News / Adani Group chiefs accused of using bribery to win solar energy deal

Gautam Adani

India’s port infrastructure behemoth Adani Group has found itself in another controversy surrounding its corporate governance, a year after it was able to scrape through shocks dealt by adverse findings from US-based stock short-seller Hindenburg Research.

The latest scandalous shot, also fired by US sources, is even graver. It places group chairman Gautam Adani and several of his senior company officials in the firing line over claims of bribery allegedly linked to securing solar energy contracts in India, while raising funds in the US.

The case is before a district court of New York and the US Securities Exchange Commission, involving both criminal and civil charges, including corruption, fraudulent conduct and obstruction of justice, under the Foreign Corruption Prevention Act.

The bribery allegation involves some $265m.

The US Department of Justice claims: “The co-conspirators, through Gautam Adani, Sagar Adani, Vineet Jain and others, had offered and promised Indian government officials bribes in exchange for Indian government officials causing the state electricity distribution companies to execute PSAs [power sale agreements]”.

Notably, that indictment by US prosecutors has left the accused individuals facing arrest warrants.

However, the Indian company has refuted all the allegations and said it would “pursue all avenues of legal recourse against the prosecution proceedings”.

It added: “The allegations made by the US Department of Justice and US Securities and Exchange Commission against directors of Adani Group are baseless and denied.

“The Adani group has always upheld, and is steadfastly committed to maintaining, the highest standards of governance, transparency and regulatory compliance across all jurisdictions of its operations,” it added.

But the existence of the case could create some significant repercussions for Adani.

The share price of Adani Ports fell 20% after news of the proceedings broke, while Adani’s global investment ambitions could hit serious obstacles – some red flags have already popped up.

The Kenyan government yesterday cancelled a joint $2.5bn airport expansion and energy development deal it had awarded to Adani Group.

Adani needs considerable funds to execute such large projects, and it is now generally believed that its access to global capital markets could be seriously tested, due to expected credit rating falls.

“It remains to be seen how Adani will steer its appetite for target acquisitions and network expansions,” a Mumbai-based shipping industry veteran told The Loadstar.

The Indian conglomerate has been pursuing multi-pronged aggressive expansion strategies, with ambitions to emerge as the world’s largest port operator by 2030 – with energy projects another growing corporate bet. Adani’s diverse interests include airports, mines, data centres and inland logistics solutions.

Adani Ports’ Indian network extends to 13 port locations – including its flagship, Mundra – cumulatively accounting for roughly 45% of India’s containerised trade. It is set to officially launch its Vizhinjam container transhipment terminal in the south, a project that has already made headlines over a flurry of ultra-large ship calls from its Adani’s liner terminal partner, MSC.

Away from home, it holds terminal concessions at Haifa Port in Israel, Colombo in Sri Lanka and Dar es Salaam in Tanzania.

Last week, the group unveiled a plan to invest some $10bn in US infrastructure and energy projects, potentially setting the stage to work closer with president-elect Donald Trump.