Gautam Adani charged with paying USD 265 mn bribe to Indian officials

NEW DELHI: Billionaire Gautam Adani has been charged by US prosecutors for allegedly being part of a scheme to pay USD 265 million (about Rs 2,200 crore) bribe to Indian officials in exchange of favourable terms for solar power contracts.

Adani, India's second-richest man, and seven others including his nephew Sagar have been charged with paying bribes to unidentified officials of state governments in Andhra Pradesh and Odisha to buy expensive solar power, potentially earning more than USD 2 billion profit over 20 years.

Adani group had in 2021 won a bid to supply 8,000 megawatt (8 GW) of power generated using locally manufactured solar cell and modular plants but could not meet the price expectations of state governments buying such electricity.

Adani is alleged to have met the then Andhra Pradesh chief minister in 2021, following which the state government agreed to buy 7,000 MW of power.

Andhra Pradesh officials were paid at the rate of Rs 25 lakh per MW, totalling Rs 1,750 crore (USD 200 million) for 7,000 MW the state ended up purchasing.

Odisha purchased 500 MW of power through the same route.

"Andhra Pradesh bribe payment was approximately USD 200 million," the court document showed. Odisha purchased 500 MW of power.

The document also stated that central government entity Solar Energy Corporation of India Limited (SECI), which originally awarded the solar manufacturing linked power tender, entered into the sale agreements with Andhra Pradesh, Odisha, Chhattisgarh and Tamil Nadu between July 2021 and December 2021.

The indictment also names New Delhi-based Azure Power, which had won a similar tender for supply of 4 GW. But when Azure could not cough up its one-third share of the bribe money paid to the states for buying expensive power, Adani made the firm give up part of its contract, which was then taken over by Adani through SECI.

Adani has been charged with bribery and securities fraud in two separate cases brought by US authorities -- a criminal indictment by the US Department of Justice in a New York court that charges him and seven others including his nephew Sagar. Separately, the US Securities and Exchange Commission (SEC) has charged Gautam and Sagar Adani and an Azure Power executive with "violating the anti-fraud provisions of the federal securities laws".

While the Adani group denied all charges and termed them as baseless, it scrapped a USD 600 million bond issue by Adani Green Energy Ltd.

The issue was oversubscribed three times hours before the indictment.

"In light of these developments, our subsidiaries have presently decided not to proceed with the proposed USD denominated bond offerings," Adani Green Energy said in a stock exchange filing.

"The allegations made by the US Department of Justice and the US Securities and Exchange Commission against directors of Adani Green are baseless and denied," the group spokesperson said in a statement, adding it will take all possible legal recourse.

Adani group stocks tanked in Mumbai trade. Ten listed firms of the group lost about USD 26 billion (Rs 2.19 lakh crore) in market value -- more than double of what the conglomerate had lost when US short seller Hindenburg brought out a damning report in January 2023.

Gautam Adani was worth USD 85.5 billion and ranked 18th on the world billionaire list prior to the fall in stocks.

The charges in the indictment are allegations and the defendants are presumed innocent unless and until proven guilty.

US authorities allege that the bribes paid were concealed from the US banks and investors from whom the Adani group raised billions of dollars for the projects that were to supply 12 gigawatts (GW) of solar power.

US law allows pursuing foreign corruption allegations if they involve certain links to American investors or markets.

US authorities allege that between 2020 and 2024, the Adani firm and its subsidiaries raised more than USD 2 billion in US dollar bank loans from international financial institutions and US-based asset management companies and offered more than USD 1 billion in securities underwritten by international financial institutions and sold to investors in the US.

Adani and his co-defendants sought to "obtain and finance massive state energy supply contracts through corruption and fraud at the expense of US investors", Deputy Assistant Attorney General Lisa Miller said.

US Attorney Breon Peace said the defendants "orchestrated an elaborate scheme" and sought to "enrich themselves at the expense of the integrity of our financial markets".

In the indictment, prosecutors accuse the 62-year-old Adani and two Adani Green Energy Ltd executives -- executive director and his nephew Sagar R Adani and CEO Vneet S Jaain -- of conspiring to defraud investors.

The trio is accused of orchestrating the scheme with the help of the five other defendants, who face Foreign Corrupt Practices Act (FCPA) and obstruction of justice charges.

It says Gautam Adani personally met with a government official several times, and the defendants met in person to discuss the alleged scheme with each other multiple times. The scheme was extensively documented by the defendants, according to prosecutors.

As an example, Sagar Adani used his cellphone to track details of the bribes offered and promised to government officials, and Jaain used his phone to photograph a document summarizing various bribe amounts owed.

Defendant Rupesh Agarwal also prepared analyses of the bribery scheme using PowerPoint and Excel that summarized various options for paying and concealing bribe payments, and he shared those analyses with other defendants, it is alleged.

The indictment charges Gautam and Sagar Adani as well as Jaain with multiple counts of conspiracy and securities fraud, and it charges Ranjit Gupta and Agarwal, who are former executives of another publicly traded renewable energy company, with FCPA violations. Agarwal and three former employees of a Canadian institutional investor — Cyril Cabanes, Saurabh Agarwal and Deepak Malhotra - have been accused of obstruction of justice and FCPA violations.

The indictment may throw the conglomerate again in a turmoil just as it rebounded from US short seller Hindenburg Reseach's damning fraud allegations.

Hindenburg allegations of "brazen stock manipulation and accounting fraud" in January 2023 had led to the conglomerate seeing USD 150 billion wipeout in market value at its lowest point. The group stocks have since recovered most of the losses.

Adani Group had denied all allegations made by Hindenburg.

A school dropout, Gautam Adani founded his namesake group in 1988 as a commodities trading firm, and built a business empire that now spans airports, shipping ports, power generation, energy transmission and mining companies.

"Specifically, on or about March 17, 2023, FBI special agents approached Sagar Adani in the United States and pursuant to a judicially authorised search warrant, took custody of electronic devices in his possession," the court document said.

Some conspirators, according to the documents, referred privately to Gautam Adani with the code names "Numero uno" and "the big man", while his nephew allegedly used his cellphone to track specifics about the bribes.

"On or about March 18, 2023, the defendant Gautam S Adani emailed himself photographs of each page of the search warrant executed and grand jury subpoena served on the defendant Sagar R Adani," it said.