Corruption allegations against Gautam Adani, tied to an investigation by a New York prosecutor, have sparked political turmoil in India, with opposition leaders accusing Prime Minister Modi of protecting him. The Congress party criticizes regulatory inaction by Sebi, especially following past accusations of stock manipulation. Recent claims suggest substantial bribes were paid to secure solar contracts, leading to a significant drop in Adani’s market value and contract cancellations in Kenya. Adani denies all allegations.
Corruption Allegations Surrounding Gautam Adani Create Political Uproar
The ongoing corruption case against Gautam Adani in New York has ignited significant controversy in India. On Friday, the opposition accused Prime Minister Narendra Modi of shielding the billionaire from scrutiny. This outcry intensified, particularly due to the involvement of an American prosecutor in investigating the business operations of Adani’s conglomerate. Opposition leader Rahul Gandhi demanded Adani’s arrest and reiterated calls for the government to relieve the head of the financial market regulator from duty.
Concerns Over Regulatory Inaction and Previous Allegations
The Congress party has long criticized the Securities and Exchange Board of India (Sebi) for its lack of action regarding the Adani Group. They have pointed fingers at Sebi chairperson Madhabi Puri Buch, claiming she has failed to address the issues surrounding the conglomerate. This is not the first instance of controversy for the Adani Group; earlier in 2023, American investment firm Hindenburg Research accused them of egregious stock manipulation and accounting fraud, leading to a significant drop in the group’s stock value. Although the company managed to rebound, the fallout from the Hindenburg report still looms large.
In August, Hindenburg Research accused Buch of having a conflict of interest due to her and her husband’s financial ties with the Adani Group through offshore entities. The lack of transparency from Sebi regarding these allegations has further eroded public trust in the regulatory body.
The latest bribery allegations pose an even greater threat to the Adani Group’s reputation. The New York prosecutor’s office is reportedly armed with concrete evidence suggesting the Adani Group paid hefty bribes from 2020 to 2024 to sell overpriced solar energy in India. Additionally, the American Securities and Exchange Commission (SEC) has initiated a civil case against the conglomerate related to these claims.
On Thursday, the Adani Group suffered a staggering loss of $34 billion in market value. Its subsidiary, Adani Green Energy, found itself compelled to cancel a planned bond issuance in the United States. Furthermore, Kenya’s President William Ruto announced the cancellation of two billion-dollar contracts with Adani, which included operations at Nairobi’s airport and power line construction, a deal that has faced criticism for quite some time.
The Adani Group has firmly denied the corruption allegations stemming from New York. Initially, the Indian government opted for silence, with regulatory authorities refraining from immediate comments. However, the opposition remains convinced of the Modi government’s inability to impartially address the Adani situation, citing the Prime Minister’s close ties to billionaires like Adani as a longstanding concern.
Since Modi took office in 2014, he has focused on expanding infrastructure in India, with the Adani Group playing a pivotal role in these developments. The conglomerate employs around 45,000 individuals in India and manages 13 ports, seven airports, and the second-largest cement company in the nation. Adani is also the largest private sector player in electricity production, with substantial investments in renewable energy.
In June 2020, the Solar Energy Corporation of India (Seci) awarded the Adani Group a major contract to develop solar power plants with a combined capacity of 8 gigawatts. However, Seci struggled to secure buyers among state electricity companies for the costly solar energy. According to the New York indictment, the Adani Group allegedly resorted to bribing officials from these companies to secure the lucrative contract.
Reports suggest that a specific official in Andhra Pradesh received $228 million in exchange for agreeing to purchase 7 gigawatts of electricity from the Adani Group. This revelation has sparked speculation in India regarding the identity of this unnamed official. Notably, the opposition highlights that they governed Andhra Pradesh until a change of power in May, leading to suspicions that the bribe may have benefitted a member of the opposition.
Particularly under scrutiny is Jaganmohan Reddy of the YSR Congress Party, who led the Andhra Pradesh government until May. Reports indicate that Reddy had a personal meeting with Adani in September 2021. The New York indictment also references a meeting in that same month between Adani and the official who allegedly received the bribe. Reddy has acknowledged that his government reached an agreement to procure solar power, but clarified that the contract was with Seci, not directly with the Adani Group.