Gautam Adani, his nephew Sagar Adani and other key Adani executives have not been charged with any bribery charges, that is, violation of the Foreign Corrupt Practices Act (FCPA) in the indictment of the US Department of Justice (DoJ) or the civil complaint of the US Securities and Exchange Commission (SEC), Adani Green Energy Ltd (AGEL) said on Wednesday.
Following the clarification, Adani Group stocks rose on Wednesday and extended gains to 10-20%. AGEL shares closed at Rs 989.30, up 10% from previous close.
Senior lawyer and former attorney general Mukul Rohatgi, who previously represented Adani group in a few cases, told reporters that while the indictment includes multiple counts, the key charges – count one involving a conspiracy to violate the FCPA and count five pertaining to obstruction of justice – do not name Adani or the other top officials, including the company’s managing director Vneet Jaain.
These directors have been charged on three counts in the criminal indictment — alleged securities fraud conspiracy; wire fraud conspiracy, and securities fraud,” the company said in an exchange filing. “The indictment does not specify any quantum of any fine or penalty,” AGEL said in a separate exchange filing, clarifying on the expected financial implications on the company, if any, due to penalty.
“It is important to note that count one and count five are more important than others, but neither in count one, nor in five, is Adani or his nephew charged,” Rohatgi said. “So count one mentions charges against certain other persons, minus the two Adanis, it includes some of their officers, and one foreign person, that is the conspiracy to violate foreign corrupt practices act (FCPA). Then there are two-three counts relating to securities and bonds, in which Adanis are named.” He further noted that the last, and very important count, which relates to obstruction of justice do not name the Adanis or their officers but certain other persons including a foreign party.
“It was alleged that Adanis have bribed Indian officials in Indian entities related to supply, and purchase of power, but I do not find a single name or detail in the chargesheet as to who has been bribed, and in what manner he is bribed. I don’t know how one can respond to this kind of chargesheet,” Rohatgi said.
Senior lawyer Mahesh Jethmalani also said that the US indictment against Gautam Adani only has claims and the charges have not been proven. He also attacked the Congress party, asking it to produce evidence before holding press conferences to launch attacks against Adani.
“It clearly is an attempt, although it emanates from a court in the US… given the nature of the indictment, the sketchy evidence and some very important circumstances, this seems to be a hatchet job,” he added.
Ketan Mukhija, senior partner at Burgeon Law noted that the group’s clarification is a significant development that mitigates the immediate reputational concerns surrounding the allegations. “The absence of FCPA charges suggests that the core bribery-related accusations, often viewed as the most damaging in terms of international credibility and legal consequences, do not directly implicate the key executives,” Mukhija said.
However, he highlighted that the group still faces other serious charges, including securities and wire fraud conspiracies, which may have financial and regulatory repercussions.
The US’s FCPA prohibits firms and individuals from paying bribes to foreign officials to further business deals. The Act was enacted for the purpose of making it unlawful for certain classes of persons and entities to make payments to foreign government officials to assist in obtaining or retaining business.
For investors hailing from the US, it is customary to have FCPA-related provisions enshrined in investment agreements, which, once triggered, may lead to the unravelling of the deal and imposition of damages and penalties, said Humera Niyazi, co-founder at White and Brief’s Sidebar.
The US prosecutors on November 20 charged Gautam Adani and seven others of conducting a bribery scheme promising to offer Rs 2,029 crore ($265 million) in bribes to Indian government officials to get state discoms enter into contracts with the Solar Energy Corporation of India to obtain business. According to the US court filings, following the promise of bribes to government officials, distribution companies in Odisha, Jammu and Kashmir, Tamil Nadu, Chhattisgarh and Andhra Pradesh entered into power sale agreements (PSAs) with the SECI between July 2021 and February 2022.
Mukhija added: “The Adani Group’s proactive stance in addressing the allegations and defending its position will likely continue to shape market and public perceptions in the coming months. The ongoing legal processes will play a critical role in determining the long-term impact on the company’s standing and operations.”
Niyazi noted events and implications of the indictment on the investments made by US companies and how the DOJ goes about the whole issue are occurring on two distinct timelines. “ It is important not to jump the gun and arrive at conclusions pending the enquiry,” Niyazi said. He said that the other charges (securities fraud, etc), if proven, might very well trigger similar consequences.