With the US federal courts charging Gautam Adani and others with bribing Indian government officials for winning renewable energy contracts and raising funds in the US to fund these, the Adani Group is once again in the limelight for all the wrong reasons. Coming from high-level US legal authorities, the charges, which claim bribes worth $250 million were paid out to Indian government officials, are very serious. The Adanis are absolutely right in quickly quoting the US Department of Justice as saying that the charges in the indictment are allegations and the defendants are presumed innocent unless and until proven guilty. But it’s also a fact that they deserve to be investigated thoroughly in India too. In fact, the scope of the probe should be widened to contracts for other projects that the group has won. After all, the officials, who were reportedly beneficiaries of the projects awarded to the Adani Group, were not just limited to Solar Energy Corporation of India (SECI) but also included office-bearers from state governments with whom agreements for drawing power were being signed.
Indian citizens are surely entitled to know whether the bribes were passed on to others and whether SECI was merely a conduit. The allegations are bound to have wider ramifications for the Adani Group, which borrows heavily in the overseas bond markets, and will hurt its credibility. With lenders likely to become more cautious, the groups’ heavily leveraged balance sheet could be further strained. The bigger question is what the episode will do to tarnish the reputation of India Inc and whether it would have an adverse fallout on companies that tap the international markets.
The corruption allegations are being pursued by the US courts because they are linked to American investors or market — under the Foreign Corrupt Practices Act. Indeed, the list of offences, provided in the very detailed court order, is damning. The US courts have indicted Adani and others not just for paying bribes but also for concealing the bribery from the US government and obstructing an investigation by the Federal Bureau of Investigation and by the Securities and Exchange Commission. The court documents note that some of the co-conspirators involved in the bribery scheme, “agreed with each other and others” to destroy and suppress evidence — documents and communications — and also to “provide false information” to the US government. Moreover, in what has been described as wire fraud and securities fraud schemes, Adani and others have been accused of making false statements and also withholding material facts to investors and lenders, among others, while transacting for fund-raises for the power projects in the US. This effectively amounted to providing “misleading” information, the courts said. The money raised was sizeable and included over $2 billion of dollar-denominated bank loans from international financial institutions and US-based asset management companies.
At the start of the year, the Supreme Court had rejected a demand for transferring the Adani-Hindenburg case to the Central Bureau of Investigation (CBI), reposing faith in the capital market regulator’s competence to deal with such cases. If the ruling National Democratic Alliance government, often charged with backing the Adani Group unfairly, wants to redeem itself, it must be willing to order a CBI probe. The process in the US will take its time but it would be a shame if we do not take the initiative to get to the bottom of the matter.