Prosecutors in the United States have indicted Gautam Adani and his nephew Sagar Adani for their alleged involvement in a Rs 2000 crore ($265 million) bribery scheme to secure power-supply contracts. The US Department of Justice (DOJ) claims the scheme involved paying Indian officials to develop India’s largest solar power plant project. Azure Power’s contracts alone were expected to generate $2 billion in profits over 20 years.
This marks the second major crisis for the Adani Group in two years, following the Hindenburg Research report in 2023 which accused the conglomerate of stock manipulation and accounting fraud. The recent fallout has also resulted in Kenya announcing the cancellation of a major airport expansion project with the Adani Group to cheers in the country’s Parliament.
The Foreign Corrupt Practices Act (FCPA) prohibits companies or individuals with US ties such as American investors, public listings, or joint ventures from offering bribes to government officials for favourable treatment. While the Adani Group is not publicly traded in the US., its American investors bring it under the purview of the FCPA.
In response to the allegations, the Adani Group issued a statement on November 21, denying the charges brought by the DOJ and the Security Exchange Commission (SEC). Describing the allegations as “baseless,” the group reiterated its commitment to legal compliance: “We assure our stakeholders, partners, and employees that we are a law-abiding organisation, fully compliant with all laws.”
It also highlighted that the charges are allegations, quoting the DOJ’s own press release: “The charges in the indictment are allegations, and the defendants are presumed innocent unless and until proven guilty.”
Adani Group emphasised its intention to seek “all possible legal recourse” to challenge the indictment. The statement aimed to reassure stakeholders amidst fluctuating share prices across its listed companies, including Adani Green Energy, Adani Enterprises, and Adani Ports.
While Gautam Adani and his nephew Sagar Adani face charges of fraud and bribery, the Adani Group is also under scrutiny for failing to disclose the ongoing investigation to US and Indian investors, as well as Indian Exchanges and SEBI. The company has been accused of denying knowledge of the investigation while providing misleading information to investors.
On March 15, 2024, Bloomberg reported that US investigators were examining whether an Adani entity or individuals linked to the group, including Gautam Adani had paid Indian officials for favourable treatment on an energy project. The Adani Group companies informed the Indian stock exchanges in writing that “The Company states that it has not received any notice from the Department of Justice of U.S. in respect of the allegation referred to in the said article.” But Gautam and Sagar Adani were aware of the investigation.
The investigation, which also involved Indian renewable energy company Azure Power Global Ltd., was led by the US Attorney’s Office for the Eastern District of New York and the DOJ's fraud unit in Washington.
The DOJ indictment unsealed on Wednesday alleges that Adani Green Energy concealed an ongoing investigation against its senior executives and falsely claimed to Indian stock exchanges that it had no knowledge of such an inquiry.
The indictment further reveals that the Adani Group had been aware of the investigation for over a year. In connection with the same investigation, the SEC also filed two lawsuits—one against Adani Group executives and another against an executive of the investor in Azure Power. These documents clarify that three key executives of Adani Green Energy, Gautam Adani, Sagar Adani (Gautam Adani's nephew), and Vneet Jaain, are being investigated by the DoJ and SEC.
According to the indictment, in March 2023, FBI special agents revealed the existence of their investigation to Sagar R. Adani, as well as certain crimes and individuals under scrutiny.
On March 17, 2023, FBI agents approached Sagar R Adani in the US and executed a judicially authorised search warrant. The FBI agents also served him a grand jury subpoena and seized his electronic equipment.
The indictment notes that the following day, on March 18, 2023, “the defendant Gautam S Adani emailed himself photographs of each page of the search warrant executed and grand jury subpoena served on the defendant Sagar R Adani.”
Despite being aware of these investigations, the indictment alleges, “the defendants Gautam S Adani and Sagar R Adani not only concealed the Bribery Scheme from financial institutions and investors in the United States and elsewhere but also caused others to make false and misleading statements regarding their awareness and knowledge of the United States government’s investigation and its subjects.”
As per the indictment, in the days that followed after the Bloomberg report, Gautam Adani and Sagar Adani allegedly directed others within the conglomerate to issue false and misleading statements about the company’s awareness of the investigation.
On March 17, 2024, the head of corporate finance for the Conglomerate, emailed a lender for the 2021 Syndicate Loan and a joint bookrunner for the 2024 144A Bond. Rule 144A offering is a private resale of securities to qualified institutional buyers (QIBs). Copying Sagar R Adani, the email dismissed the 2024 news article as “baseless,” “malicious,” and “defamatory.” Later that day, similar or identical emails were sent by him to more than a dozen other financial institutions and investors, again copying Sagar R Adani on these communications.
On March 19, 2024, the corporate finance head emailed the financial institutions, sharing letters that the Indian Energy Company had sent to the NSE and BSE Limited. These letters falsely claimed that the Indian Energy Company “has not received any notice from the Department of Justice of the US in respect of the allegation referred to in the Bloomberg article and that the company was only “aware of an investigation” into potential violations of US anti-corruption laws by a “third party.”
Adani Green Energy subsidiaries hinted at the existence of an anti-corruption investigation in the fine print of a bond offer document after a $409 million bond issue had closed successfully, the document stated: “AGEL, its operations and projects in India and its officers and/or personnel are subject to or exposed to present inquiries and investigations under the anti-bribery or anti-corruption laws of other countries (such as the US. Foreign Corrupt Practices Act).”
While the company subtly acknowledged exposure to anti-bribery inquiries in the above document, it told the BSE and NSE in the same month that no investigation was ongoing.
To facilitate its bond offering, Adani Green provided Offering Circulars to potential investors. These documents, designed to assist investors in making informed decisions, detailed the company’s operations, financial performance, and compliance policies. The Offering Circulars further only assured investors.
The Offering Circulars also warned investors about potential “Risk Factors,” including the possibility that employees could expose the company to liability under anti-bribery laws:
"We are subject to anti-corruption and anti-bribery laws that prohibit improper payments or offers of improper payments to governments and their officials and political parties for the purpose of obtaining or retaining business or securing an improper advantage and require the maintenance of internal controls to prevent such payments..”
While these warnings appeared comprehensive, they were materially misleading. They implied that the risk of bribery was hypothetical, ignoring the ongoing bribery scheme led by senior executives, including Gautam Adani and Sagar Adani.
The Offering Circulars also falsely claimed that Adani Green secured its renewable energy contracts through transparent and competitive tender processes:
“We win our PPAs through transparent and competitive tender processes conducted by the central and state governments of India.”
By detailing specific anti-bribery policies and governance measures, Adani Green sought to create the impression that it had effective safeguards in place.
According to a report by The Morning Context, SEBI is likely to investigate Adani Green Energy Ltd for allegedly making a false disclosure to Indian stock exchanges, as revealed by a source with direct knowledge of the matter.
SEBI’s Listing Obligations and Disclosure Requirements (LODR) Regulations, particularly Regulation 30 and Schedule III, require listed entities to disclose all material events or information that could impact investors or affect the company’s operations.
Additionally, SEBI’s Prohibition of Fraudulent and Unfair Trade Practices Relating to Securities Market rules explicitly prohibit false declarations. “No person shall indulge in a manipulative, fraudulent, or an unfair trade practice in securities.”
SEBI has faced significant criticism over its handling of allegations against the Adani Group, particularly after the January 2023 report by Hindenburg Research accused the conglomerate of stock manipulation and accounting fraud. Although SEBI initiated multiple investigations in response to these allegations, progress has been slow. By August 2023, SEBI reported to the Supreme Court that it had completed 22 of the 24 investigations into the Adani-Hindenburg matter, but the remaining two were delayed due to difficulties in obtaining information from foreign regulatory agencies. This lack of a decisive resolution has raised questions about SEBI’s ability to effectively regulate and hold powerful corporate entities accountable.
Adding to these concerns are allegations of conflicts of interest involving SEBI Chairperson Madhabi Puri Buch. In August 2024, reports surfaced claiming that Buch and her husband held stakes in offshore funds linked to the Adani Group. These allegations, first highlighted by Hindenburg Research, have fueled speculation about potential bias in SEBI’s handling of Adani-related matters. Although Buch denied any wrongdoing and stated that she had recused herself from Adani-related investigations, critics argue that her position within SEBI during these inquiries undermines the regulator’s impartiality. The Lokpal has since sought an explanation from Buch regarding these allegations, emphasising the need for greater transparency and accountability in regulatory oversight.
The current indictment has further amplified concerns over SEBI’s regulatory framework, with opposition leaders urging the regulatory authority to demonstrate impartiality and rigour. The slow pace of past investigations, combined with allegations of potential conflicts of interest, has cast a shadow over SEBI’s credibility. Whether SEBI can take decisive action in light of these developments remains an open question.
This article is part of a collaborative series reporting on the US charges against Adani Group.
