Why US court’s ‘bribery’ indictment is a huge credibility crisis for Adani Group

In their worst fall since the Hindenburg allegations in January 2023, shares of Adani Group companies fell over 20 per cent on November 21 following charges against chairman Gautam Adani and seven others in the United States in an alleged multi-million-dollar bribery and fraud case. US authorities had said the day before that the Adani Group had bribed Indian officials to secure solar energy contracts in India.
Following the indictment, the combined market capitalisation of the 11 Adani company stocks fell by Rs 2.25 lakh crore to Rs 12 lakh crore. For instance, the shares of Adani Enterprises, the flagship firm, fell by 22.6 per cent to Rs 2,181.55, of Adani Ports and SEZ by 13.5 per cent to Rs 1,114.70, of Adani Power by 9.2 per cent to Rs 476.15, of Adani Green Energy by 18.8 per cent to Rs 1,146.40, and of Adani Wilmar by 9.98 per cent to Rs 294.45. The benchmark BSE Sensex fell 422.59 points to close at 77,155.79 on November 21.
According to US prosecutors, the seeds of the bribery scam were planted between December 2019 and July 2020. The filing by the US District Court, Eastern District of New York, that accused Adani, his nephew and six others of bribery showed that around $228 million (Rs 1,926 crore) of allegedly fraudulent payment was offered to “Foreign Official #1”—a high-ranking Andhra Pradesh government official whom the court did not name—in exchange for the official facilitating that the state’s distribution companies agree to purchase seven gigawatts of solar power from the Solar Energy Corporation of India (SECI) under the manufacturing linked project, media reports said.
In all, Adani and his team allegedly offered $265 million (Rs 2,238.5 crore) in bribes to Indian government officials, which led some state electricity distribution companies to enter into power sale agreements (PSAs) with SECI, thereby benefiting Adani Green Energy, the indictment said. It also said Adani Green Energy tried to raise money from the US and international investors with a 2021 bond offering by placing before investors what it alleged were false and misleading statements about the firm’s anti-corruption and anti-bribery efforts.
The Adani Group has rejected as “baseless” the charges of alleged wrongdoing. In a statement on November 21, the group said these were mere allegations. It has also decided to examine a legal course of action. “We assure our stakeholders, partners and employees that we are a law-abiding organisation, fully compliant with all laws,” it said.
Controversies are not new to Gautam Adani. However, the latest indictment and reports of an arrest warrant being issued against him has had a big impact on his over $30 billion (Rs 2.5 lakh crore) business empire yet again—the first casualty being the share prices of group companies. Unlike the allegations by a short seller like Hindenburg, the present indictment by a court carries a lot more credibility for the common public. Moreover, the charges of bribery and fraud in the indictment can be much easily understood by commoners, unlike issues like manipulation of stocks or the setting up of shell companies overseas as alleged in the Hindenburg report.
The indictment also puts into jeopardy the fund-raising plans of the Adani Group overseas. On November 21, Adani Green Energy said it has decided to halt its proposed $600 million (Rs 5,068 crore) dollar-denominated bond issuance following the bribery charges.
Opposition parties in India have already upped the ante, with Rahul Gandhi, leader of the Opposition in the Lok Sabha, calling for Adani’s arrest and senior Congress leader Jairam Ramesh reiterating the need for a joint parliamentary probe against the billionaire businessman.
“Adani should be arrested immediately and his ‘protector’ Madhabi Puri Buch (markets regulator SEBI’s chairperson, who was alleged by Hindenburg of close ties with Adani in a report earlier) should be probed,” Gandhi said on November 21.
It was very clear that Adani broke not only Indian laws but also the American law, Gandhi claimed at a press conference. “But we know that he won’t be arrested because the prime minister of India backs Adani; he (PM) is his protector…[Narendra] Modi says Ek hain toh safe hain. Modi and Adani are safe in India if they are one,” alleged Gandhi.
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