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The head of a $25 billion Indian energy company, a former CEO of a New York-listed energy firm, and one of Asia’s richest men were scheduled to meet in New Delhi to discuss business.
To prepare for the meeting, Vineet Jain, chief executive of the $25 billion Adani Green Energyphotographed a document on his cell phone.
The document, according to the U.S. Attorney’s Office for the Eastern District of New York, summarizes the amounts owed to the Indian energy company. Azure PowerFor bribing Indian government officials, was previously listed on the NYSE.
Jain’s phone and other electronic devices were seized as evidence by U.S. prosecutors in their months-long investigation and indicted Wednesday in a New York federal court on charges related to a massive bribery and fraud scheme. was added.
US prosecutors have also alleged that Gautam Adani, the second-richest Indian man, personally met with Indian government officials to further his “bribery scheme”.
They allege that Indian officials were offered around $265 million in bribes to “induce” state-owned electricity distribution companies to buy solar power from Adani and related companies at fair market prices.
The indictment Also describes a trail of evidence that Adani and its executives left behind, such as presentation slides and spreadsheets. One document alleges $7 million in bribes to secure a 650 megawatt power purchase contract and $76 million in bribes for a 2.3 gigawatt contract.
Prosecutors have also successfully obtained an arrest warrant for the billionaire from a federal court.
Why are US officials involved?
The 62-year-old billionaire and others are accused of misleading American and international investors as they raised more than $3 billion in capital to fund those energy deals.
“As alleged, the defendants orchestrated an elaborate scheme to bribe Indian government officials to secure multi-billion dollar contracts and Gautam S. Adani, Sagar R. Adani and Vineet S. Jain perpetrated the bribery scheme. lied about because they were trying to raise capital from U.S. and international investors,” Brion Pace said. US Attorney for the Eastern District of New York.
“Adani and the other defendants also defrauded investors by raising capital based on false statements about bribery and corruption, while the other defendants allegedly obstructed the government’s investigation into the bribery conspiracy. tried to cover up,” added FBI Assistant Director in Charge James Denney.
The Securities Exchange Commission also condemned the actions of Adani and two others. “A massive bribery scheme.”
“During the alleged scheme, Adani Green raised more than $175 million from U.S. investors, and Azure Power’s stock traded on the New York Stock Exchange,” the SEC said in a statement. statement To justify its jurisdiction and cause in the investigation.
What is Adani’s response?
An Adani Group spokesperson said the allegations leveled by the US Department of Justice and the SEC against the directors of Adani Green Energy are “baseless and refuted”.
“The Adani Group has always maintained and is committed to maintaining the highest standards of governance, transparency and regulatory compliance in all jurisdictions of its operations. We assure our stakeholders, partners and employees that we are a We are a law abiding organization, fully complying with all laws,” the spokesperson told investors.
Azure Power has said the company continues to cooperate with U.S. authorities and that its employees cited in the U.S. indictment are no longer associated with the company.
What is the impact on Adani?
In addition to the sharp drop in share prices, where Adani Enterprises Lost about a quarter of its market value, there are also wider implications.
Investors in Adani’s bonds have also suffered a sharp drop in prices after news of the indictment emerged. There are also concerns about whether Adani companies will be able to raise debt in the US market in the future.
“The indictment of Adani Group chairman and other senior officers on bribery charges is credit negative for the group companies,” credit rating agency, Moody’s, said in a statement.
“While reviewing the Adani Group our primary focus is on the group companies’ ability to access capital to meet their liquidity needs and its governance practices.”
The Adani Group was also forced to withdraw a $600 million bond sale on Thursday.
Even Adani’s ardent followers seem to be reconsidering their support for the party.
GQG Partners, which has poured $1.9 billion into Adani companies in 2023 despite a short-seller attack, told investors that it is “reviewing the emerging details and determining what is right for our portfolio.” The steps are appropriate.”
The investment management firm’s Sydney-listed shares also lost a fifth of their value on Thursday.
Broader implications and effects
Allegations against the Adanis could also risk hurting sentiments of foreign investors and could lead to faster outflows from India. Foreign institutional investors pulled record amounts from local markets in October, and November looks very similar.
“The US bribery allegations against Gautam Adani are further complicating foreign investors’ calculations about India,” Matt Orton, chief market strategist at Raymond James, told CNBC’s Tanveer Gill.
“While at 10% pullback Nifty Presenting investors with an interesting entry point for capital deployment, the Adani charges will have a significant impact on sentiment. In an environment where the US is on the rise, why add a red flag threat to India now?”
Orton added that select Indian equities remain attractive despite broader negative sentiment.
Investors are also concerned about creditors facing Adani Green Energy, the firm under the spotlight. Citi analysts estimate that Indian banks have more than $15 billion in borrowings and outstanding loans. State Bank of India A large part of the loan was due.
Elsewhere, the Singapore-headquartered lender DBS Group Almost revealed before 1 billion in loans to other Adani companies. DBS declined to comment on the matter.
But it’s not just investors and financial firms feeling the heat. Regulators in India are also under intense scrutiny for their association with Adani.
“The Federal Bureau of Investigations has said. [Adani] What is a criminal act? why not [India’s] Central Bureau of Investigation is also saying the same? Why is SEBI not saying so?” India’s opposition leader Rahul Gandhi asked, referring to the Securities and Exchange Board of India (SEBI), as translated by CNBC.
Earlier this year, the chair of the stock market regulator, Madhabi Bach was accused of conflict of interest. According to short seller Hindenburg, politicians are now calling for him to be fired while investigating Adani Group companies.
