Gautam Adani faces five-count criminal indictment in U.S. for bribery, security fraud
While the Department of Justice’s indictment constitutes a criminal case, the SEC’s is a civil complaint and if proved, could result in a “permanent injunction, a civil penalty, and an officer and director bar”. The SEC’s complaints were filed in the U.S. District Court for the Eastern District of New York.
The indictment concerns the actions of the defendants between 2020 and 2024. The defendants are Gautam Adani, Sagar Adani, Executive Director of Adani Green Energy, Vneet S. Jaain, former CEO of Adani Green Energy, Ranjit Gupta, former CEO of Azure Power Global, Cyril Cabanes, a former managing director at CDPQ, a Canadian pension fund which is also a majority stockholder of Azure Power, Saurabh Agarwal, former managing director of CDPQ India, Deepak Malhotra, former executive of CDPQ, and Rupesh Agarwal, former CEO of Azure Power.
Under the U.S.’s Foreign Corrupt Practices Act, 1977 (FCPA), it is unlawful to make payments to foreign government officials in a bid to obtain or retain business. It is also a criminal offence to raise money by misleading investors about key corporate governance practices, which this case concerns compliance with the FCPA. Further, it is unlawful to obstruct federal investigations by giving false information and destroying evidence such as electronic communications. It is also a separate offence to hide the authorisation of bribery practices in company annual reports. The defendants have been charged with offences on all these counts.
The U.S. DoJ indictment has alleged that the Adanis resorted to a bribery scheme because SECI was unable to find buyers among State distribution companies (discoms) for the Adanis’ solar power, whose price was above market rates. But many State discoms did subsequently sign sale agreements with SECI to buy the Adanis’ more expensive renewable power.
And then, to fund the operations of Adani Green Energy and its subsidiaries, the defendants committed securities fraud and wire fraud (any fraud that uses electronic communications through the U.S.) by hiding their FCPA violations to obtain bank loans worth more than $2 billion from international financial institutions and U.S.-based asset management companies. Also, by “offering more than $1 billion in securities” that were marketed and sold to investors in the U.S., Adani Green Energy and its directors “relied on the United States’ financial system to perpetrate this fraudulent scheme by….causing wires to be sent and received that passed through the United States.”
The Adani Group has denied the allegations of the U.S. Department of Justice and the SEC, terming them “baseless”. In a statement, a spokesperson for the conglomerate said, “As stated by the U.S. Department of Justice itself, ‘the charges in the indictment are allegations and the defendants are presumed innocent unless and until proven guilty.’ All possible legal recourse will be sought. The Adani Group has always upheld and is steadfastly committed to maintaining the highest standards of governance, transparency and regulatory compliance across all jurisdictions of its operations.”
Published - November 21, 2024 05:05 pm IST
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