Gautam Adani charged with paying Rs 2,200 cr bribe to Indian officials

New York/New Delhi, Nov 21: Billionaire Gautam Adani has been charged by US prosecutors for allegedly being part of an elaborate scheme to pay USD 265 million (about Rs 2,200 crore) bribe to Indian officials in exchange for favourable terms for solar power contracts.

The bombshell allegations, which Adani group denied saying it is innocent until proven guilty, may have a widespread fallout ranging from reputational risk to the conglomerate, inability to raise funds from the US market and the billionaire being forced to restrict his overseas travels to opening a political pandora's box that will give the Opposition another tool to target the government just as Parliament meets for the winter session, starting Monday.

Adani, India's second-richest man, and seven others, including his nephew Sagar, have been charged by the US Department of Justice with paying bribes to unidentified officials of state governments in Andhra Pradesh and Odisha to buy expensive solar power, potentially earning more than USD 2 billion in profit over 20 years.

Prosecutors said the US started an investigation in 2022. They alleged that the group raised USD 2 billion in loans and bonds, including from US firms, on the backs of false and misleading statements related to the firm's anti-bribery practices and policies as well as reports of the bribery probe.

According to the indictment, Adani Green Energy - the renewable energy arm of the group - in 2021 won a tender to supply 8 gigawatts of solar power to the government-owned Solar Energy Corporation of India. New Delhi-based Azure Power, whose officials too have been named along with former executives of Canadian public pension fund manager CDPQ in the case, won a similar 4 GW tender.

SECI was unsuccessful in finding buyers for the power at the prices contracted with Adani and Azure. Adani, in 2021 and 2022, met personally with government officials and offered them bribes to sign power sale agreements with SECI, according to the US Attorney's Office.

Following the promise of bribes, electricity distribution companies in Andhra Pradesh, Odisha, Tamil Nadu and Chhattisgarh entered into agreements with SECI.

The indictment alleges that Rs 25 lakh per megawatt was paid to an official of the Andhra Pradesh state government, after which the state agreed to purchase 7,000 MW (7 GW) of solar power from SECI. Odisha purchased 500 MW of power through the same route.

While the Adani group denied all charges and termed them baseless, it scrapped a USD 600 million bond issue by Adani Green Energy Ltd.

The issue was oversubscribed three times hours before the indictment.

"In light of these developments, our subsidiaries have presently decided not to proceed with the proposed USD-denominated bond offerings," Adani Green Energy said in a stock exchange filing.

Stating that it is innocent unless and until proven guilty, a group spokesperson said, "The allegations made by the US Department of Justice and the US Securities and Exchange Commission against directors of Adani Green are baseless and denied". The group said it will take all possible legal recourse.

Adani group stocks tanked in the Mumbai trade. Ten listed firms of the group lost about USD 26 billion (Rs 2.19 lakh crore) in market value -- more than double of what the conglomerate had lost when US short-seller Hindenburg brought out a damning report in January 2023.

Seizing on the allegations, the Leader of the Opposition in the Lok Sabha Rahul Gandhi demanded the arrest of Adani. Other opposition parties, including TMC, also attacked Adani over the allegations.