How Indian billionaire Gautam Adani’s alleged bribery scheme unfolded and unfolded

By Luc Cohen

NEW YORK (Reuters) – In June 2020, a renewable energy company owned by Indian billionaire Gautam Adani won what it called the largest solar development bid ever awarded: an agreement to supply 8 gigawatts of electricity to a state energy.

But there was a problem. Local power companies did not want to pay the prices the state utility was offering, jeopardizing the deal, according to US authorities. To save the business, Adani would have decided to bribe local officials to convince them to buy the electricity.

The allegation is at the center of US criminal and civil charges filed Wednesday against Adani, who is not currently in US custody and is believed to be in India. His company, the Adani Group, said the allegations were “baseless” and would pursue “all possible legal avenues”.

The alleged hundreds of millions of dollars in bribes promised to local Indian officials drew the attention of the US Department of Justice and the Securities and Exchange Commission as Adani’s companies raised funds from US investors in several deals starting in 2021.

This account of how the alleged scheme unfolded is drawn from federal prosecutors’ 54-page criminal indictment of Adani and seven of its associates and two parallel SEC civil complaints, which cite extensively electronic messages between alleged participants in the scheme .

In early 2020, the Solar Energy Corporation of India awarded Adani Green Energy and another company, Azure Power Global, contracts for a 12-gigawatt solar power project expected to generate billions of dollars in revenue for both companies, according to the indictment .

It was a major step forward for Adani Green Energy, headed by Adani’s grandson Sagar Adani. Up to that point, the company had earned only about $50 million in its history and had yet to turn a profit, according to the SEC complaint.

But the initiative soon hit roadblocks. Local electricity distributors have been reluctant to commit to buying new solar power, expecting prices to drop in the future, according to an April 7, 2021 report from the Institute for Energy Economics and Financial Analysis, a think tank.

Sagar Adani and Azure’s CEO at the time discussed the delays and hinted at bribery on the encrypted messaging app WhatsApp, according to the SEC.

When Azure CEO wrote on November 24, 2020 that local energy companies “are motivated,” Sagar Adani reportedly replied, “Yes… but the optics are very hard to cover. In February 2021, Sagar Adani reportedly wrote to the CEO, “Just so you know, we have doubled the incentives to push for these acceptances.”

The SEC did not name Azure’s CEO as a defendant, but Azure’s securities filings show that the CEO at the time was Ranjit Gupta.

Gupta was charged by the Justice Department with conspiracy to violate an anti-bribery law. He did not immediately respond to a request for comment.

Azure said Thursday that it was cooperating with the U.S. investigation and that the people involved in the allegations had left the company more than a year ago.

“HAPPY NOOC DEBATE”

In August 2021, Gautam Adani had the first of several meetings with an official in the southern state of Andhra Pradesh, who was eventually promised $228 million in bribes in exchange for agreeing to the state buying power, according to the Justice. Indictment of the Department.

By December, Andhra Pradesh had agreed to buy the power, and other states soon followed with smaller contracts. Officials in other states were also promised bribes, US authorities said.

During a Dec. 6, 2021 meeting at a coffee shop, Azure executives reportedly discussed “rumors that Adani somehow facilitated the signing of the deals,” according to the SEC.

Gautam Adani said on 14 December 2021 that the company is on track to “become the world’s largest player in renewables by 2030”.

“The sudden windfall for Azure and Adani Green caused market speculation about the contract award,” the SEC wrote in its complaint.

LETTER FROM SEC

Before long, the SEC began investigating. The agency sent a “general inquiry” letter to Azure — which at the time traded on the New York Stock Exchange — on March 17, 2022, asking about its recent contracts and whether foreign officials had sought anything of value, according to the Department of Justice. indictment.

According to the Justice Department, Gautam Adani told Azure representatives during a meeting at his office in Ahmedabad, India, next month that he expected to be reimbursed more than $80 million in bribes he paid to officials who ultimately benefited from the Azure contracts.

Some Azure representatives and a top investor in the company decided to pay Adani back by allowing his company to take over a potentially lucrative project. The representatives and the investor allegedly agreed to tell Azure’s board that Adani had demanded bribes, but hid their role in the scheme, prosecutors said.

All the while, Adani’s companies were raising billions of dollars in loans and bonds through international banks, including from American investors. In four separate fundraising deals between 2021 and 2024, the companies sent investors documents indicating they paid no bribes — statements prosecutors say are false and constitute fraud.

FBI SEARCH

During a visit to the United States on March 17, 2023, FBI agents seized Sagar Adani’s electronic devices. Agents served him with a search warrant from a judge indicating that the US government is investigating potential violations of fraud laws and the Foreign Corrupt Practices Act.

According to prosecutors, Gautam Adani emailed himself photos of each page of the search warrant on March 18, 2023.

However, his companies entered into a $1.36 billion syndicated loan agreement on December 5, 2023 and another sale of collateralized notes in March 2024 and again provided investors with misleading information about their anti-bribery practices, according to the prosecutors.

On October 24, federal prosecutors in Brooklyn obtained a secret grand jury indictment against Gautam Adani, Sagar Adani, Gupta and five others allegedly involved in the scheme.

The indictment was opened on November 20, causing a $27 billion drop in the market value of Adani Group companies. Adani Green Energy immediately canceled a scheduled $600 million bond sale.

(Reporting by Luc Cohen in New York; Editing by Noeleen Walder and Sonali Paul)