Legal
Feds Charge India Energy Billionaire Adani in Bribe Scheme, Putting US Investors at Risk
Authorities allege billionaire Gautam Adani, whose companies have major U.S. investor backing, was involved in a scheme to bribe Indian government officials to obtain lucrative solar energy supply contracts.
Photo courtesy U.S. Embassy New Delhi
A federal grand jury in New York on Nov. 20 indicted India-based billionaire Gautam Adani and seven others on charges related to an alleged bribery scheme for Indian government solar energy supply contracts, while the U.S. Securities and Exchange Commission separately added other charges—with millions from U.S. and other investors backing the companies involved.
France-based investor TotalEnergies, which said it is close to a 20% shareholder in the company's Adani Green unit and a 50% joint venture project partner, announced Nov. 25 it "has suspended financial contributions to its investments in Adani Group companies ... until such time when the accusations against Adani Group individuals and their consequences have been clarified." TotalEnergies said it "is not targeted nor involved in the facts described" in the indictment,
According to U.S. investigators, Adani and others agreed to pay more than $250 million in bribes to Indian government officials to obtain the contracts and sell India's government energy at above-market rates. Companies involved raised millions of dollars from U.S.-based investors, while working to conceal the practices from investors and investigators.
“These offenses were allegedly committed by senior executives and directors to obtain and finance massive state energy supply contracts through corruption and fraud at the expense of U.S. investors,” said Lisa Miller, deputy assistant attorney general for the Justice Dept. criminal division, in a statement.
Details in court records match with an announcement Adani Green Energy made in June 2020 about an agreement with the Indian government’s Solar Energy Corp. of India for “the world’s largest solar award” to develop 8 GW worth of solar projects over five years. The company has more than 50 commissioned solar developments in India, ranging in capacity from 5 MW to 2,000 MW.
Court records did not yet list an attorney for Adani, but an Adani Group spokesperson said in a statement that the allegations “are baseless and denied.”
Authorities also charged Cyril Cabanes, who was director at Mauritius-based Azure Power Global Ltd., alongside Adani executives and employees. Prosecutors say Cabanes helped facilitate the scheme. Azure said in a statement that it is cooperating with U.S. authorities.
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The company itself is not charged in any of the cases, and said any former directors and officers named in the cases “ceased to be associated with Azure more than a year ago.”
Project Impacts
Kenya President William Ruto said during his State of the Nation Address Nov. 21 that he had directed the Ministry of Transport and Ministry of Energy and Petroleum to cancel the procurement process with Adani Group for a $2-billion contract for an airport expansion project in the country and a recently signed $736-million contract with Adani Energy Solutions Ltd. for a power transmission project.
Ruto directed officials to “immediately commence the process of onboarding alternative partners.” He also said that “In the face of undisputed evidence or credible information on corruption, I will not hesitate to take decisive action.”
It remains to be seen how any U.S. projects or others may be impacted. But Adani may run into trouble obtaining funding for projects with the allegations pending.
Credit ratings agency S&P Global warned that the charges could raise questions about management across various Adani Group entities, stating on Nov. 22 that it revised its outlook to negative on several Adani businesses including Adani Electricity Mumbai Ltd., Adani Ports and Special Economic Zone Ltd. and a subsidiary of Adani Green Energy Ltd.
“The negative outlook on these entities indicates that, in our view, their cash flows could be materially affected if their funding access weakens, their funding costs rise significantly or the allegations are proven, in addition to our assessment of their governance and business profiles,” S&P said in a statement.
