Gautam Adani, nephew Sagar not charged with bribery, but with fraud: Adani Green clarifies amid US DoJ indictment

Adani Green Energy said reports claiming that Adani and co have been charged with FCPA violations 'are incorrect'. 'These directors have been charged on three counts in the criminal indictment, namely (i) alleged securities fraud conspiracy, (ii) alleged wire fraud conspiracy, and (iii) alleged securities fraud,' the company clarified.

New Delhi: Billionaire Gautam Adani, and his nephew Sagar have not been charged with any violation of the US Foreign Corrupt Practices Act (FCPA) in the indictment that authorities filed in the New York court in the alleged bribery case, the Adani Group said on Wednesday.

They have been charged under securities fraud that involves levy of monetary penalties.

Gautam Adani, founder chairman of the ports-to-energy conglomerate, his nephew Sagar, and another key executive have been charged by the US Department of Justice of being part of an alleged scheme to pay $265 million bribes to Indian officials to win contracts for the supply of solar electricity that would yield $2 billion profit over a 20-year period.

In a stock exchange filing, Adani Green Energy Ltd -- which is at the centre of the bribery allegations -- said reports saying the three have been charged with FCPA violations "are incorrect".

They are charged for offences that are punishable with a monetary fine or penalty.

"Gautam Adani, Sagar Adani and Vneet Jaain have not been charged with any violation of the FCPA in the counts set forth in the indictment of the US DOJ or civil complaint of the US SEC.

"These directors have been charged on three counts in the criminal indictment namely (i) alleged securities fraud conspiracy, (ii) alleged wire fraud conspiracy, and (iii) alleged securities fraud," it said.

Adani Group has denied all allegations as baseless and said it will take all possible legal recourse to defend itself.

The United States Department of Justice (US DoJ) and the United States Securities and Exchange Commission (US SEC) have issued a criminal indictment and brought a civil complaint in the US District Court for the Eastern District of New York, against Gautam Adani, Sagar Adani and Vneet Jaain -- all directors of Adani Green Energy Ltd.

"The indictment does not specify any quantum of any fine/penalty," the company said.

The civil complaint alleges that the executives violated certain sections of the Securities Act of 1933 and the Securities Act of 1934, and to have aided and abetted Adani Green Energy's violation of the Securities Act of 1933 and the Securities Act of 1934.

"Although the complaint prays for an order directing the defendants to pay civil monetary penalties, it does not quantify the amount of penalty," it added.

DoJ has alleged that between 2020 and 2024, senior executives of Adani Green, Azure Power, and CDPQ (Caisse de dépôt et placement du Québec -- a Canadian institutional investor and Azure's largest shareholder) participated in a scheme to bribe Indian government officials to ensure the execution of lucrative solar energy supply contracts with Indian government entities.

During the same period, senior executives of Adani Green conspired to misrepresent the company's anti-bribery practices (to US-based investors and international financial institutions) and concealed from those investors and institutions their bribery of Indian government officials to obtain billions of dollars in financing for green energy projects, including the corrupt solar energy supply contracts, the DoJ stated.

Of the five counts in the US DoJ's indictment, Adani and two other executives have not been charged in Count 1 (appearing on Page 42 of the US DoJ's Indictment), which the DoJ describes as "Conspiracy to violate FCPA".

Those charged in Count 1 are Ranjit Gupta, Cyril Cabanes, Saurabh Agarwal, Deepak Malhotra, and Rupesh Agarwal.

Adani and his executives have also not been charged in Count 5 (appearing on Page 51 of the US DoJ's Indictment), which the DoJ describes as "Conspiracy to obstruct justice".

Those charged in Count 5 are Cyril Cabanes, Saurabh Agarwal, Deepak Malhotra and Rupesh Agarwal.

Since Gautam Adani, Sagar Adani and Vneet Jaain have not been charged with Counts 1 or 5 (Conspiracy to violate FCPA and Conspiracy to obstruct justice, respectively), they cannot be charged by US authorities on Counts 2, 3 or 4 (Securities fraud conspiracy, wire fraud conspiracy and securities fraud, respectively).

Stock Decline

The Adani Group companies have lost about $54 billion in market capitalisation since the US indictment.

Credit Rating Downgrades

International credit rating agencies, including Moody's and Fitch, have downgraded their outlook on several Adani firms.

Despite receiving an order book of $2 billion for $600 million green bonds, Adani Green Energy Ltd withdrew those bonds to safeguard the investors from potential Mark-to-Market Loss. The DOJ indictment appeared exactly on the day, AGEL launched its bonds.

International Partnerships and Investments

• TotalEnergies: The French oil major has halted new investments in Adani firms, citing the bribery charges as a significant concern. TotalEnergies holds investments in Adani Green Energy and Adani Total Gas, and this announced pause indicates a cautious approach amid the legal uncertainties.

• US International Development Finance Corporation: The DFC has announced that it is reviewing its $550-million port development loan to the Adani-led consortium developing CWIT, a container terminal in Colombo Port. The agency says it is assessing the implications of the indictments on the project's integrity and compliance.

• GQG Partners: The investment firm has suddenly faced financial setbacks due to its substantial holdings in Adani companies. Shares in GQG Partners have declined sharply, and while the firm has publicly declared its confidence in the Adani Group's resilience, it might nevertheless be compelled to review its investments in Adani in light of the legal developments.

• Jefferies: The US investment bank, which has been a significant supporter of the Adani Group, is reconsidering its relationship with the group following the bribery charges. This reassessment reflects concerns over reputational risks and compliance issue.