On November 20, a federal grand jury in New York indicted billionaire Gautam Adani and seven other people from India on charges related to an alleged bribery scheme for contracts to supply Indian government solar power, while the US Securities and Exchange Commission separately added other charges, with millions of US investors backing the companies involved.
According to US investigators, Adani and others agreed to pay more than $250 million in bribes to Indian government officials to obtain the contracts and sell the Indian government’s power at above-market prices. Adani’s company, Adani Green Energy Ltd., and the others worked to hide the practices from investors and investigators, according to the charges.
“These crimes were allegedly committed by senior executives and directors to obtain and finance massive state energy supply contracts through corruption and fraud at the expense of American investors,” said Lisa Miller, the division’s deputy assistant attorney general. Department of Justice, in a statement.
Details in court records match an announcement Adani Green Energy made in June 2020 about a deal with Solar Energy Corp. of India from the Indian government for the “World’s Largest Solar Award” to develop 8 GW solar projects over five years. The company has more than 50 solar developments commissioned in India, with capacities ranging from 5 MW to 2,000 MW.
Court records do not yet list a lawyer for Adani, but an Adani Group spokesman said in a statement that the allegations “are baseless and are denied.”
Authorities also charged Cyril Cabanes, who was a director of Mauritius-based Azure Power Global Ltd., along with Adani executives and employees. Prosecutors say Cabanes helped facilitate the scheme. Azure said in a statement that it is cooperating with US authorities.
The company itself is not a defendant in any of the cases and said the former directors and officers named in the cases “ceased association with Azure more than a year ago.”
Impacts of the project
Kenyan President William Ruto said during his state of the nation address on November 21 that he had ordered the Ministry of Transport and the Ministry of Energy and Petroleum to cancel the procurement process with Adani Group for a $2 billion contract for an airport expansion project in the country and a recently signed $736 million contract with Adani Energy Solutions Ltd. for a power transmission project.
Ruto told officials to “immediately begin the process of bringing in alternative partners”. He also said that “in the face of indisputable evidence or credible information about corruption, I will not hesitate to take decisive action.”
It remains to be seen how US or other projects may be affected. But Adani may have trouble getting financing for projects with the pending allegations.
Credit rating agency S&P Global warned that the charges could raise questions about the management of several Adani Group entities, and said on November 22 that it revised its outlook to negative for several Adani companies, including now Adani Electricity Mumbai Ltd., Adani Ports and Special Economic Zone Ltd. and a subsidiary of Adani Green Energy Ltd.
“The negative outlook for these entities indicates that, in our view, their cash flows could be materially affected if their access to funding weakens, their funding costs increase significantly, or allegations they are demonstrated, in addition to our assessment of their governance and business profile. ” S&P said in a statement.
