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Adani Group Chairman Indicted in Alleged Fraud and Bribery Case

Adani Group fraud case

A US District Court in New York has charged Gautam Adani, Chairman of the Adani Group, along with several senior executives, for their alleged involvement in a multi-billion-dollar bribery and investor fraud scheme.

The Adani Group has strongly denied the allegations, describing them as “baseless” and asserting that they will pursue all available legal options to counter the charges.

The 62-year-old business tycoon faces accusations of securities fraud and conspiracy to commit securities and wire fraud, as outlined in an indictment unsealed on Wednesday.

According to the US Department of Justice (DOJ), Adani and seven other senior executives allegedly paid over $265 million in bribes to Indian government officials to secure solar energy contracts.

The controversy centers on agreements involving Adani Green Energy Ltd. and another company to provide 12 gigawatts of solar power to the Indian government. These contracts, estimated to power millions of homes and businesses, were projected to generate post-tax profits exceeding $2 billion over two decades.

In a related civil lawsuit, the US Securities and Exchange Commission (SEC) has accused Adani and two associates of violating US securities laws. The SEC claims that the executives misrepresented the company’s anti-bribery compliance program and assured investors that no bribes had been or would be paid by senior management.

The regulator seeks financial penalties and additional sanctions against the accused, with both cases being heard in federal court in Brooklyn.

This high-profile case has drawn global attention, spotlighting corporate governance and compliance within one of India’s largest business conglomerates.

Adani Group and Azure Power Face US SEC Allegations Under FCPA Compliance

The recent SEC complaints and indictments highlight alleged violations of the US Foreign Corrupt Practices Act (FCPA) by Adani Group and Azure Power. The charges stem from activities involving US investors and corporate transactions tied to American financial markets.

Key Allegations Against Adani Group

The allegations against the Adani Group focus on its 2021 corporate bond issuance worth $750 million, including $175 million raised from US investors. During this issuance, Adani Green executives reportedly assured investors that no bribes were paid or promised to government officials. The SEC contends this claim was false, alleging that Gautam Adani, Sagar Adani, and Vneet S. Jaain were directly involved in offering substantial bribes to Indian state officials to secure lucrative contracts.

The SEC further claimed that the Adani Group leveraged US financial systems to execute the scheme, including emails, text messages, and other modes of interstate communication. The indictment also notes that the group raised over $2 billion in dollar-denominated loans from international and US-based lenders during the alleged bribery period.

Azure Power and FCPA Violations

Azure Power, another entity named in the case, is accused of engaging in similar misconduct. Although Azure primarily operated in India through a subsidiary, it listed securities on the New York Stock Exchange (NYSE). The SEC alleges that Azure’s representatives, including French national Cabanes, facilitated bribery while serving on the company’s board as a representative of CDPQ, its largest stockholder.

Azure’s stock remained publicly traded on the NYSE during the alleged bribery period (2020–2024) until its delisting in November 2023 for failing to file mandatory SEC reports.

Legal Context: FCPA Regulations and US Jurisdiction

The FCPA prohibits foreign companies with US-listed securities or financial ties to engage in bribery to secure business advantages. By using US financial instruments, such as corporate bonds or stock exchanges, and communicating through US interstate systems, entities like Adani Green and Azure Power fall under FCPA jurisdiction.

Statements and Consequences

Breon Peace, US Attorney for the Eastern District of New York, stated:

The defendants orchestrated an elaborate scheme to bribe Indian government officials to secure contracts worth billions and misled US and international investors during capital-raising efforts.

The SEC is seeking financial penalties and sanctions against the accused parties. With the charges underlined by their connections to US markets, the case underscores the importance of adhering to FCPA compliance in global business operations.

Even if the IDA doesn’t apply, employees may still have legal options if they feel their layoff was unfair or if their employer violated contract terms. For example, employees can file a civil lawsuit for breach of contract if the company fails to provide the severance or benefits promised in their contract.

Accused of Multi-Million Dollar Bribery

Between 2020 and 2024, Adani Group and Azure Power executives allegedly orchestrated a bribery scheme involving over $250 million in payments to Indian government officials to secure lucrative solar energy contracts. These contracts were projected to yield billions of dollars in profits, according to the US Attorney’s Office for the Eastern District of New York.

Key Allegations

Bribery and Misrepresentation:

Gautam S. Adani, Sagar R. Adani, and Vneet S. Jaain are accused of meeting government officials and misrepresenting Adani Green’s anti-bribery practices to US investors and financial institutions.
Allegedly, these misrepresentations helped secure financing, including funds used to execute contracts procured through bribery.

Collaboration Between Adani and Azure:

The scheme reportedly involved both Adani Green and Azure Power.
The SEC claims Azure was responsible for one-third of the bribes, while Adani Green accounted for the remaining two-thirds.

Use of Electronic Communication:

Defendants allegedly used electronic messaging platforms to discuss and document the bribery scheme.

Obstruction of Justice:

The indictment accuses executives from Azure Power, including Cabanes and others linked to CDPQ (a major Azure shareholder), of attempting to obstruct investigations by the FBI, DOJ, and SEC.
Actions included deleting evidence, withholding information during internal investigations, and providing false statements to US authorities.

SEC and DOJ Actions

The SEC alleges that the accused parties pressured Indian state power distribution companies into purchasing solar power at favorable rates by offering bribes. Investigators claim the bribes and associated misrepresentations were central to securing favorable contracts and raising funds from US investors.

Moreover, the SEC and DOJ have accused the defendants of taking deliberate measures to erase evidence and mislead authorities, further intensifying the legal challenges against them.

Implications of the Case

This case underscores the stringent enforcement of US laws, including the Foreign Corrupt Practices Act (FCPA), which prohibits bribery by entities with financial ties to US markets. It also highlights the potential repercussions for corporate governance failures, especially for companies with international operations and US-listed securities.

Adani Group Shares Tumble

Adani Group stocks plummeted on Thursday following the indictment of its chairman, Gautam Adani, in the United States on bribery and fraud charges. The conglomerate’s 10 listed companies saw a combined market capitalization drop of approximately ₹2.8 lakh crore during trading hours.

Market Impact

Major Declines in Adani Group Stocks:

Adani Enterprises: Fell 23.44%, closing at ₹2,159 on the BSE.
Adani Green Energy: Plunged 18% to ₹1,145.
Adani Ports: Dropped 13.11% to ₹1,120.
Adani Energy Solutions: Crashed 20% to ₹697.70.
Adani Total Gas: Fell 10.35% to ₹602.65.
Other subsidiaries, including Adani Power, Adani Wilmar, ACC Cement, Ambuja Cement, and NDTV, saw declines ranging from 0.5% to 12.5%.

Impact on Financial Institutions:

Shares of banks with significant exposure to Adani Group were also hit:

State Bank of India (SBI), Bank of Baroda (BoB), and Punjab National Bank (PNB) fell over 7% intraday.
Adani dollar bonds experienced a price drop of 3-5%.

Broader Market Effects:

NSE Nifty fell 0.71%, while BSE Sensex declined 0.51%.
US-based investor GQG Partners, a major Adani stakeholder, saw its shares drop 20%.

Global and Political Reactions

Valuation Loss:

The Adani Group’s overall valuation dropped by $27 billion in Thursday’s trade, bringing its total market capitalization to $142 billion.
Before the Hindenburg report’s release earlier this year, the conglomerate’s valuation stood at $235 billion, with the report causing an additional $150 billion erosion.

Legal Challenges and Investigations:

Indian regulators, including the Securities and Exchange Board of India (SEBI), have yet to comment on the U.S. charges, while an investigation into the Hindenburg allegations remains ongoing.
Legal experts anticipate the Adani Group will seek dismissal of the indictment and highlight that extradition proceedings may be initiated due to an arrest warrant issued by U.S. authorities.

Political Fallout:

Opposition parties in India renewed their calls for an independent investigation into alleged favoritism by Prime Minister Narendra Modi’s government. Both Modi and Adani have denied any wrongdoing.

Stay Informed About Your Company’s Financial Health

Being aware of your company’s financial situation is crucial. If layoffs are occurring in the industry, it’s important to monitor news about your company’s performance. If layoffs seem likely, you’ll be better prepared to act, whether that means updating your resume or starting a job search early.

Avoid Gossip and Office Rumors

Office gossip can quickly spiral out of control, damaging your professional reputation. Avoid participating in or spreading rumors about your colleagues. Not only can this hurt your co-workers, but it can also tarnish your image as a team player.

Focus on building trust and maintaining professional relationships to solidify your place within the company.

Kenya Cancels Adani Group Deals

Kenyan President William Ruto announced on Thursday the cancellation of multimillion-dollar airport modernization and energy infrastructure deals with Indian billionaire Gautam Adani. The decision follows U.S. indictments accusing Adani of bribery and fraud.

Details of the Cancelled Deals

Airport Expansion:

The Adani Group was set to modernize Nairobi’s Jomo Kenyatta International Airport, including constructing a new runway and terminal.
In return, the group would operate the airport for 30 years.
The deal had sparked widespread criticism, protests, and a strike by airport workers over fears of job losses and worsened working conditions.

Energy Project:

Adani had also secured a contract to build power transmission lines in Kenya, a critical hub for East African business.

Government's Justification

President Ruto cited “new information” provided by investigative agencies and international partners, hinting at revelations tied to the U.S. bribery and fraud charges against Adani.
Energy Minister Opiyo Wandayi clarified before a parliamentary committee that Kenya’s role in signing the deals was free of bribery or corruption.

Global Implications

The U.S. indictment alleges that Adani concealed a bribery scheme related to a solar energy project in India, defrauding investors through securities and wire fraud.

Public and Political Reactions

The airport deal had already faced resistance domestically, with anti-Adani protests and worker strikes calling attention to its potential socio-economic impacts.
Kenya’s decision underscores increasing scrutiny of Adani Group’s global operations following allegations of impropriety in India and abroad.

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Hindustani

After looting public money from India they tried to implement the same model on US and evenatually these are the consequences