US VS Adani: Adani in spotlight again

It has came into light that the Indian Adani Group run by Gautam Adani is involved in a rather large-scale legal dispute with the agencies of the United States where the latter accused former of bribery, securities fraud, and other corporate crimes. This has stemmed from solar energy sector in India and has provided a rich background for corporate law and governance, international law and renewable energy goals and objectives.

The Core Allegations

The centre of a crisis in the company at the moment is a 250 million bribery scheme that was provided by Adani and his companions during 2019-2020. The bribes were allegedly to facilitate Indian government official to obtain PPAs for the SECI. These contracts allowed Adani’s group to secure high margin solar energy contracts despite having difficulty in identifying states who would agree to pay the fixed prices.

Adding fuel to this fire, the Adani Group is accused of concealing these actions from US investors even as they sought money through American equity and debt markets. The company has also been accused by prosecutors of trying to conceal investigations by way of deleting files and as well providing the SEC and the FBI with information that was false.

Breaking the Law and Its Consequences

The American government has also had a series of arrest warrants out on prominent members of the company such as Gautam Adani, and his nephew Sagar Adani. These charges have posed a serious blow to the Adani Group, which has had to cancel a $600 million bond issue in the U.S. it has lost its international image. The Broader Impact this case has its positive implications. For India it highlights the issues that the country might face in terms of maintaining the transparency within ambitious renewable energy programmes. On an international relevance, it elicits questions as to the ethical standards corporations especially those trading internationally will embrace particularly when operating in the financial market.

In reply, Adani has dismissed the allegations labelling them as political manufactured lies. But the case has once again brought focus on the conglomerate especially after allegations made by short-seller, Hindenburg Research in the early months of the year.

Root Causes and Lessons

The genesis of this legal complexity is initially couched in the interplay of renewable energy investment and governance failure. Because SECI failed to find buyers for expensive solar power, the alleged space was filled by large companies. In that perspective, the case becomes quite symbolic – a message to governments and to corporations that they must ensure they have proper compliance and fight against corruption – or else.

Thank you.

 Regards,

Mayuresh Anjarlekar,

Kautilya, IBS Mumbai.