The reprieve from the Hindenburg Research controversy has proven to be quite short-lived for the Adanis. Just as the group managed to move past allegations of stock market manipulation and accounting fraud levelled by the US short-seller in January last year, US prosecutors dropped a bombshell late on Wednesday.
They charged group chairman Gautam Adani and seven others with helping drive a $265 million bribery and fraud scheme under which Indian government officials were allegedly paid hush money, termed as “development fees” to win solar energy contracts. It was also alleged that the Adanis concealed the plan as they sought to raise money from US investors. The five-count indictment also accuses Adani’s nephew Sagar R Adani and Vneet S Jaain, executive director and managing director respectively of Adani Green Energy.
The US prosecutors have claimed that the seeds for the bribery scheme involving Adani were planted between December 2019 and July 2020. Adani Green Energy and Azure Power Global listed on the New York Stock Exchange till recently won contracts with the Solar Energy Corporation of India (SECI), a state-owned company that tries to increase renewable energy use in the country. The energy was expensive for states in India, and SECI struggled to find customers to sign on. Adani and his associates, prosecutors alleged, used bribes to help convince Indian states to use their solar energy.
“The defendants orchestrated an elaborate scheme to bribe Indian government officials to secure contracts worth billions of dollars,” Breon Peace, US Attorney for the Eastern District of New York which brought the case, said in a statement. US law allows federal prosecutors to pursue foreign corruption allegations if they involve certain links to American investors or markets.
Dismissing the charges as baseless, the Adani group said “all possible legal resource will be sought” and quoted the US Department of Justice as saying , “the charges in the indictment are allegations and the defendants are presumed innocent unless and until proven guilty.” The Adani Group, the statement said, is steadfastly committed to maintaining the highest standards of governance, transparency and regulatory compliance across all jurisdictions of its operations.
The other co-conspirators named are Ranjit Gupta, who between 2019 and 2022, was the CEO of Azure. The company told Reuters that it was “aware of the actions” announced by the US Department of Justice and the Securities & Exchange Commission against its former employee and have been cooperating in the case.
Cyril Cabanes, who US court documents said, was a citizen of Australia and France who resided in Singapore, was the managing director of infrastructure overseeing Asia Pacific and Middle East regions at Caisse de dépôt et placement du Québec (CDPQ), a Canadian investment firm, between 2016 and 2023. The indictment document said that an unnamed unit of CDPQ is the top stakeholder of Azure Power. Cabanes, his then-CDPQ colleagues Saurabh Agarwal and Deepak Malhotra, and Rupesh Agarwal are accused of joining the conspiracy between 2021 and 2022.
CDPQ said it was aware of the charges against its former employees. “Those employees were all terminated in 2023 and CDPQ is cooperating with the US authorities,” it said.
US prosecutors said the power supply contracts were expected to yield $2 billion of profit over 20 years, and develop India’s largest solar power plant project. They also said the Adanis (Gautam and Sagar) and Jaain, raised more than $3 billion in loans and bonds by hiding their corruption from lenders and investors.
The three were charged with securities fraud, securities fraud conspiracy and wire fraud conspiracy. The Adanis were also charged in a parallel US Securities and Exchange Commission (SEC) civil case.
“Gautam and Sagar Adani were engaged in the bribery scheme during a September 2021 note offering by Adani Green that raised $750 million, including approximately $175 million from US investors,” the SEC said in a press statement, adding that a company central to the scheme, Azure Power, used to trade on the New York Stock Exchange.
The unsealed criminal charges by the US Attorney’s Office for the Eastern District of New York showed some conspirators referred privately to Gautam Adani with the code names “Numero uno” and “the big man,” while Sagar Adani allegedly used his cellphone to track specifics about the bribes. The defendants also referred to each other as “V,” “snake” and “numero uno minus one.”
Five of the defendants were charged with conspiring to violate the Foreign Corrupt Practices Act, a US anti-bribery law, and four were charged with conspiring to obstruct justice.
“The “Bribe Notes” identified: (i) the state or region for which government officials had been offered a bribe; (ii) the total amount of the offered bribe; and (iii) the approximate amount of solar power the state or region would agree to purchase in exchange for the bribe. In most instances, the Bribe Notes also identified the per megawatt rate for the total bribe amount offered, the abbreviated titles of the government officials who would receive the bribes, and/or the allocation of the total bribe amount among government officials within each state and region,” the US justice department said.
The SEC provided detailed allegations against both Adanis and Cabanes, in a parallel lawsuit, to develop India’s largest solar power plant project.
The 54-page indictment also said the co-conspirators met in person and communicated through an electronic messaging app to discuss execution, including while in the US. They made extensive electronic documentation of their bribery efforts, including using cell phones to track the locations and recipients of the promised bribes and photographing a document summarising the amounts offered.
Some members of the group destroyed evidence to hide their participation in the scheme, including a PowerPoint analysis and electronic communications, and Gautam Adani emailed himself photos of each page of the search warrant and grand jury subpoena the FBI handed his nephew and co-defendant Sagar Adani.