US SEC charges Adani in alleged bribery scheme

Mumbai: Gautam Adani founder and chairman of Adani Group have been indicted by the United States Securities and Exchange Commission (SEC) for allegedly paying $265 million (Rs 21,000 crore) in bribes to Indian government officials and defrauding American investors. The bribes were reportedly aimed at securing lucrative contracts for Adani Green Energy, the renewable energy arm of the Adani Group. The SEC alleged that Adani raised the money for the “bribery scheme” from US investors.

The indictment against Gautam Adani 62, his nephew Sagar Adani 30, executives of Adani Green Energy Ltd, and Cyril Cabanes, an executive of Azure Power Global Ltd and others was unsealed on Wednesday in the US District Court in the Eastern District of New York.

The alleged incident occurred during a September 2021 bond offering by Adani Green, which raised $750 million, including $175 million from US investors.

“Gautam and Sagar Adani induced US investors to buy Adani Green bonds through an offering process that misrepresented not only that Adani Green had a robust anti-bribery compliance program but also that the company’s senior management had not and would not pay or promise to pay bribes,” said Sanjay Wadhwa, acting director of SEC’s Division of Enforcement in the official statement by the US market watchdog.

Amid the bribery charges, Adani Green Energy Ltd said on Thursday that it has decided to halt its proposed $600-million dollar-denominated bond issuance. The company cited the indictment as the reason for its subsidiaries’ plans to defer the bond offering.

Adani Group released a statement denying the charges. “The allegations made by the US Department of Justice and the US Securities and Exchange Commission against directors of Adani Green are baseless,” read the Adani statement. As stated by the US Department of Justice itself, "the charges in the indictment are allegations and the defendants are presumed innocent unless and until proven guilty.”
With assurances that “all possible legal recourse will be sought”, Adani reiterated that the company was a “law-abiding organisation, fully compliant with all laws.”

The accusations by SEC which also include obstruction of justice led to a 20 per cent decline in Adani Group stocks. Shares of Adani Group companies took a severe hit with the combined market value of all the 10 listed firms dropping by Rs 2.45 lakh crore following US charges. Adani Enterprises saw a dramatic 22.99 per cent fall, while other key stocks like Adani Ports, Adani Green Energy, and Adani Total Gas dropped between 18-20 per cent. Ambuja Cements fell 17.59 per cent, ACC fell 14.54 per cent, NDTV dropped 14.37 per cent and Adani Wilmar declined 10 per cent.

Amid unfavourable global conditions, the allegations also led to a broader market downturn, with the BSE Sensex and NSE Nifty also facing losses. After opening 30 points lower, Nifty nosedived in the early morning session to hit a low of 23263, losing more than 250 points as compared to previous session’s close. Post 10:30 A.M, Nifty remained in the tight range of 70 point between 23300-23370 through-out the session. Nifty finally ended the day with the losses of 169 points or 0.72 per cent at 23349.90 levels. NSE cash market volumes were higher by 20 per cent as compared to Tuesday. Nifty Midcap 100 and Small cap 100 fell by 0.30 per cent and 0.46 per cent respectively. Declining shares outnumbered the advancing shares where advance decline ratio stood at 0.45 on BSE. Amongst the sectoral Indices, Nifty Reality and IT were major gainers while Nifty PSU Banks, Media and Metal fell the most. Nifty is in continuation of a down trend.

Meanwhile, Moody’s termed the bribery charges against Gautam Adani and other senior Adani Group officials as ‘credit negative’. The ratings agency cited concerns over the group’s governance practices and access to capital to meet liquidity requirements.