On March 15, Bloomberg reported that investigators in the United States were examining whether an Adani entity or individuals linked to the group, including promoter Gautam Adani, had paid Indian officials in exchange for favours on a solar energy project.
Two days later, the head of corporate finance for the Adani Group, emailed a lender for a 2021 syndicate loan and a joint bookrunner for a private resale of securities, assuring them that the report was untrue.
The email, on which Gautam Adani’s nephew Sagar R Adani was copied, dismissed the news article as “baseless,” “malicious,” and “defamatory.” Later that day, similar or identical emails were sent by the head of corporate finance to more than a dozen other financial institutions and investors, again copying Sagar R Adani on these communications.
Two days later, the Adani Group also went on to claim to Indian stock exchanges that it had no knowledge of the investigation.
These claims did not pass the truth test.
According to a recently released indictment by US prosecutors, Gautam Adani and senior executives of the Adani Group were at the time being investigated for their involvement in a multi-million dollar bribery scheme intended to secure lucrative solar energy contracts in India, which was allegedly used to mislead investors in America.
Contrary to their admissions to Indian stock exchanges, Federal Bureau of Investigation special agents had revealed the existence of this investigation to Sagar R Adani over a year before.
That is not all. The false claims to the stock exchanges were made days after Adani Green Energy subsidiaries hinted at the existence of an anti-corruption investigation in the fine print of a bond offer document issued on March 4, 2024.
The Securities and Exchange Board of India has, so far, not reacted to the disclosures made in the indictment.
The indictment
On November 21, the US Department of Justice and the Securities and Exchange Commission made public the indictment – a statement of charges – against the billionaire and the senior associates of his company.
The prosecutors have indicted Gautam Adani and his nephew Sagar Adani for orchestrating a Rs 2,000 crore ($265 million) bribery scheme to secure power-supply contracts for Adani Green Energy Ltd and another energy firm, Azure Power Global Ltd.
Azure Power’s contracts alone were expected to generate $2 billion or Rs 16,800 crore in profits over 20 years.
This marks the second major crisis for the Adani Group in two years, following the Hindenburg Research report in 2023 which accused the conglomerate of stock manipulation and accounting fraud. The recent indictment has also resulted in Kenya announcing the cancellation of a major airport expansion project with the Adani Group as well as a deal to build power transmission lines.
The Adani Group has denied the charges as “baseless” and reiterated its commitment to legal compliance. The statement aimed to reassure stakeholders amidst fluctuating share prices across its listed companies, including Adani Green Energy, Adani Enterprises, and Adani Ports.
A subpoena is served
On March 19, Adani Green Energy Limited had sought to clear the air on the Bloomberg article published a few days before.
In emails sent to the Bombay Stock Exchange and the National Stock Exchange, the company said “that it has not received any notice from the Department of Justice of U.S. in respect of the allegation referred to in the [Bloomberg] article.”
The company was only “aware of an investigation” into potential violations of US anti-corruption laws by a “third party”, the statement said.
However, on March 17, 2023, FBI agents had approached Sagar R Adani in the US and executed a judicially authorised search warrant. They took custody of Sagar Adani’s electronic devices and served him with a grand jury subpoena, informing him that he was the subject of an investigation.
The indictment notes that the following day, on March 18, 2023, “the defendant Gautam S Adani emailed himself photographs of each page of the search warrant executed and grand jury subpoena served on the defendant Sagar R Adani.”
Despite being aware of these investigations, the indictment alleges, “the defendants Gautam S Adani and Sagar R Adani not only concealed the bribery scheme from financial institutions and investors in the United States and elsewhere but also caused others to make false and misleading statements regarding their awareness and knowledge of the United States government’s investigation and its subjects”.
According to the indictment, in the days that followed the Bloomberg report, Gautam Adani and Sagar Adani allegedly directed others in the conglomerate to issue false and misleading statements about the company’s awareness of the investigation.
In connection with the same investigation, the US Securities and Exchange Commission filed two lawsuits – one against Adani Group executives and another against an executive of the investor in Azure Power. These documents clarify that three key executives of Adani Green Energy – Gautam Adani, Sagar Adani (Gautam Adani's nephew), and Vneet Jaain – are being investigated.
The bond offering
In the very month it denied any knowledge of an investigation against it to the Bombay Stock Exchange and the National Stock Exchange, Adani Green Energy had acknowledged that it had been exposed to anti-bribery inquiries in a bond offer document.
To facilitate its offering after the $409 million issue closed successfully, Adani Green had provided offering circulars to potential investors. These documents, designed to assist investors in making informed decisions, detailed the company’s operations, financial performance, and compliance policies.
Hidden in the fine print of the bond offer document was this statement: “AGEL, its operations and projects in India and its officers and/or personnel are subject to or exposed to present inquiries and investigations under the anti-bribery or anti-corruption laws of other countries (such as the US. Foreign Corrupt Practices Act).”
The offering circulars also warned investors about potential “risk factors”, including the possibility that employees could expose the company to liability under anti-bribery laws.
“We are subject to anti-corruption and anti-bribery laws that prohibit improper payments or offers of improper payments to governments and their officials and political parties for the purpose of obtaining or retaining business or securing an improper advantage and require the maintenance of internal controls to prevent such payments…” the circulars said.
While these warnings appeared comprehensive, they were misleading. They implied that the risk of bribery was hypothetical, ignoring the ongoing bribery scheme led by senior executives, including Gautam Adani and Sagar Adani.
The offering circulars also falsely claimed that Adani Green secured its renewable energy contracts through transparent and competitive tender processes: “We win our PPAs [power purchase agreements] through transparent and competitive tender processes conducted by the central and state governments of India.”
By detailing specific anti-bribery policies and governance measures, Adani Green sought to create the impression that it had effective safeguards in place.
In doing so, it was in violation of SEBI rules.
SEBI’s listing obligations and disclosure requirements (LODR) regulations – particularly Regulation 30 and Schedule III – require listed entities to disclose all material events or information that could impact investors or affect the company’s operations.
Additionally, SEBI’s rules explicitly prohibit false declarations. “No person shall indulge in a manipulative, fraudulent, or an unfair trade practice in securities.”
According to a report by The Morning Context, the Securities and Exchange Board of India is likely to investigate Adani Green Energy Ltd for allegedly making a false disclosure to Indian stock exchanges, as revealed by a person with direct knowledge of the matter.
SEBI has faced significant criticism over its handling of allegations against the Adani Group, particularly after the January 2023 report by Hindenburg Research accused the conglomerate of stock manipulation and accounting fraud.
Although SEBI initiated several investigations in response to these allegations, progress has been slow. This has raised questions about SEBI’s ability to effectively regulate and hold powerful corporate entities accountable.
Adding to these concerns are allegations of conflicts of interest involving SEBI chairperson Madhabi Puri Buch.
In August 2024, reports surfaced claiming that Buch and her husband held stakes in offshore funds linked to the Adani Group. These allegations, first highlighted by Hindenburg Research, have fueled speculation of potential bias in SEBI’s handling of Adani-related matters.
Although Buch denied any wrongdoing and stated that she had recused herself from Adani-related investigations, critics argue that her position within SEBI during these inquiries undermines the regulator’s impartiality.
The Lokpal has since sought an explanation from Buch regarding these allegations, emphasising the need for greater transparency and accountability in regulatory oversight.
The US indictment has amplified concerns over SEBI’s regulatory framework, with Opposition leaders urging the regulatory authority to demonstrate impartiality and rigour.
