United States prosecutors on Wednesday indicted billionaire Gautam Adani, one of the world’s richest men, for his alleged key role in a bribery scheme involving a massive solar power plant.
In a statement, the US Department of Justice (DOJ) alleged that Adani, a close aide of Indian Prime Minister Narendra Modi, and seven of his associates, including his nephew Sagar Adani, paid bribes of more than $250 million to Indian officials to secure energy deals. Had promised. The contracts are being funded by international investors, including some from the US.
On Thursday, Adani Group denied the allegations and called the prosecution a “baseless move”. The group said it had “firmly maintained the highest possible standards of governance and transparency” and would seek “all possible legal recourse”.
Adani Group companies lost about $28 billion in market value on Thursday morning after the indictment as shares of the group’s listed companies fell 10 to 20 percent on Indian stock exchanges. Adani Green Energy also canceled a $600m bond sale.
Wednesday’s indictment comes more than a year after Hindenburg Research, a US short seller and forensic auditing firm, accused Adani Group of stock manipulation and accounting fraud. Hindenburg has a track record of investigating companies. As a short seller, he profits when he sells stakes in a company when its shares fall.
The US indictment did not specify whether the charges were based on the Hindenburg allegations.
Opposition parties in India on Thursday demanded Adani’s arrest. Opposition Congress party leader Raul Gandhi told reporters on Thursday that PM Modi was “protecting” his ally Adani.
Here’s what we know about Adani and the bribery scheme:
What are the allegations?
Wednesday’s charges relate to violations of the Foreign Corrupt Practices Act, a US anti-bribery law.
Specifically, US prosecutors allege that Adani, 62, and two other Adani Green Energy executives, including his nephew Sagar Adani, 30, and a third associate, Vineet S Jain, connived with Indian officials to secure financing and contracts. Had promised to pay bribe of more than 250 million dollars. Related to a solar power plant project with the Government of India.
Prosecutors said the contracts were expected to generate after-tax profits of more than $2 billion over about 20 years. Prosecutors allege Adani Green Energy raised more than $3 billion in loans and bonds from international investors based on false and misleading statements.
Prosecutors claim Adani personally held meetings with Indian government officials between 2020 and 2024 to discuss bribes. Sagar Adani and Jain also allegedly recorded bribe details on their phones and took photographs of documents showing the bribe amount.
Five other Adani associates – Cyril Cabens, Saurabh Agarwal, Deepak Malhotra, Rupesh Agarwal and Ranjit Gupta – have also been charged with related criminal conspiracy. Prosecutors say some of the defendants conspired to obstruct justice.
The associates allegedly concealed evidence by agreeing to delete emails and other electronic materials. According to the DOJ, he also falsely denied his involvement in the scheme during a meeting with US officials in New York. The DOJ did not disclose when these meetings took place.
All the defendants are Indian citizens and believed to be based in India, except dual French-Australian citizen Cyril Cabanes, who prosecutors said lives in Singapore.
Who is Gautam Adani?
The billionaire is the founder and chairman of the Adani Group, one of India’s largest business conglomerates. According to Forbes magazine, Adani is worth $69.8 billion and is the 25th richest person in the world and the second richest person in India.
Adani is a native of Gujarat – the state where Prime Minister Narendra Modi is from. After leaving college, Adani left his father’s textile business to set up a commodity trading business in 1988, his first solo foray into business.
Now, the giant Adani Group operates everything from airports to cement production, with at least seven Adani Group companies listed on Indian stock exchanges and employing about 23,000 people.
The Adani Group also controls several airports as well as the country’s largest private port – Mundra Port in Gujarat. In January 2023, it led a consortium that purchased Israel’s Haifa port for $1.15 billion.
Adani Group supplies electricity to neighboring Bangladesh and controls the controversial Carmichael coal mine in Australia, a lightning rod for climate change activists. It also has a controlling stake in India’s NDTV News.
However, analysts say the billionaire’s meteoric rise in the business world has been overshadowed by allegations of crony capitalism and is linked to PM Modi’s own rise as a politician.
Many have accused Adani of benefiting from Modi’s support, dating back to the time when the Prime Minister was the Chief Minister of Gujarat, when Adani bought land at cheap prices. Some also accuse Indian government companies, which have sided with Adani, of being involved in corruption.
Journalist Paranjoy Guha Thakurta, who investigated Adani, told Al Jazeera that Adani “is extremely close to PM Modi, and the prime minister has often promoted Adani’s businesses abroad.
“If you track the rise of Mr Narendra Modi, his political career, and you look at the rise of the Adani Group businesses, I mean, they match up. his closeness [to Modi] It’s more than we’ve ever seen before…They’re like twin brothers,” he said.
In the past, Adani has often denied allegations of corruption or favoritism. For example, in 2014, when Modi was campaigning as prime minister and used Adani’s private jet, the businessman told reporters that he was not seeking favors by supporting the politician.
At the moment, the Adani Group faces hurdles in Bangladesh, where officials are mulling over a power supply contract agreed under former President Sheikh Hasina, a Modi ally. Hasina was ousted from office in August after massive youth-led protests broke out against her government’s plan to secure job quotas for relatives of veterans who fought in the 1971 independence war against Pakistan.
In September, Kenyan workers protested about the group’s 30-year lease of the country’s main airport, fearing mass layoffs. Kenyan President William Ruto canceled the deal on Thursday following the US allegations.
What was the Hindenburg Research Report?
In a January 2023 report, US-based forensic financial research firm Hindenburg alleged that the Adani Group had engaged in a “brazen stock manipulation and accounting fraud scheme over the course of decades”.
This report was created for the benefit of short-sale investment clients and published on Hindenburg Research’s website. As a short-sale firm, Hindenburg makes money by taking positions in companies whose values are likely to decline. That decline could be accelerated when such investigations are published.
Hindenburg claimed he investigated Adani Group for two years and reviewed thousands of documents, visited sites in about half a dozen countries and spoke to dozens of individuals, including former senior executives of the group. Some of the allegations in the report include:
- Some of Adani’s companies had “substantial debt” and were close to liquidation,
- Adani family members created offshore shell entities in tax-haven jurisdictions including Mauritius, UAE and several Caribbean islands, prepared fake import/export documents to create fake or illegitimate turnover and siphon off money from the group’s listed companies.
- Adani Group was using firms in tax havens to inflate revenues and stock prices to make its listed entities appear more creditworthy.
- The group had “virtually non-existent financial controls” and had changed chief financial officers five times in eight years, indicating an accounting red flag.
- Shah Dhandaria, the independent auditor of some Adani Group companies, had no website and “hardly seems capable of undertaking complex audit work”.
What happened after the Hindenburg Report?
After the report was released online, the value of Adani Group’s shares fell by about $112 billion and billionaire Adani dropped from the world’s third richest man in Forbes to now 25th.
In a 413-page rebuttal, the group denied Hindenburg’s allegations and called them a “malicious combination of selective misinformation.”
Opposition parties in India demanded an investigation into government companies having business ties with Adani, such as State Bank of India.
The Securities and Exchange Board of India (SEBI) duly initiated an investigation. In March 2023, the Supreme Court of India also established an independent investigation into the Hindenburg Report. However, in May, the court’s investigative panel said it had found no evidence of fraud.
In January 2024, the Supreme Court ruled that the group would not face a separate investigation by the court based on the panel report, although the SEBI investigation continues. According to Bloomberg, following the court decision, Adani Group’s shares recovered and by the end of January 2024, Adani was named India’s richest person.
In August 2024, Hindenburg released a new report, this time accusing SEBI Chairperson Madhabi Puri Buch of conflict of interest, which prevented a thorough investigation of Adani. The report alleged that Butch and her husband also kept foreign funds used by the Adani Group. SEBI Chairman denied the allegations.
what happens next?
Wednesday’s indictment in the US is merely a notification of charges, meaning Adani and his associates are still presumed innocent.
Prosecutors now plan to hand those warrants over to foreign law enforcement, according to Reuters news agency.
Although the US may attempt to extradite all defendants for trial, it is unclear whether the Indian government will allow it. Under the extradition treaty between the US and India, extradition can be carried out if they are for charges that would result in a prison sentence of more than one year in either country.
It is unclear when the trial will begin in the US or whether Adani will have to appear.
According to analysts, Adani also has close relations with the newly elected US President Donald Trump. Some have suggested that Trump could stall the case, but it is not yet clear whether Trump would want to get involved or whether his powers as president would allow him to do so. In November, after the US elections, Adani congratulated Trump on his victory in a post on Twitter. He also promised to invest $10 billion in US energy projects.
Meanwhile, Gandhi, leader of India’s opposition Congress party, has demanded Adani’s arrest in India and also summoned SEBI Chairman Butch.
“We demand that Adani be arrested immediately,” Gandhi said at a press conference in the capital Delhi. “But we know that won’t happen, because Modi is protecting them.”
