The SEC has accused Adani, chairman of Adani Green Energy Ltd., and his nephew, Sagar Adani, of orchestrating a scheme involving the payment or promise of hundreds of millions of dollars in bribes to government officials to secure energy contracts at inflated rates. The alleged scheme aimed to benefit Adani Green and Azure Power, with the SEC also charging Cyril Cabanes, a former executive at Azure Power, for his role in the purported misconduct.
According to the SEC's complaint, during a $750 million note offering by Adani Green in September 2021, which raised approximately $175 million from U.S. investors, the offering materials contained statements about the company's anti-corruption and anti-bribery efforts that were materially false or misleading, given the alleged bribery activities. The SEC's charges against Gautam and Sagar Adani include violations of antifraud provisions of federal securities laws, seeking permanent injunctions, civil penalties, and officer and director bars. Similarly, Cabanes faces charges under the Foreign Corrupt Practices Act , with the SEC seeking a permanent injunction, civil penalty, and an officer and director bar against him.
In a parallel action, the U.S. Attorney's Office for the Eastern District of New York unsealed criminal charges against Gautam and Sagar Adani, Cabanes, and other individuals connected to Adani Green and Azure Power. The indictment alleges that the defendants conspired to misrepresent the companies' anti-bribery and corruption practices, concealing the bribery scheme from U.S. investors and international financial institutions to obtain financing.
The Ministry of Law and Justice's letter to the Gujarat court underscores the seriousness of the allegations and the international ramifications of the case. The summons requires Adani to appear in a New York court, and if served, he must comply. The Adani Group has denied the allegations, stating they are "baseless" and asserting full compliance with all laws.
The alleged bribery scheme involved securing power-supply deals through payments to officials, with the SEC highlighting that during the period of the scheme, Adani Green raised significant funds from U.S. investors. The offering materials allegedly misrepresented the company's anti-corruption efforts, falsely portraying strong anti-bribery measures while senior management was involved in bribery.
The SEC's ongoing investigation is being conducted by its New York Regional Office and the FCPA Unit, with assistance from the U.S. Attorney's Office, the Fraud Section of the U.S. Department of Justice, and the FBI.
The developments have sent ripples through the financial markets, with shares in companies linked to the Adani Group experiencing volatility. Investors are closely monitoring the situation, given the potential implications for the conglomerate's operations and financial health.