Gautam Adani, other defendants allegedly paid $250 million in bribes to Indian government officials; Adani bonds tank up to 10%

In more trouble for embattled businessman Gautam Adani, the chairman of the Adani conglomerate is among eight individuals indicted in a US court over a bribery and fraud scheme. Gautam Adani and other defendants allegedly paid Indian government officials over $250 million in bribes to obtain solar energy supply contracts worth over $2 billion in profits. Gautam Adani, his nephew Sagar Adani and Vneet Jaain, two executives in Adani Green Energy, are charged with misleading investors from the US and other foreign locations about their company’s compliance with antibribery and anticorruption practices when they were seeking capital to fund those energy contracts, according to American authorities. 

The news sent Adani group bonds tumbling by almost 20 per cent after the news.

Adani Enterprises, the conglomerate's flagship, is also learned to have cancelled a $600-million bond-selling programme.  

'Corruption, Bribe...': US authorities

An official statement of the US Attorney's Office, Eastern District of New York, stated: "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 (the Indian 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 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 (the U.S. Issuer), 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 a bribery scheme also perpetrated by Gautam S. Adani, Sagar R. Adani and Vneet S. Jaain, involving one of the world’s largest solar energy projects," it noted. 

The charges were announced by US Attorney for the Eastern District of New York Breon Peace, Deputy Assistant Attorney General for the Justice Department’s Criminal Division Lisa H Miller and FBI Assistant Director in Charge (New York Field Office) James E Dennehy. 

“As alleged, the defendants orchestrated an elaborate scheme to bribe Indian government officials to secure contracts worth billions of dollars and Gautam S. Adani, Sagar R. Adani and Vneet S. Jaain lied about the bribery scheme as they sought to raise capital from U.S. and international investors,” Attorney Peace wrote, adding: “My Office is committed to rooting out corruption in the international marketplace and protecting investors from those who seek to enrich themselves at the expense of the integrity of our financial markets.”

SEC Complaints

According to complaints filed on Wednesday by the US Securities and Exchange Commission (SEC), the US market regulator, during the alleged scheme, Adani Green raised over $175 million from US investors, and Azure’s stock traded on the New York Stock Exchange. Ranjit Gupta and Rupesh Agarwal, who were former executives in renewable energy company Azure Power Global, and three former employees of the Canadian institutional investor Caisse de Depot et Placement du Quebec, Cyril Cabanes, Saurabh Agarwal and Deepak Malhotra, have also been charged in the indictment. 

The US market regulator has filed civil complaints against Gautam Adani, Sagar Adani and Cabanes in connection with alleged bribery that enabled Adani Green Energy and Azure to capitalise on solar energy contracts awarded by the Indian government.

Who are the eight defendants?

According to the US authorities, the defendants in the matter are:  

• Gautam S Adani, 62
• Sagar S Adani, 30
• Vneet S Jaain, 53
• Ranjit Gupta, 54
• Cyril Cabanes, 50
• Saurabh Agarwal, 48
• Deepak Malhotra, 45
• Rupesh Agarwal, 50

The American authorities said the Department of Justice’s Office of International Affairs and the US market regulator's New York Regional and Boston Regional offices provided valuable assistance during the investigation.

Dollar-denominated Adani Bonds Tumble 

In pre-market hours back home, certain Adani group-issued, dollar-denominated notes plunged as much as 15 per cent after the news.

At the last count, Adani Green Energy UP dollar notes were trading a record 15 per cent lower while Adani Electricity Mumbai dollar notes were down 8.2 per cent.

Hindenburg vs Adani

The news comes roughly 22 months into the release of a report by US-based research firm and short-seller Hindenburg Research leveling serious charges against the Adani conglomerate including financial misconduct and stock manipulation. The Hindenburg report created ripples in the Indian capital market, causing Adani group investors to lose crores of rupees. The Adani group has denied those charges, calling the allegations baseless. 

The American research firm labelled the matter as “the largest con in corporate history”.

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