The US Department of Justice has charged Gautam Adani, the founder of the Adani Group, his nephew Sagar Adani, and other senior Adani Green executives with bribing or offering bribes totalling $265 million to Indian state government officials in order to persuade them to sign solar power contracts. The company also raised money for the same projects in the US by promising to abide by anti-bribery laws. According to US federal securities law, this is fraud and might result in criminal penalties if proven.
In order to persuade their electricity distribution firms (discoms) to commit to buying solar power at prices higher than the going rates, Adani Green allegedly paid government officials in Odisha, Andhra Pradesh, and perhaps Tamil Nadu, Chhattisgarh, and Jammu and Kashmir (J&K). The purported bribes took place between the middle and the end of 2021. The Biju Janata Dal, YSR Congress, DMK, and Congress were in power in four of the aforementioned states, while the central BJP essentially ran J&K.
The Adani Group claimed to be completely in compliance with all laws and rejected the accusations as unfounded.
The Eastern District Court of New York’s US attorney’s office filed charges Wednesday evening Eastern time, alleging that senior executives of Adani Green and related companies “conspired to misrepresent the company’s anti-bribery practices” to US investors and foreign financial institutions between 2020 and 2024. Adani and others “hid” from the same investors, according to the indictment, their bribery of Indian government officials to get billions of dollars in funding for green energy projects, including the “corrupt solar energy supply contracts” for which they were soliciting bids.
The US Security and Exchange Commission (SEC) has simultaneously charged Adani and his nephew Sagar, the executive director of Adani Green, “for conduct arising out of a massive bribery scheme.” Based on “materially false and misleading” statements, it allegedly raised $175 million from US investors during the same period while “paying or promising to pay the equivalent of hundreds of millions of dollars in bribes to Indian government officials to secure their commitment to purchase energy at above-market rates.”
If convicted, the allegations could result in monetary fines and a ban on the defendants’ ability to hold positions as executives or directors of businesses subject to US exchange laws.
The US has made accusations that are based on a specific sequence of events. Adani Green profited from a central solar agency programme that offered a secured power purchase agreement in exchange for businesses producing solar production parts. Discoms didn’t want to purchase power at what were now above-market prices; therefore, this depended on the central agency and state discoms signing comparable power sales agreements. The main accusation is that Adani Green made false statements to American investors after bribing state discom officials to do so.
Cyril Cabanes of Azure Power Global Ltd., which the SEC describes as a company owned by two Canadian pension funds and established under Mauritius law that manufactures and sells solar power in India, has also been charged by US prosecutors and the SEC for allegedly enabling the authorisation of bribes and breaking the Foreign Corrupt Practices Act. Through the same solar plan, Azure had also gained relationships. Other Adani Green and Azure personnel, as well as its Canadian institutional investor, are listed in the DOJ indictment as allegedly participating in the scam in various capacities. Additionally, it accuses Azure staff members of plotting to thwart justice.
Please note that this is merely a tale of the accusations made by one side and does not provide a comprehensive analysis of the US charges based on a reading of the indictment and complaint. The various parties listed in the narrative, including Adani Green, Azure, state governments, and others connected to them, have not had an opportunity to comment, and none of these accusations have been validated in court. At this point, every claim is merely an alleged one, and the report only represents what is currently in the legal public domain.
US charges: Adani’s wrongdoing
The SEC complaint provides background information by placing the January 2015 launch of Adani Green against the Indian government’s declared objective of building 100 GW of solar energy production capacity by 2022. The company’s business plan involved creating, constructing, owning, running, and maintaining utility-scale grid-connected wind and solar farms. It made money by selling electricity to discoms and central government organisations through long-term fixed-price power purchasing agreements.
According to the SEC lawsuit, the company’s solar aspirations were “largely dependent on programs and economic incentives” put in place by the government-run Solar Energy Company of India (SECI). The SEC complaint claims that Adani Green and Azure Power profited from SECI’s manufacturing-linked incentive program, which encouraged a company to manufacture solar power parts in exchange for a formal promise to purchase a specific amount of power at a specific price.
Two-thirds of the projects went to Adani, while one-third went to Azure. However, an SECI guarantee of power purchase was not included in the contracts awarded in June 2020. According to the complaint, this depended on two things: first, SECI signed an agreement with the companies, and second, it entered into identical agreements with state discoms, whereby the discoms agreed to purchase power at those rates.
According to the US regulator, Adanis then bribed state officials to get them to sign agreements with SECI after discoms declined to enter into deals with SECI because the price SECI had promised the companies was higher than market rates. The US prosecution is predicated on the idea that Adani Green failed to disclose this to American investors, which is where the corruption occurred.
Where Indian states are involved
According to the SEC complaint, Gautam and Sagar Adani acquired agreements from discoms “by their involvement and promises to pay or payment of a total of hundreds of millions of dollars.” In order to persuade government authorities to purchase power, Adani executives “kept track of the bribes, creating and maintaining multiple records of bribes.” The grievance then provides particular instances.
It claims that “a payment of hundreds of thousands of dollars was paid or promised to government officials” in Odisha “to cause Odisha to enter into a power supply agreement with SECI,” according to Adani Green’s internal documents. Odisha’s grid authority announced in July 2021 that it will purchase 500 MW of power capacity from SECI, which had already announced its first power supply agreement. Naveen Patnaik was the chief minister of Odisha at the time.
In August 2021, Adani allegedly met the Andhra Pradesh chief minister in person, who was then Jagan Mohan Reddy, according to the US regulator’s complaint (the indictment only names the Andhra official Adani met as foreign official 1, a “high ranking government official of Andhra Pradesh”). According to the complaint, Adani paid or threatened to pay $200 million to Andhra government officials “at or in connection with the meeting” (the indictment states that the payment was $228 million to “foreign official 1”), which was “by orders of magnitude” more than bribes given to Odisha authorities. Andhra soon declared its intention to purchase 7000 MW of generating capacity from SECI.
The DOJ indictment claims that in addition to Odisha and Andhra, the discoms of J&K (then governed by lieutenant governor Manoj Sinha and essentially under central control), Chhattisgarh (under Bhupesh Baghel), and Tamil Nadu (under MK Stalin) signed power supply agreements with SECI between July 2021 and February 2022, “following the promise of bribes to Indian government officials.”
According to the accusation, both Gautam and Sagar Adani separately demanded payment from Azure, which had secured one-third of the contracts, for their portion of the bribe. The deals would also benefit Azure because SECI would buy power capacity from Azure and resell it to discoms. According to the complaint, Gautam Adani described how he bribed state government officials in India to get them to sign power supply deals. Azure made amends in part by giving Adani Green the portion of the power it had to sell to SECI in relation to Andhra.
The assurance from the American side
The SEC claims that the Adani Group was making progress on the funding front at the same time in August 2021. The management committee of Adani Green approved its request to raise or borrow $750 million “via the issuance of debt securities, i.e., notes.” Adani Green conducted a roadshow at the end of the month to market the bonds to US investors as “green bonds” that were intended to finance “eligible green projects.”
The main charge from the SEC is that Adani Green made “materially false and misleading” claims in the offering circulars that it had followed all the rules, including the anti-bribery rules, while not saying how it got the contracts, which was through bribery, even though it knew it had to. “Adani Green would offer and sell the notes based on a misleading portrayal of Adani Green’s core business, which both Gautam Adani and Sagar Adani intended or carelessly ignored.”
US regulators have a locus standi in the dispute because Adani Green offered $175 million of the bonds to US investors. Therefore, the SEC lawsuit centres on Adani Green’s assertion to these note buyers/investors that the firm was a leader in excellent corporate governance and that no director or officer had paid bribes, planned to pay bribes or attempted to influence officials improperly.
In the core of the case, the SEC charge states that “none of this was true…Defendants were personally involved in paying or promising the equivalent of hundreds of millions of dollars in bribes to Indian state government officials to induce Indian state governments to enter into contracts necessary for Adani Green to develop India’s largest solar power plant project, from which Adani Green stood to earn billions of dollars.”
In a move that could effectively bar the two Adanis from participating in US companies that raise capital and go public, the SEC has asked the court to order defendants to pay civil money penalties and to forbid them from ever serving as directors or officers in a company that has a class of securities under the Exchange Act Section.
According to the indictment, Adani and others “induced investors to purchase bonds and financial institutions to lend money pursuant to terms and at prices that did not account for the true risk” involved in the transaction by making “false statements, misrepresentations, and material omissions.”
How Things Fell Apart
In general, this is what the court filings seem to indicate, although neither the indictment nor the complaint provides a precise timeline of how the plan was discovered or the sources that were employed.
Adani Green’s CEO, Vneet Jaain, who is also charged in the indictment, snapped a picture in April 2022 in order to be ready for a meeting that included information about how much Azure owed Adani for its portion of the payments (about $83 million). One employee, who was also charged, created a PowerPoint presentation on “which corrupt option was best,” as the accusation stated, following lengthy conversations about the many ways Azure could reimburse Adani for the bribe. These are the purported discussions that resulted in Azure giving Adani its Andhra rights.
Communication between the many Adani Green and Azure personnel implicated in the scam included “electronic messaging,” some of which took place while some of the participants were in the United States.
Following the SEC’s inquiry, Azure staff members and its institutional investor conspired to “suppress documents, conceal information, and profile false information” in order to “obstruct, influence, and interfere” with government investigations.
Five of these defendants, representing Azure and related businesses, devised a scheme in August 2022 to accuse Adani of conspiring to pay the bribes while concealing their involvement.
FBI detectives approached Sagar Adani in March 2023, took his electronic devices into custody, told him and Gautam Adani about the investigation, and served a subpoena to the grand jury. According to the indictment, Adani Green made “false and misguiding statements” regarding its anti-bribery policies in later company releases. In remarks to the market, regulators, financial institutions, and the media, it charges Gautam and Sagar Adani with making false claims regarding their knowledge of the SEC inquiry.
Sagar Adani’s mobile might have been a major source of the evidence. According to the indictment, he tracked the specifics of bribes promised and offered using notes on his mobile. Among other things, these notes contained the names of the states, the precise sum paid to authorities, the quantity of power that Discom would buy, the bribe proposed per megawatt, and the titles of government officials.
The strategic and political weight of Adani
One of the wealthiest, most influential, and most divisive businessmen in India, Adani has holdings in a variety of industries, including ports, airports, coal trade, renewable energy, power, and defence. Pro-government voices in India portray the Adani group, which has a market value of more than $200 billion, as a national champion who has improved Indian infrastructure at home and increased the nation’s economic influence abroad. Opposition voices, on the other hand, blame the group’s rise on Adani’s alleged closeness to Prime Minister Narendra Modi, their shared Gujarati past, and outright patronage, calling it an instance of “crony capitalism.” Adani’s role was the subject of political accusations and denials during the Lok Sabha elections and the just-finished Maharashtra state assembly elections.
In the US, the group’s interactions with the market and the government have been conflicting. The Adani company has teamed up with the US Development Finance Corporation, an official body that aims to thwart China’s infrastructure development, on a port project in Sri Lanka.
A collection of accusations made against the group by Hindenburg Research, a US market short seller, caused a sharp decline in its market value last year and prompted an investigation by Indian regulators. The head of the Security and Exchange Board of India, a prominent Indian regulator, has been accused of having a conflict of interest in the group in more recent accusations.
Although the Adani group has previously refuted every accusation, the current charges could be the biggest threat to the company’s and its founder’s integrity. Congratulating Donald Trump on his victory in the presidential election, Adani has called him a man of “unbreakable tenacity, unshakeable grit, relentless determination, and the courage to stay true to his beliefs.” Adani has also pledged to invest $10 billion in US “energy security and resilient infrastructure projects” in order to generate 15,000 jobs. It’s unclear if Adani needs Trump, but in order to get through this crisis, Adani might require all of the strength-related traits he said he appreciated in Trump.
