the India-CARICOM (Caribbean Community) summit, and I’m not in a position to respond to questions beyond that mandate,” he said in the Guyanese capital of Georgetown.
Modi’s political opponents launched a string of attacks on the billionaire.
“In a way, Adani has hijacked India; the country is in Adani’s grip. That’s why India’s airports, ports, defense industry … it is a partnership. Modi on one side [of the partnership] and Adani on the other,” senior Indian National Congress leader Rahul Gandhi said in a press conference on Thursday.
Gandhi is also leader of the opposition in the parliament’s lower house, a powerful position that has a say in appointing the director to the Central Bureau of Investigation, the domestic crime investigating agency. Gandhi said his party would raise Adani’s indictment in the winter session of parliament, scheduled to start Monday.
Is extradition on the cards?
There is already an ongoing probe into Adani by India’s securities regulator that began in the aftermath of the Hindenburg Research allegations last year.
For the latest indictment, the U.S. prosecution could request for the extradition of Adani and other defendants, lawyers in India and the U.S. said. The two countries have had an extradition treaty in force since 1997.
India’s Ministry of External Affairs will be the primary adjudicator in case a request for extradition is made by the U.S. government, Prashant Mendiratta, a lawyer in the Delhi high court, said.
“In case the Indian government declines extradition, the prosecution could approach India’s judiciary with a writ petition against the decision … there is a good chance that this becomes a legal battle on two fronts,” he added.
The Indo-U.S. extradition treaty also mandates that an offense must be punishable by imprisonment of one year or more for extradition to be applicable. Under India’s Bharatiya Nagarik Suraksha Sanhita (BNSS) laws, bribery is only punishable by up to one year in prison.
The harsher Prevention of Corruption Act (PoCA) could also be applied to the case.
“But for PoCA to be applied, there has to be proof of demand of bribery by the government official as well as of the acceptance of the bribe. That will be even harder to prove in India,” Mendiratta said.
White House Press Secretary Karine Jean-Pierre said, “So, obviously, we’re aware of these allegations,” during a Thursday media briefing in response to a question as to whether the U.S. was concerned that the charges against Adani would damage bilateral ties. “What I will say is: On the U.S. and India relationship, we believe that it stands on an extremely strong foundation anchored in ties between our people and cooperation across a full range of global issues.”
source : asia.nikkei