US SEC has no jurisdiction to summon foreign national Adani notice to go via 'proper channel'

NEW YORK: US SEC will have to serve the summons on Adani Group Founder and Chairman Gautam Adani and his nephew Sagar in the alleged USD 265 million (Rs 2,200 crore) payoffs through proper diplomatic channels as it has no jurisdiction to summon a foreign national directly, according to sources.

US Securities and Exchange Commission (SEC) wants Adanis to explain their stand on allegations of paying bribes to secure lucrative solar power contracts but that request will have to follow the established protocol of routing it through the Indian Embassy in the US and following other diplomatic formalities, two sources aware of the matter said.

The US SEC has no jurisdiction over foreign nationals and cannot send anything by post to them.

The 1965 Hague Convention and the Mutual Legal Assistance Treaty between India and the US governs such matters. These clearly lay out the established procedure to be followed in such requests.

The summons, which are part of the legal docket that SEC filed before a New York court, will take some time before it can actually be served on the Adanis, they said.

No summons have been served on Adanis so far.

"Within 21 days after service of this summons on you (not counting the day you received it)... you must serve on the plaintiff (SEC) an answer to the attached complaint or a motion under Rule 12 of the Federal Rules of Civil Procedure," said the US SEC notice of November 21 notice being set through New York Eastern District Court.

"If you fail to respond, judgment by default will be entered against you for the relief demanded in the complaint. You also must file your answer or motion with the court," it added.

Gautam Adani, 62, and seven other defendants, including his nephew Sagar, who is director at the group's renewable energy unit Adani Green Energy Ltd, allegedly agreed to pay about USD 265 million in bribes to Indian government officials between approximately 2020 and 2024 to obtain lucrative solar energy supply contracts on terms that expected to yield USD 2 billion of profit over 20 years, according to an indictment unsealed in a New York court on Wednesday.

Separate from the indictment brought by the US Department of Justice, the US SEC has also charged the two and Cyril Cabanes, an executive of Azure Power Global, for "conduct arising out of a massive bribery scheme".

The ports-to-energy conglomerate has denied the allegations and said it will seek all possible legal resources. "The Adani Group has always upheld and is steadfastly committed to maintaining the highest standards of governance, transparency and regulatory compliance across all jurisdictions of its operations. We assure our stakeholders, partners and employees that we are a law-abiding organisation fully compliant with all laws."

An indictment in the US is basically a formal written allegation originating with a prosecutor and issued by a grand jury against a party charged with a crime. A person indicted is given formal notice to reply. That person or persons can then hire a defence lawyer to defend.

Prosecutors said the investigation started in 2022, and found the inquiry obstructed.

They allege that the Adani Group raised USD 2 billion in loans and bonds, including from US firms, on the backs of false and misleading statements related to the firm's anti-bribery practices and policies, as well as reports of the bribery probe.

"As alleged, the defendants orchestrated an elaborate scheme to bribe Indian government officials to secure contracts worth billions of dollars and... lied about the bribery scheme as they sought to raise capital from U.S. and international investors," US Attorney Breon Peace said in a statement announcing the charges on Wednesday.

"My office is committed to rooting out corruption in the international marketplace and protecting investors from those who seek to enrich themselves at the expense of the integrity of our financial markets."