Why Adani charged in US for alleged bribery in India

Indian billionaire Gautam Adani is accused of bribing Indian government officials to the tune of hundreds of millions of dollars, but why is he being charged in the United States and not in India? He is wanted in the US because he raised hundreds of millions of dollars in America at the same time, allegedly misleading US investors that his company was not involved in bribery or corruption.

US law allows federal prosecutors to pursue foreign corruption allegations if they involve certain links to American investors or markets, says Bloomberg.

In a major blow to one of India’s most powerful business figures, US prosecutors have indicted billionaire Gautam Adani and seven others in an alleged scheme to pay over $250 million in bribes to Indian officials. The alleged payoffs were to secure solar energy power supply contracts that would have generated $2 billion in profits over 20 years.

Arrest warrants for Ambani and nephew

Arrest warrants have been issued in the US for both Adani and his nephew Sagar Adani, an executive director at Adani Green Energy.

They and six others were charged with bribery and fraud related to renewable energy projects in India that benefited Adani Green and another Indian company, Azure Power, which was listed on the New York Stock Exchange until late 2023.

Gautam Adani, currently India’s second-richest person with a net worth of $69.8 billion according to Forbes, becomes one of the few billionaires to face formal criminal charges in the United States.

Why charged?

The prosecutors allege that the Adonis and former Adani Green Energy CEO Vneet Jaain raised over $3 billion in loans and bonds while concealing their corrupt activities from lenders and investors, reports Reuters. The US Securities and Exchange Commission has filed parallel civil charges.

The SEC specifically pointed to a September 2021 note offering by Adani Green that raised $750 million, with approximately $175 million coming from US investors. The offering materials allegedly contained “materially false or misleading” statements about the company’s anti-corruption efforts.

Other foreign businessmen and companies have been prosecuted in America in the past. Odebrecht SA, a Brazilian construction company, admitted to paying nearly $800 million in bribes to public officials in 12 countries, including Ecuador, and was ordered to pay $2.6 billion in fines by a US judge in 2017. In October 2024, Siemens Energy agreed to pay $104 million to settle an investigation with US authorities after it used stolen trade secrets to inflate bids for contracts five years ago, reported Reuters.

Adani Group denies allegations

However, Adani Group has strongly denied the allegations, stating they were “baseless” and vowing to pursue “all possible legal recourse.”

The conglomerate reeled under the US charges on the stock market.

Adani Group firms lost $34 billion in market value on Thursday (Nov 21), reducing the combined market capitalisation of the conglomerate’s 10 companies to $147 billion, reports the BBC. Adani Green Energy, the firm at the centre of the allegations, also said it wouldn’t proceed with a $600 million bond offering.

The charges mark an enormous setback for Asia’s second richest man just as his businesses were recovering from the blow dealt by short-seller Hindenburg Research’s January 2023 report that alleged improper use of offshore tax havens by Adani Group. The group’s market value has significantly declined from its pre-Hindenburg level of $235 billion.

Political controversy in India

The case has reignited political controversy in India, with the opposition Congress party renewing calls for a parliamentary investigation into the Adani Group. Indian Prime Minister Narendra Modi’s administration has previously faced accusations of favouring Adani, though both Modi and Adani have denied any impropriety.

Adani’s fortunes have become inextricably bound with India’s. As the New York Times says, “Over the past 10 years, he has become in effect an extension of India’s government. His conglomerate, Adani Group, builds and buys ports, factories and power plants, often under state contract or licence. It operates airports. It even owns a TV news channel.

“Mr Adani’s business empire has become central to India during the rise of Narendra Modi, first elected as prime minister in 2014.

“As Mr Modi brought India to the centre of the world stage, he brought Mr Adani in tow. Today, Mr Adani’s flagship company is worth about 10 times what it was at the start of the Covid-19 pandemic.”

Adani’s business empire

Adani, the country’s leading infrastructure tycoon, operates 13 ports (30% market share), seven airports (23% of passenger traffic), and India’s second-largest cement business (20% of the market), reports the BBC. With six coal-fired power plants, he is India’s largest private player in power and also runs an 8,000-km-long natural gas pipeline. He employs over 45,000 people, but his businesses impact millions nationwide.

His business interests range from Sri Lanka to Australia, Indonesia to the United Arab Emirates. What’s more, though probed by US investigators, the conglomerate plans to invest $10 billion in energy and infrastructure projects in the US. Adani promoted the deal in a post on the X social media platform where he congratulated Trump on winning the presidential election.

How the charges brought against Adani during the last days of the Biden administration are proceeded with once Trump becomes President in January next year remains to be seen.

Repercussions

The US charges have already had repercussions abroad. The Kenyan government on Thursday scrapped its airport and energy deal with the Adani Group, hours after Adani was indicted in New York.

Modi will find it difficult to distance himself from the latest Adani controversy, according to Bloomberg.

Modi and the BJP were largely unaffected when Adani was accused of wrongdoing by Hindenburg.

But after national elections earlier this year, when the BJP lost its majority, Modi will confront an emboldened opposition ready to exploit the controversy to damage his reputation, analysts said.