The indictment, brought by a district court of New York and the Securities and Exchange Commission (SEC), is a combination of criminal and civil charges that can lead to millions of dollars in penalties and disgorgement of gains, while the doors are open for settlement. The Federal Bureau of Investigation (FBI) was also involved in the probe. Adani Green scrapped its $600 million bond sale—for the second time in as many months—amid a selloff in group shares and bonds that wiped out billions of dollars in market value as investors weighed the implications on their future. Leader of Opposition in Lok Sabha Rahul Gandhi demanded that Gautam Adani be arrested and punished for his actions.
“The co-conspirators through Gautam Adani, Sagar Adani, Vneet Jaain and others had offered and promised Indian government officials approximately ₹2,029 crore in bribes in exchange for Indian government officials causing the state electricity distribution companies to execute PSAs (power sale agreements),†the DoJ said.
The US prosecutors levelled five counts of charges against the Adani Group that raised funds from US investors, and the New York Stock Exchange-listed Azure Power, a company backed by Canadian investor CDPQ and a partner of Adani Group. Under the conspiracy to violate Foreign Corrupt Practices Act (FCPA) and obstruct justice, it lists executives from Azure, while the Adanis are charged with securities and wire fraud. Adani Group denied any wrongdoing and said it will pursue legal remedies.
Department of Justice and the US Securities and Exchange Commission against directors of Adani Green are baseless and denied,†the group said in a statement. “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.â€
The US action rippled through with Adaniâ€s businesses in Kenya becoming the first casualty. President William Ruto Thursday cancelled the procurement process to expand the country’s main airport, and also directed the cancellation of a $700 million deal the energy ministry had signed with the Adanis.
Bribery Allegations
Top executives of Azure colluded with Adani to bribe government officials in India to secure contracts for their solar projects, inducing state governments to sign power purchase agreements from the two companies in violation of the FCPA, the indictment alleges.
Main Charges
The SEC complaint, on which the DoJ indictment is based, says Gautam Adani met the “Andhra Pradesh chief minister†at the time, which was YS Jagan Mohan Reddy. The FCPA makes payments directly or indirectly to a foreign official to secure business unlawful. Upon conviction, the penalties could be as high as $25 million, profit disgorgement, and even imprisonment for serious violations, said lawyers.
The DoJ charges are of two kinds — with FCPA violations likely attracting criminal charges while securities laws violations such as concealing of information from investors likely leading to civil charges. But both could be settled with enforcement agencies by paying penalties, said lawyers.
The US investigators have brought charges against Azureâ€s former chief executive Ranjit Gupta who quit abruptly after the company was unable to finalise accounts in 2022. A whistleblower alleged wrongdoings in the company. There were public interest litigations against it in the Andhra Pradesh high court too.
Azure investor Canadian pension fund Caisse de dépôt et placement du Québec (CDPQ)â€s representatives such as Cyril Cabanes, Deepak Malhotra and Saurabh Agarwal, and a consultant to the US firm, Rupesh Agarwal, are also among the accused.
Around 2020, Gupta is alleged to have connected with the Adanis to work the government machinery to secure a contract for the solar power their companies produced. Azure hid some of its actions from the board and agreed to transfer a portion of its power capacity to meet the bribe payments.
The Adanis and Azure won some of the biggest contracts to build solar power projects; the power prices mentioned in the Letter of Awards were so high that it required bribing to get the generated power purchased by state distribution companies, the DoJ alleged.
The winning bidders were supposed to sell power to the Solar Energy Corporation of India (SECI) which in turn was to sell to the power distribution companies owned by states. But SECI found it tough to convince states to buy power at the price that would make the bids by Adani and Azure viable. Hence, the two conspired to bribe state officials.
The main charges against Adanis, as pertaining to US law, are securities and wire fraud for not disclosing that it was being probed by the federal authorities for being involved in paying bribes.
“About March 17, 2023, special FBI agents approached the defendant Sagar Adani, and pursuant to a judicially authorised search warrant, took custody of electronic devices in his possession,†the DoJ said. “The search warrant identified offenses, individuals and entities under investigation by the US government.â€
This, the agencies say, should have been disclosed to investors when Adani Green was raising funds from US investors under the SEC laws. While Indian companies mostly raise funds through the so-called Reg. S, which doesnâ€t attract SEC laws, Adani is alleged to have raised $1.35 billion under Rule 144A that demands disclosures of all investigations.
“The 2024 bond circular contained false and misleading assurances about, among other things, the Indian Energy Companyâ€s corporate governance and touted maintaining transparency and compliance in every aspect,†the DoJ said. The transfer of funds through the payments system that was raised fraudulently led to wire fraud charges as well.
Taking the case to a logical conclusion could take months or even years, said experts. With the government set to change in January, it would fall on the Department of Justice under President Donald Trump to decide on how to proceed with this investigation.
