United States Files Fraud Charges Against Indian Billionaire Gautam Adani

In the United States, Indian billionaire Gautam Adani faces fraud charges. The US has accused him of orchestrating a $250m (£198m) bribery scheme and concealing it to secure funding within the US. These criminal charges, formally lodged on Wednesday in New York, represent a significant setback for Mr Adani, aged 62, who is among Asia’s wealthiest individuals, with a business conglomerate spanning from ports and airports to renewable energy. According to the indictment, prosecutors contend that the tycoon, along with other high-ranking executives, consented to making payments to Indian officials to obtain contracts for his renewable energy firm, projected to generate over $2bn in profits across two decades. The Adani Group has refuted these allegations, describing them as “baseless.” In a statement, the group affirmed, “All possible legal recourse will be sought.” On Thursday, shares of Adani Enterprises, the group’s primary company, concluded trading with a 22% decrease. Other companies within the group also experienced declines. Adani Green Energy, identified as the company central to the allegations, announced its decision not to proceed with a $600m bond issuance. The conglomerate has been under scrutiny since 2023, following a report by US short-seller Hindenburg Research that alleged decades of “brazen” stock manipulation and accounting fraud. These claims, which Mr Adani refuted, led to a substantial market downturn and an inquiry by India’s market regulatory body, the Securities and Exchange Board of India (Sebi). Subsequently, Hindenburg additionally accused Madhabi Puri Buch, Sebi’s chief, of connections to offshore funds utilized by the Adani group; both Ms Buch and the group have denied these assertions. Nevertheless, the US indictment represents one of the most significant challenges encountered by the group. In addition to Mr Adani, seven other individuals are named as defendants, including his nephew. Information regarding the bribery investigation into the company has been public for several months. Prosecutors stated that the US initiated its investigation into the company in 2022 and encountered obstruction during the inquiry. It is alleged that executives secured $3bn in loans and bonds, partly from US companies, based on inaccurate and deceptive statements concerning the firm’s anti-bribery measures and policies, alongside information about the bribery investigation. US Attorney Breon Peace, in a statement announcing the charges, declared: “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.” He further stated, “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.” Officials indicated that Mr Adani personally met with government officials multiple times to facilitate the bribery scheme. US Attorney roles in the United States are presidential appointments. This legal filing occurs mere weeks after Donald Trump’s victory in the presidential election, where he committed to reforming the US Justice Department. Following Trump’s win, Mr Adani had extended congratulations via social media and, last week, committed to a $10bn investment in the US. Michael Kugelman, who serves as director of the South Asia Institute at the Wilson Center, characterized the charges as a “body blow” for the tycoon. He informed the BBC’s Business Today programme that “For the last nearly two years, Mr Adani has been trying to rehabilitate his image, and [trying] to show that those earlier fraud allegations levelled by the Hindenburg group were not true, and his company and his businesses had actually been doing quite well.” However, he suggested it could prove more challenging for the billionaire to “shake off” the accusations brought by US authorities. US investment firm GQG Partners LLC, having invested approximately $10bn in the Adani Group, has stated it is “monitoring the charges” and might implement “appropriate” actions concerning its portfolios. Moody’s Ratings commented that the indictment represented a “credit negative” for the group’s companies. It added, “Our main focus when assessing Adani Group is on the ability of the group’s companies to access capital to meet their liquidity requirements and on its governance practices.” This matter has also ignited a political controversy in India. Mr Adani maintains a close relationship with Indian Prime Minister Narendra Modi. He has consistently faced accusations from opposition politicians asserting that he has gained from his political connections, claims he denies. During a press conference, opposition leader Rahul Gandhi called for Mr Adani’s arrest and for Ms Buch’s removal from her role as Sebi chief. He further accused Modi of shielding the businessman. As of yet, Modi and the government have not issued comments on the situation. Sambit Patra, a prominent figure in the ruling Bharatiya Janata Party (BJP), rejected the allegations against Modi, stating that it was the Adani Group’s responsibility to “issue a statement and defend itself.” He concluded, “The law will take its course.” For an extended period, opposition parties have advocated for a joint parliamentary inquiry into the Hindenburg allegations targeting the Adani Group. It is anticipated that they will bring up this matter during the upcoming winter session of parliament next week. Additional reporting was provided by Nikhil Inamdar and Archana Shukla in Mumbai. Follow BBC News India on Instagram, YouTube, Twitter, and Facebook. Copyright 2024 BBC. All rights reserved. The BBC bears no responsibility for the content of external websites. Information regarding our approach to external linking is available.