Gautam Adani faces charges for securities law violations, Adani Green says

Indian billionaire Gautam Adani and his nephew Sagar Adani have been charged in the United States. They are accused of violating securities laws. Adani Green Energy, a company owned by the Adani Group, has said that Gautam Adani and Vneet S. Jaain might face penalties. But, they are not charged with bribery under the Foreign Corrupt Practices Act (FCPA).

The US authorities say the Adani Group paid $265 million in bribes to get power contracts in India. They also claim the group misled US investors. The indictment says the Adanis and others worked together to break the FCPA and obstruct justice.

The Adani Group denies these claims, calling them baseless. They plan to fight back legally. Since the US indictment, the group’s market value has dropped by nearly $55 billion.

Key Takeaways

• Gautam Adani and Adani Green Energy’s managing director Vneet S. Jaain face potential civil monetary penalties in the US for securities law violations.
• The US authorities accused the Adani Group of a $265 million bribery scheme to secure power contracts in India and misleading US investors.
• The Adani Group has denied the charges as baseless and plans to seek legal recourse.
• Adani Group companies have lost approximately $54 billion in market capitalization since the US indictment.
• The case has led to disruptions in the Indian Parliament, with the Congress accusing the Modi government of aiding Adani in cover-ups.

Criminal Charges and Legal Implications

Gautam Adani, Sagar Adani, and Vneet Jaain face serious charges. They are accused of securities fraud conspiracy, wire fraud conspiracy, and securities fraud. The US Department of Justice’s indictment does not accuse them of violating the Foreign Corrupt Practices Act.

Securities Fraud Conspiracy Details

The indictment says there was a $265 million bribery scheme. It aimed to get big solar power contracts in India. The executives are accused of lying about anti-bribery practices to get financing.

They also made false statements to investors for over $2 billion. They hid their corrupt actions through emails and document destruction.

Civil Case and SEC Involvement

The US Securities and Exchange Commission (SEC) has also filed a civil complaint. It accuses the Adani Group of violating the Securities Act of 1933 and 1934. The defense team, led by Mukul Rohatgi and Mahesh Jethmalani, says the indictment doesn’t name any bribe recipients.

They claim there’s no crime against the Adanis or Adani Green Energy Limited.

Legal Defense Strategy

The Adani Group believes the charges are unfounded and is fighting back legally. In response, some Adani subsidiaries have delayed US dollar-denominated bond offerings. The defendants are considered innocent until proven guilty, as the US justice department states.

“The scheme involved paying over $250 million in bribes to Indian officials between 2020 and 2024 to secure renewable energy contracts projected to generate over $2 billion in profits after tax.”

Market Impact and Financial Consequences

The Adani Group’s legal troubles have hit its market and finances hard. Since the U.S. Department of Justice’s (DOJ) indictment, its market value has dropped by about $54 billion. This shows investors’ worries and the market’s reaction to the news.

International credit rating agencies like Moody’s and Fitch have downgraded several Adani companies. This could lead to higher costs for capital and less access to funds. For example, Adani Green Energy had to cancel a $600 million debt raising, even though it was oversubscribed.

The legal issues have also made the group review its partnerships. French oil major TotalEnergies has stopped new investments in Adani companies. The U.S. International Development Finance Corporation is thinking twice about a $550-million loan to an Adani-led group. Investment firm GQG Partners has seen its Adani Group holdings lose value, and U.S. investment bank Jefferies is reevaluating its ties to the conglomerate.