US accuses Indian billionaire of defrauding investors and concealing bribery scheme

by Associated PressNovember 20, 2024 21:18 (NPR)

NEW YORK — An Indian businessman who is one of the richest people in the world has been indicted in the United States on charges that he deceived investors by hiding that his company’s giant solar energy project in the subcontinent was facilitated by an alleged bribery scheme.

Gautam Adani, 62, was charged with securities fraud and conspiracy to commit securities and wire fraud in an indictment unsealed Wednesday. The case is Adani Green Energy Ltd. and a lucrative arrangement for another firm to sell 12 gigawatts of solar energy to the Indian government, enough to light millions of homes and businesses.

The indictment shows that Adani and other defendants played both ends of the deal.

He accuses them of portraying the situation as rosy and exaggerated to Wall Street investors, who have poured several billion dollars into the project over the past five years and have paid or planned to pay about $265 million in bribes to government officials in India. helping secure billions of dollars worth of contracts and financing.

Deputy Assistant Attorney General Lisa Miller said Adani and other defendants sought to “obtain and finance massive government energy supply contracts through corruption and fraud at the expense of U.S. investors.”

U.S. Attorney Breon Peace said the defendants “orchestrated an elaborate scheme” and sought to “enrich themselves at the expense of the integrity of our financial markets.”

In a parallel civil case, the U.S. Securities and Exchange Commission charged Adani and two other defendants with violating anti-fraud provisions of the U.S. securities laws. The regulator is seeking fines and other sanctions.

Both lawsuits were filed in federal court in Brooklyn.

Adani’s other defendants include his nephew Sagar Adani, who was the managing director of Adani Green Energy’s board of directors, and Vneet Jaain, who was the company’s managing director from 2020 to 2023 and was the managing director of the board of directors.

Online court records did not list the name of an attorney who could speak on Adani’s behalf. An email message seeking comment was left with an arm of his conglomerate, Adani Group. Emails were also sent to lawyers representing the defendants. Sagar Adani’s lawyer, Sean Hecker, declined to comment. Others did not immediately respond.

SEC Acting Director of Enforcement Division Sanjay Wadhwa said Gautam and Sagar Adani were accused of persuading investors to buy their company’s securities by misrepresenting “not only that Adani Green has a strong anti-bribery compliance program, but that the company’s senior management does as well.” He said they were accused. “does not pay or promise to pay bribes.”

Adani is a strong player in the world’s most populous country. He made his fortune from the coal business in the 1990s. The Adani Group has grown to encompass many aspects of Indian life, from making defense equipment to road construction and selling edible oil.

Adani Group has made major moves in the field of renewable energy in recent years and adopted the philosophy of sustainable growth, which is reflected in its slogan: “Growing with Kindness.”

The company has a clean energy portfolio of over 20 gigawatts, including one of the world’s largest solar power plants in the southern state of Tamil Nadu. Adani Group has announced its aim to become the country’s largest player in space by 2030. Gautam Adani said in 2022 that the company will invest $70 billion in clean energy projects by 2032.

Last year, a US-based financial research firm accused Adani and his company of “brazen stock manipulation” and “accounting fraud”. Adani Group called the allegations a “malicious combination of selective misinformation and stale, unfounded and discredited allegations.”

The firm in question is known as a short seller, essentially a Wall Street term for traders who bet that the prices of certain stocks will fall, and had made such investments in association with the Adani Group. As a result, the company’s shares fell and fell again in August as Hindenburg Research revealed more corruption allegations.

Jaain told The Associated Press last year that Hindenburg’s claims had little impact on its ongoing projects, including work to build a 20-gigawatt solar and wind power project in the northwestern Indian village of Khavda.

Prosecutors allege that Adani and other defendants began a bribery scheme in 2020 or 2021 to secure demand for energy that Adani Green and another firm had contracted to produce for the national government’s Solar Energy Corporation of India.

High prices from Adani Green and others have sidelined India’s state-run electricity distributors, which buy energy from the national government and supply it to homes and businesses. But prosecutors said the companies needed these deals to make the project worthwhile and keep revenues high, so they offered bribes to make them happen.

Prosecutors said that after the defendants began promising bribes to government officials, electricity distributors in five Indian states or regions made deals to buy power in 2021 and 2022. Adani’s company released a statement touting their agreement as the “world’s largest” power purchase agreement.

Prosecutors also said Adanis and Jaain confirmed to global investors that Adani Green was and never would be involved in bribery. Prosecutors said these allegations enabled them to secure billions of dollars in financing for the project on terms that “did not take into account the actual risk”.