US indictment against Adani and its domino effect in India
According to the US Attorney for New York’s eastern district, the businessman close to Prime Minister Narendra Modi lied about investigations into his activities and the transparency of his companies in order to secure US investments. The case highlights the shortcomings of the Securities and Exchange Board of India, the country’s regulatory body for securities and commodity markets.
New Delhi (AsiaNews) – The shares of Indian billionaire Gautam Adani's companies have plummeted on the stock market after recent charges of fraud came to light in the United States.
Adani, his nephew Sagar, and six other individuals are accused of promising bribes worth more than US$ 250 million to Indian government officials to secure a series of solar energy contracts to be funded by US investors.
According to the US Attorney for New York’s eastern district, who has been investigating the matter for a couple of years, the Adani group secured funding by spreading misleading information, and hiding the corruption scheme behind the contract. Two arrest warrants have been issued against Adani and his nephew.
Reacting to the situation, Gautam Adani said "All possible legal recourse will be sought,” calling the accusations “baseless”.
For his part, opposition leader Rahul Gandhi said that the billionaire will not be arrested because he enjoys the protection of Indian Prime Minister Narendra Modi, thanks to whom he obtained a broad range of contracts, mostly related to infrastructure projects and the development of renewable energy together with Indian government bodies.
The Indian National Congress leader called for the dismissal of Madhabi Puri Buch, chairperson of the Securities and Exchange Board of India (SEBI), the body that regulates stock market operations in India, accusing her of failing to investigate wrongdoings by the Adani group.
Other opposition politicians have also questioned the involvement of the Indian prime minister and his party, the Bharatiya Janata Party (BJP), in the corruption operations exposed in the United States.
At a press conference, BJP spokesman Sambit Patra avoided going into details, saying that the “law will take its own course”, pointing out that US authorities cite the payment of bribes even in Indian states that were not governed by the BJP at the time of the events.
Yesterday, the combined market valuation of all 10 listed Adani Group firms fell sharply by 2.19 trillion rupees (US$ 26 billion), while Adani Green Energy, which is developing the “world’s largest renewable energy plant” in the state of Gujarat after winning the contract with the Indian government, withdrew a US$ 600 million bond offer.
This is not the first time Adani has been accused of fraud. Last year, Hindenburg Research, a US investment research firm, published a report revealing Adani's stock manipulation.
In August this year, it also accused SEBI chairperson Madhabi Puri Buch of having ties to Adani's offshore funds.
Adani has denied all the accusations while Buch has refused to provide any information, raising a series of questions about the work of the regulatory body.
In March of this year, Adani told financial institutions that he was not aware of any investigations into his companies. But US investigators show that he was lying. Adani had been aware of an FBI investigation for corruption and financial misconduct for at least a year, but preferred to hide it from investors.
SEBI should have checked these claims. Last January, it received an order from the Indian Supreme Court to ascertain whether the losses to Indian investors after the publication of a report by Hindenburg Research were due to violations of the law.
According to The Wire, an Indian news website, SEBI “purportedly failed to properly scrutinise the Adani Group’s filings and annual reports.”
Earlier this year, the Supreme Court pointed out that if it found failures on the part of the SEBI to conduct proper investigations, the court would reserve the right to entrust the investigation to an independent agency or to a court-appointed special investigation team.
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