Adani bribery scandal | Modi govt's failure to investigate sends wrong signal to corporate India

An independent investigation by Parliament into the Adani bribery issue seems increasingly doubtful. Division within the Opposition and the nonchalance of the government makes the demand for a Joint Parliamentary Committee (JPC) on the issue unlikely to succeed.

The indifference of the Trinamool Congress (TMC) to the Adani investigation may be better understood against the Adani Group’s promise to invest Rs10,000 crore in West Bengal over 10 years. With Adani’s investments in West Bengal expected to create 25,000 direct and indirect jobs, why will TMC chief Mamata Banerjee want to disturb the goose that lays golden eggs?

The Samajwadi Party (SP)’s reluctance is harder to explain. Its argument is that communal violence in Sambhal is a more important concern for their voters.

Meanwhile, anonymous Congress Lok Sabha MPs are reportedly saying that the party’s protests in Parliament on the Adani bribery issue have no resonance with the common man. The proposed debate on the Constitution in the Lok Sabha has provided the Congress with the face-saver that it will be an opportunity to address the Adani indictment as well.

The states where officials were promised or received bribes — Andhra Pradesh (then ruled by the YSR Congress), Odisha (Biju Janata Dal), Tamil Nadu (Dravida Munnetra Kazhagam), Chhattisgarh (Congress), and Jammu and Kashmir (central rule) — have not ordered inquiries into who received a share of the $265 million bribe in their jurisdiction.

The Congress ruled Chhattisgarh at the time when the state discom signed a power supply agreement with the Solar Energy Corporation of India (SECI) to buy Adani supplied electricity at high rates. Yet neither the Congress nor Rahul Gandhi, its most-voluble champion for inquiry into the Adani indictment, have begun an internal inquiry into the possible involvement of its party leaders.

However, the Telugu Desam Party (TDP)-led government in Andhra Pradesh, has announced that it will ‘assess the situation’ of ‘government officials’ who were allegedly promised or received Rs 1,750 crore in bribes. According to media reports it is exploring options including termination of the agreement with SECI citing concerns over integrity. Other states have taken refuge behind the plea that they only dealt with the SECI and not with Adani, and the bribery allegations were ‘false’.

The conduct of the SECI, at the centre of the power supply negotiations between the states and Adani’s companies, is most puzzling of all. The SECI is a fully-owned public sector unit (PSU) under the Ministry of New and Renewable Energy. It says that it has not received any documents about the Adani indictment, and that it is unsure whether any of the company’s ‘covenants’ have been violated.

If not a ‘covenant’, then the sequencing of supply and demand has been violated — the SECI buying power from the Adani companies without ensuring the availability of buyers.

The Narendra Modi government has washed its hands off the issue saying that the bribery charges against Adani are a ‘legal matter involving private individuals and private entities and the US Department of Justice’.

This is an insincere position given that Indian governments have earlier taken action against companies indicted by the US for paying bribes in India. The cases of Louis Berger and Cognizant are immediate precedents.

In the Louis Berger case, the New Jersey-based firm self-admitted to the US authorities that it had paid bribes worth $3.9 million to officials in India, Indonesia, Vietnam, and Kuwait to win business contracts. Despite Louis Berger settling in the US for a penalty of $17.1 million, India also ordered inquiries into the allegations by the Enforcement Directorate (ED) against two former Congress chief ministers of Goa, Churchill Alemao and Digmabar Kamat named in the US indictment.

The Central Bureau of Investigation (CBI) also began investigations in Assam against officials of the Tarun Gogoi-led Congress government alleged to have received bribes of Rs 6 crore from Louis Berger between 1998 and 2010. Himanta Biswa Sarma as the minister in-charge of the Guwahati Development Department oversaw the three water supply projects in question. Gogoi and Sarma blamed each other.

The government also proactively investigated allegations of bribes and favours in the Cognizant-Larsen & Toubro case. The US indictment was for bribes amounting to $770,000 in India paid through L&T to secure contracts in Tamil Nadu and Maharashtra. A Maharashtra court ordered the Anti-Corruption Bureau to file cases against Cognizant, L&T and unknown government officials for accepting bribes between 2013 and 2014.

These precedents show that the Indian government can hold investigations of its own on those grounds of polluting India’s business environment and influencing sub-optimal policy decisions. However, unlike Cognizant and Louis Berger, the Adani companies have not admitted their guilt.

In the US, Gautam Adani, his nephew Sagar Adani, and executive Vineet Jain have been criminally indicted with other Indian citizens and some Canadian executives of a pension fund CPDQ and Azure Power under securities fraud conspiracy, wire fraud conspiracy, and securities fraud. The three of them have been excluded only from Foreign Corrupt Practices Act (FCPA) violations.

Irrespective of what happens in the US courts, it is incumbent on the Indian government to investigate the impact of the indictment on Indian businesses and policy making within the country, especially of the SECI and the concerned state discoms. Otherwise it will lead to reputational loss for Indian corporates and impact their ability to raise capital in the US.

The Securities and Exchange Control Board of India (SEBI) is apparently ‘examining’ the fresh US allegations against the Adani companies for not sharing critical market-sensitive information of the US federal investigation against the group’s companies. A violation could lead to monetary fines and civil cases against the company.

However, SEBI’s ongoing investigation of disclosure violations by the Adani Group in the Hindenburg case is yet to be completed. It has, apparently, not even issued notices to the Adani Group in any of the 24 investigations (of which 22 are apparently complete and two are ongoing).

In short, there is little chance of any Indian investigation against the most influential corporate conglomerate in India. Indian businesses are likely to only learn the wrong lessons from the Adani bribery indictment.

(Bharat Bhushan is a New Delhi-based journalist)