Mint Narrator: What is the US prosecution of Gautam Adani about?

Mint A detailed look at the allegations, who is involved and what it could mean for the Adani Group.

What exactly is this bribery case?

The U.S. Attorney’s Office in New York has indicted eight executives, including billionaire Gautam Adani, over an alleged multibillion-dollar bribery scheme to pay $250 million. U.S. prosecutors have charged Gautam Adani and seven other executives with allegedly bribing unnamed Indian government officials between 2020 and 2024 to secure solar supply contracts.

How much does it cost?

U.S. prosecutors have charged executives, including Gautam Adani, with securities fraud and wire fraud. Separately, the Securities and Exchange Commission, the U.S. market regulator, filed charges against Adani Group’s conduct, calling it a “massive bribery scheme.”

Who is being sued?

Eight executives were involved, including three from Adani Group, two former CEOs of Azure Power and three former executives of the Caisse de dépôt etiquette du Québec (CDPQ), a fund with $450 billion in assets under management. Canada Pension Fund.

Adani Group Chairman Gautam Adani, his nephew Sagar Adani, who is in charge of Adani Green Energy’s construction, and Adani Green Energy CEO Vineet S. Jain ( Vneet S. Jaain) are three senior executives of Adani Group.

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Ranjit Gupta served as CEO of Azure Power from July 2019 to April 2022. His successor Rupesh Agarwal will serve as CEO from August 2022 to July 2023.

The other three executives are Cyril Cabanes, former CDPQ infrastructure managing director for Asia Pacific and Middle East; Saurabh Agarwal, former managing director of CDPQ India; and Deepak Malhotra, former CDPQ infrastructure director for South Asia.

What companies are involved?

Two companies, including Adani Green Energy Ltd and New Delhi-based Azure Power. Adani Green Energy Limited is one of the top ten listed companies of the Adani Group. It went public in 2017 with a market capitalization of $2,23,625 Crores. Azure Power was founded in 2008 by Inderpreet Wadhwa, an Indian-American renewable energy entrepreneur.

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In October 2016, Azure Power became the first local energy company to be listed on the New York Stock Exchange. However, last November, while Azure Power’s shares continued to trade on the over-the-counter (OTC) market, the company decided to delist itself.

Were the names of Indian officials mentioned?

Court documents filed by U.S. prosecutors did not name any Indian government officials. However, the document mentions Solar Energy Corporation of India (SECI).

SECI is a government agency under the Ministry of New and Renewable Energy that promotes the development and implementation of solar projects in the country through tenders. It also purchases power from developers and sells it to state-owned distribution companies. SECI acts as the project developer (Adani Green and Azure Power) and the state power distribution companies (six state power distribution companies including Tamil Nadu Generation and Distribution Corporation, Chhattisgarh State Electricity Distribution Corporation Limited, Jammu Kashmir Intermediary between Electric Power Company Limited and Andhra Pradesh Central Electricity Distribution Company Limited)

Why did U.S. prosecutors get involved?

Adani Green has raised more than $2 billion from investors, including U.S. investors, over the past four years. The U.S. Attorney’s Office alleges that Adani hid the bribery scheme from investors despite being investigated by multiple government agencies, including the Justice Department and the FBI.

How did U.S. prosecutors reach their conclusion?

One of the prosecutors’ revelations concerns developments in the summer of 2023. On or about March 17, 2023, prosecutors said FBI agents issued a grand jury subpoena to Sagar Adani while he was in the United States. They also searched Sagar Adani’s offices in the United States. The next day, Gautam Adani emailed himself “photos of every page of the executed search warrant and service of the grand jury subpoena.” “Although defendants Gautam S Adani and Sagar R Adani were aware of certain criminal conduct and individuals under investigation by the U.S. government, they not only provided information to the United States and elsewhere financial institutions and investors, and also caused others to make false and misleading statements about their knowledge and understanding of the U.S. government investigation and its subject matter,” U.S. prosecutors said.

What happens next?

Adani Group has yet to respond to the indictment, but the fallout is already affecting its financial plans. Shares in Adani Group fell 20% when Indian stocks started trading on Thursday, reflecting growing investor concerns.

According to media reports, the group on Thursday canceled a $600 million bond issue following the charges against Gautam Adani. Existing dollar notes issued by the group tumbled in Asian trading, signaling investor concerns.

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Historically, such cases have often resulted in companies and individuals paying fines without admitting wrongdoing. However, the latest incident threatens to reignite a reputational crisis for the Adani Group, which had previously successfully emerged from accusations of stock market manipulation and accounting fraud brought by U.S. short seller Hindenburg Research in January last year.

The charges could also create new challenges for the organization’s overseas fundraising efforts, exacerbating the reputational damage caused by Hindenburg’s accusations.