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The head of a $25 billion Indian energy company, the former CEO of a New York-listed energy company and one of Asia’s richest men will meet in New Delhi to discuss business.
In preparation for this meeting, Vneet Jaain CEO adani green energyphotographed a document with a mobile phone.
The document summarizes the amount owed by the Indian energy company, according to the U.S. Attorney’s Office for the Eastern District of New York. blue powerPreviously listed on the New York Stock Exchange for bribing Indian government officials.
U.S. prosecutors filed charges related to a massive bribery and fraud scheme in federal court in New York on Wednesday after seizing Jain’s cellphone and other electronic devices as evidence in a months-long investigation.
U.S. prosecutors have also accused Gautam Adani, India’s second richest man, of personally meeting with Indian government officials to advance their “bribery scheme.”
They accuse Indian officials of paying approximately $265 million in bribes to “incentivize” state-owned power distribution companies to purchase solar power from Adani and related companies at above-fair-market prices.
indictment It also describes a trail of evidence left behind by Adani and his top brass, such as briefing slides and spreadsheets. One document purportedly disclosed a $7 million payment to secure a 650-megawatt power purchase agreement and a $76 million bribe payment to secure a 2.3-megawatt contract.
Prosecutors also successfully obtained an arrest warrant for the billionaire from federal court.
Why did the US authorities get involved?
The 62-year-old billionaire and others are accused of misleading U.S. and international investors as they raised more than $3 billion to fund the energy contracts.
“The defendants allegedly orchestrated an elaborate scheme to bribe Indian government officials to obtain contracts worth billions of dollars, and Gautam S. Adani, Sagar R. Sagar R. Adani and Vneet S. Jaain lied about the bribery scheme while seeking to raise funds from the United States. U.S. Attorney for the Eastern District of New York.
FBI Assistant Director in Charge James Dennehy added: “Adani and other defendants also raised funds and defrauded investors based on false statements about bribery and corruption, while other defendants allegedly attempted to conceal bribes by obstructing government investigations. conspiracy.
The U.S. Securities and Exchange Commission also stepped in, saying the actions of Adani and two others were “A massive bribery scheme.”
“As part of the alleged scheme, Adani Green raised more than $175 million from U.S. investors, and shares of Azure Power were traded on the New York Stock Exchange,” the SEC said in a statement. statement Justify its jurisdiction and grounds for investigation.
Adani’s response?
An Adani Group spokesman said the DOJ and SEC charges against Adani Green Energy directors “baseless and denied”.
“The Adani Group has always adhered to and is deeply committed to maintaining the highest standards of governance, transparency and regulatory compliance in all jurisdictions in which it operates. We assure our stakeholders, partners and employees that we are a law-abiding organization and fully comply with All laws,” the spokesman told investors.
Azure Power said it continues to cooperate with U.S. authorities and that the employees named in the U.S. indictment no longer have any relationship with the company.
What impact does it have on Adani?
In addition to the sharp drop in stock prices, Adani Enterprises Although it lost nearly a quarter of its market capitalization, there were wider impacts.
Investors in Adani bonds also suffered sharp price drops after news of the indictment broke. There are also concerns about whether Adani will be able to raise debt in the U.S. market in the future.
Credit ratings agency Moody’s said in a statement that “bribery charges against Adani Group’s chairman and other senior officials have a negative impact on the creditworthiness of the group of companies.”
“In assessing the Adani Group, our primary focus is the group’s companies’ ability to access capital to meet their liquidity requirements and its governance practices.”
Adani Group was also forced on Thursday to withdraw a planned $600 million bond issuance.
Even ardent Adani believers appear to be reconsidering their support for the conglomerate.
GQG Partners tells investors it pumped $1.9 billion into Adani despite short-seller attacks in 2023 It is “to review emerging details and determine what, if any, appropriate actions will be taken with respect to our portfolio.”
The investment manager’s Sydney-listed shares also fell by a fifth on Thursday.
Wider impact and impact
The allegations against the Adani family could also damage foreign investor sentiment and threaten to accelerate capital outflows from India. Foreign institutional investors withdrew funds from local exchanges in October to a record high, and November is looking very similar.
“The U.S. bribery charges against Gautam Adani have put foreign investors at risk,” Raymond James chief market strategist Matt Orton told CNBC’s Tanvir Gill. The author’s considerations about India are more complicated.
“Although the 10% correction Playful Adani’s allegations provide investors with an interesting entry point into capital allocation and will have a significant impact on market sentiment. In an environment where the US continues to move higher, why are overall risks increasing in India now?
Orton added that despite broader negative sentiment, some Indian stocks remain attractive.
Investors are also worried about lenders exposed to Adani Green Energy, which is in the spotlight. An estimate by Citi analysts shows Indian banks will take on more than $15 billion in borrowings and mortgages, including state bank of india A large amount of debt was incurred.
Elsewhere, Singapore-based lenders DBS Group Previously disclosed nearly $1 billion in loans to other Adani companies. DBS declined to comment for this story.
But it’s not just investors and financial firms feeling the pinch. Indian regulators have also come under intense scrutiny over their ties to Adani.
“The FBI said (Adani) committed a crime. Why didn’t the Central Bureau of Investigation (India) say that? Why didn’t SEBI say that?” According to a CNBC translation report, questioning Indian opposition leader Rahul Gandhi, Refers to the Securities and Exchange Board of India (SEBI).
Earlier this year, the chairman of the stock market regulator Madhabi Buch, accused of conflict of interest According to short-seller Hindenburg, while investigating Adani Group Inc. Now, politicians are calling for her to be fired.
