US charges billionaire Gautam Adani with $265 million bribery scheme, alleged investor fraud

The indictment also charges Ranjit Gupta and Rupesh Agarwal, former executives of a renewable-energy company whose securities were traded on the New York Stock Exchange (the US Issuer), and Cyril Cabanes, Saurabh Agarwal, and Deepak Malhotra, former employees of a Canadian institutional investor, with conspiracy to violate the Foreign Corrupt Practices Act in connection with the alleged bribery scheme.

US Attorney Breon Peace said the defendants “orchestrated an elaborate scheme,” sought to “enrich themselves at the expense of the integrity of our financial markets” and “defrauded US and global investors.”

Prosecutors allege that Adani and his co-defendants started plotting the bribery scheme in 2020 or 2021 to guarantee demand for the energy that Adani Green and another firm were under contract to produce for the national government’s Solar Energy Corporation of India.

Adani Green and the other firm’s high prices turned off India’s state-run electricity distributors, which buy power from the national government and provide it to homes and businesses. However, the companies needed those deals to make the project worthwhile and keep revenues high, so they offered bribes to get them done, prosecutors said.

After the defendants started promising bribes to government officials, in 2021 and 2022, electricity distributors in five Indian states or regions entered into agreements to purchase their energy, prosecutors said.

Adani’s company issued a statement in which he touted his deals as the “world’s largest” power purchase agreement.

At the same time, prosecutors said, the Adanis and Jaain were attesting to global investors that Adani Green was and would never be involved in bribery. Those claims enabled them to secure billions of dollars in financing for the project at terms that “did not account for the true risk” involved, prosecutors said.

In a parallel civil action, the US Securities and Exchange Commission (SEC) accused Adani and two co-defendants of violating anti-fraud provisions of US securities laws. The regulator is seeking monetary penalties and other sanctions. Both cases were filed in federal court in Brooklyn.

Sanjay Wadhwa, acting director of the SEC’s Enforcement Division, said Gautam and Sagar Adani are accused of persuading investors to buy their company’s bonds by misrepresenting “not only that Adani Green had a robust anti-bribery compliance programme but also that the company’s senior management had not and would not pay or promise to pay bribes.”

The indictment also accuses the executives of obstructing investigations by the FBI, DOJ, and SEC. The investigation was conducted by the FBI New York’s Corporate, Securities and Commodities Fraud and International Corruption Units.

“The business executives allegedly bribed the Indian government to finance lucrative contracts designed to benefit their businesses. Adani and other defendants also defrauded investors by raising capital on the basis of false statements about bribery and corruption, while still other defendants allegedly attempted to conceal the bribery conspiracy by obstructing the government’s investigation,” said FBI Assistant Director in Charge James Dennehy.

Last year, US-based short-seller Hindenburg Research accused Adani and his company of “brazen stock manipulation” and “accounting fraud.”

The Adani Group called the claims “a malicious combination of selective misinformation and stale, baseless and discredited allegations.”

The company’s stock plunged as a result and dipped again in August when Hindenburg Research levied more corruption allegations.

(With addtional inputs from AP and ANI)