$250M Adani bribery case: Whistleblower complaints, WhatsApp texts and ‘incentives’

The Adani Group has denied the allegations by the US Department of Justice and the US Securities and Exchange Commission, calling the allegations against its directors, including Gautam Adani and his nephew Sagar Adani, “baseless”.

Azure Power Global Ltd, a New York Stock Exchange-listed company, disclosed in its annual report for 2022-23 that its audit committee received two whistleblower complaints in May and September 2022 detailing improper reporting to Indian government officials. Payment status.

The New Delhi-based company said an internal investigation found no wrongdoing and shared the complaint and findings with the U.S. Department of Justice and market regulators.

“We have disclosed details of the special committee’s investigation to the SEC and the U.S. Department of Justice, and we will continue to cooperate with these agencies,” Azure Power said in its annual report for the fiscal year ending March 2023.

As part of the investigation, the FBI issued a grand jury subpoena notice to Sagar Adani last March. According to the U.S. Department of Justice, Adani Green Energy Ltd. did not disclose this information when it raised $2 billion from foreign investors, including American investors.

ALSO READ | Mint Explainer: US prosecution of Gautam Adani

“[D]Although defendants Gautam S Adani and Sagar R Adani were aware of certain crimes and individuals under investigation by the U.S. government, they not only provided information to those in the U.S. and elsewhere Financial institutions and investors concealed bribery schemes and caused others to make false statements. The U.S. Department of Justice said in a statement on November 20 that “they were misleading about the U.S. government’s investigation and the subjects of its investigation.” sexual statement”.

Gautam Adani is the Chairman and Sagar Adani is the Executive Director of Adani Green Energy.

The charges come as Adani Group successfully emerges from accusations of stock market manipulation and accounting fraud raised last January by U.S. short seller Hindenburg Research, which could create new challenges for the group’s overseas financing efforts.

After the allegations came to light, Adani Green Energy halted plans to raise $600 million in U.S. dollar bonds.

Adani Group shares fell by around $On Thursday, losses hit $2.24 trillion after allegations from a U.S. investigation surfaced.

Also Read | Adani Group adopts strategic management, diversified borrowings after Hindenburg crisis

motivation

Azure Power, founded in 2008 by Indian-American renewable energy entrepreneur Inderpreet Wadhwa, decided to delist from the New York Stock Exchange in November last year.

In 2016, Azure became the first local company to be listed on the New York Stock Exchange. It subsequently issued preferred shares in 2019 and 2020 to Caisse de dépôt et place du Québec (CDPQ), a Canadian pension fund with $450 billion in assets under management.

As of the end of 2020, CDPQ owned 51% of Azure Power.

In December 2019, the Solar Energy Corporation of India (SECI) was shortlisted by Azure Power and Adani Green Energy to build solar cells and produce 10 GW of electricity. Azure Power’s share is to produce 2GW of solar energy and Adani Green’s share is 8GW (equivalent to about 8 billion watts of electricity).

SECI, a company under India’s Ministry of New and Renewable Energy, oversees New Delhi’s renewable energy plans, including funding large-scale solar projects such as Azure Power and Adani Green.

“Azure and Adani Green expect to earn millions from these projects,” the Securities and Exchange Commission said in a case filed in a New York court on November 20 against former Azure Power Global CEO Cyril Cabanes. Billions of dollars in revenue.”

But there’s a major obstacle to expected gains.

No agreement has yet been reached to purchase the power produced by Azure and Adani Green.

“Indian state governments and DISCOMS (state-owned energy distribution companies) continue to hesitate to enter into PSAs (power supply agreements) with SECI to purchase energy at contract prices awarded to Azure and Adani Green,” the US SEC said in its complaint.

The SEC said that due to energy price fluctuations following the 2019 tender, “state governments and DISCOMs have reason to believe that they will be able to purchase power at cheaper prices elsewhere”.

“The bottom line for Azure and Adani Green is that unless Indian state governments and their associated DISCOMs enter into PSAs with SECI, they will each stand to lose billions of dollars in potential revenue,” the US markets regulator added.

Therefore, two additional contractual steps are required.

First, SECI requires state-owned energy distribution companies to sign new agreements committing to supply power. Second, SECI must draft new contracts with Azure and Adani Green detailing the price at which power will be purchased.

U.S. authorities believe this is where Azure and Adani Green executives paid kickbacks.

The U.S. securities regulator alleges that Azure and Adani Green executives “orchestrated pressure and proposed direct payments of ‘rewards’ (i.e. bribes) to Indian state government officials to induce Indian state government entities and related DISCOMs to enter PSA with SECI price Good for Azure and Adani Green”.

bribe per megawatt

In a WhatsApp conversation on February 25, 2021, Sagar Adani wrote to Azure Power’s then CEO Ranjit Gupta, “As you are aware, we Incentives to drive these acceptances have been doubled.”

The talks involve state-owned power distribution companies in Jammu and Kashmir and Chhattisgarh being asked to sign agreements with SECI.

“The motive and inducement mentioned in the WhatsApp messages was bribery of Indian state government officials,” the SEC said in its complaint.

The U.S. regulator added that Adani Green executives “tracked bribery and created and maintained records of payments or promises of bribes to numerous Indian states and Indian state officials to induce them to induce Indian states to purchase renewable energy from SECI.”

The SEC said in its complaint that Gautam Adani met Andhra Pradesh government officials in August 2021 and Sagar Adani met them on September 12, 2021.

“At or in connection with these meetings, the Adani family (Gautam and Sagar) paid or promised bribes to Andhra Pradesh government officials to induce the relevant Andhra Pradesh government entities to enter into a PSA with SECI for the purchase of 7,000 megawatts of electrical capacity,” the SEC said.

“Adani Green’s records and subsequent statements provided by Adani Green executives to the Azure chairman indicate that the amount of bribes in Andhra Pradesh was approximately $200 million. Shortly after these meetings, Andhra Pradesh has agreed in principle to execute a PSA with SECI which will directly benefit Adani Green and Azure,” it added.

The US markets regulator added in its complaint that the amount of bribe paid to Andhra Pradesh government officials during a face-to-face meeting between Adani Group and Azure Power executives in Ahmedabad was pegged at $Buying 1 MW of power from SECI requires Rs 25 lakh.

“7,000 MW multiplied by Rs 25 lakh equals Rs 1,750 crore (multiples of Rs 1,000 crore) or over $200 million,” the SEC said.

Bribery Notes

The findings of the U.S. Department of Justice’s investigation into alleged bribery by the Adani group are even more revealing.

“During the course of and in furtherance of the bribery scheme, Defendant Sagar R Adani used his cell phone to track specific details of offers and promises of bribes to government officials (‘Bribery Record'”, the DOJ said in the complaint. ).”

“The Bribery Statement identifies: (i) the state or territory in which bribes were paid to government officials; (ii) the total amount of the bribe; (iii) the approximate amount of solar energy the state or territory agreed to purchase in exchange for the bribe. In most cases, the Bribery Statement The Instructions also identify the per-megawatt rate for the total bribe offered, the abbreviated title of the government official who received the bribe and/or the distribution of the total bribe among state government officials, and by region,” the DOJ said.

Mint was unable to independently ascertain the details of the DOJ and SEC disclosures, including how the alleged kickbacks were paid or received.

“Innocent until proven guilty”

Azure Power revenue more than doubles $992.6 billion for the year ended March 2019 $Adani Green Energy’s revenue jumps to Rs 2,074.8 crore in financial year ended March 2023 $Rs 2,058 crore in March 2019 $10,460 crore for the year ending March 2024.

Adani Group denied the allegations on Thursday, referring to the indictment, which states that the charges are “allegations and the defendants are deemed innocent unless proven guilty.”

An Adani Group spokesman said: “All possible legal recourse will be pursued.”

“The Adani Group remains committed and strongly committed to maintaining the highest standards of governance, transparency and regulatory compliance in all jurisdictions in which it operates. We would like to assure our stakeholders, partners and employees that we are a law-abiding organization and fully comply with All laws.”