By Aditya Kalra and Sumeet Chatterjee
NEW DELHI (Reuters) – Indian billionaire Gautam Adani has been charged by U.S. prosecutors for his alleged role in a $265 million bribery scheme, plunging his conglomerate into deep crisis for the second time in two years.
Multiple fraud charges brought against Adani, one of the world’s richest people, and seven other defendants sent stocks and bonds of Adani’s companies tumbling on Thursday. Adani Green Energy (NS:), the company at the center of the accusations, also canceled a bond sale worth $600 million.
Arrest warrants have been issued for Adani and his nephew Sagar Adani, and prosecutors plan to hand those warrants over to foreign authorities, court records show.
The charges follow major upheaval for the Adani Group last year after short seller Hindenburg Research issued a report accusing it of inappropriately using offshore tax havens, something the company has denied.
US federal prosecutors said the defendants agreed to pay bribes to Indian government officials to obtain contracts that were expected to generate $2 billion in profits over 20 years and develop India’s largest solar power plant project.
They also said Adanis and another Adani Green Energy executive, former Adani Green Energy CEO Vneet Jaain, raised more than $3 billion in loans and bonds by hiding their corruption from lenders and investors.
All three were charged with securities fraud, securities fraud conspiracy and wire fraud conspiracy. The Adanis were also charged in a parallel U.S. Securities and Exchange Commission (SEC) civil case.
“Gautam and Sagar Adani participated in the bribery scheme during an Adani Green note offering in September 2021 that raised $750 million, including approximately $175 million from U.S. investors,” the SEC said in a news release.
“The SEC’s complaint against Gautam and Sagar Adani accuses them of violating the anti-fraud provisions of the federal securities laws. The complaint seeks permanent injunctions, civil penalties and disqualifications for officers and directors,” it added.
Adani Group representatives did not respond to repeated requests for comment. Indian authorities, including the Securities and Exchange Board of India (SEBI), also did not respond to requests for comment on the US allegations.
Shares of Adani Green Energy plunged 17% and shares of many other companies in the conglomerate lost more than 10%. The group lost $28 billion in value in trading on Thursday, putting the combined market capitalization of its companies at $141 billion. Before last year’s Hindenburg report, the group’s market value was $235 billion.
Adani dollar bonds plunged, with prices down 3 to 5 cents on bonds for Adani ports and the Special Economic Zone.
‘NUMBER ONE’, ‘THE GREAT MAN’
Prime Minister Narendra Modi’s administration has been accused by political opponents of favoritism toward Adani in government decisions. Modi and Adani, both from the western state of Gujarat, denied wrongdoing.
On Thursday, India’s Congress Party reiterated calls for a parliamentary inquiry into the Adani Group’s alleged irregularities. SEBI is conducting an investigation following the Hindenburg report.
Criminal charges unsealed by the U.S. Attorney’s Office for the Eastern District of New York showed that some conspirators privately referred to Gautam Adani by the code names “Number One” and “the Big Man,” while Sagar Adani allegedly used his phone. cell phone to track specific details about the bribes.
Five other defendants were charged with conspiring to violate the Foreign Corrupt Practices Act, a U.S. anti-bribery law, and four were charged with conspiring to obstruct justice.
None of the defendants are in custody, said a spokesman for U.S. Attorney Breon Peace in Brooklyn. Gautam Adani is believed to be in India.
Gautam Adani is worth $69.8 billion according to Forbes magazine, making him the second richest man in India after Mukesh Ambani. He is one of the few billionaires formally charged in the United States with criminal offenses.
Shares in GQG Partners, an Australian-listed investment firm that is a major backer of Adani, fell 20%, its biggest one-day drop since it went public three years ago. It said in a statement that it was monitoring the charges.