Summary of the Indictment Against Adani and Other Executives
Overview of the Indictment
Gautam Adani, Sagar Adani, Vneet Jaain, and five other executives have been charged in a bribery scheme involving $250 million in payments to Indian government officials. The scheme aimed to secure lucrative solar energy contracts and deceive U.S. investors.
Bribery Allegations
The defendants allegedly promised over $250 million in bribes to Indian officials between 2020 and 2024 to secure contracts expected to generate $2 billion in profits over 20 years.
Fraudulent Financing
Adani and others misrepresented their company’s anti-bribery practices to secure over $3 billion in financing from U.S. and international investors through misleading statements.
Obstruction of Justice
Some defendants obstructed investigations by deleting evidence, withholding information, and lying to authorities, including the FBI and SEC.
Evidence of the Scheme
The defendants used electronic communications, documents, and detailed analyses to plan and conceal their bribery activities.
Legal Proceedings
The charges include securities fraud, wire fraud, conspiracy, and violations of the Foreign Corrupt Practices Act (FCPA). The defendants are presumed innocent until proven guilty.
Investigation Details
The case was investigated by the FBI’s Corporate and International Corruption Units. The Justice Department’s Fraud Section and the SEC provided critical assistance.
Bribery Scheme Execution
Key players, including Gautam Adani, personally met with officials to negotiate bribes. Financial and operational details of the bribes were tracked using phones and internal documents.
Misleading Financial Statements
The Indian company falsely reported financial statements to conceal bribery and secure loans and investments.
Obstruction Tactics
Executives initiated internal investigations but withheld critical information and denied involvement during meetings with U.S. authorities.
Ongoing Commitment to Justice
The Justice Department and FBI emphasize their dedication to prosecuting international corruption and protecting investors from fraud.
Additional Information
The Fraud Section manages FCPA enforcement, with further details available on the Justice Department’s website. The SEC and international authorities provided support for the investigation.
Additionally, Adani Group’s dollar bond prices dropped sharply in Asia on Thursday after its chairman, Gautam Adani, was indicted in New York for bribery and fraud.
Key Drops:
Adani Ports bonds (maturing Aug 2027): Fell over 5 cents.
Adani Electricity Mumbai bonds (maturing Feb 2030): Fell nearly 8 cents.
Adani Transmission bonds: Dropped over 5 cents, trading above 80 cents.
This marks the largest decline since February 2023, following Hindenburg Research’s critical report on the group’s finances.
Adani Cancels $600 Million Bond as Other Notes Fall Amid U.S. Charges – Bloomberg News
FBI Investigation into Bribery and Fraud Involving Sagar and Gautam Adani
On or around March 17, 2023, FBI agents approached Sagar R. Adani in the United States and, under a legal search warrant, took electronic devices from him. At the same time, they gave him a copy of the search warrant and served him with a grand jury subpoena. The search warrant listed possible crimes under investigation, including violations of the Foreign Corrupt Practices Act (FCPA), securities fraud, wire fraud, and conspiracies involving Sagar R. Adani, Gautam S. Adani, Vneet S. Jain, and an Indian Energy Company. The warrant also mentioned evidence related to bribes, kickbacks, or other offers to Indian government officials to gain business advantages.
On or around March 18, 2023, Gautam S. Adani emailed himself photos of the search warrant and subpoena served on Sagar R. Adani.
After this, despite knowing about the investigation and the crimes being looked into by the U.S. government, Gautam and Sagar Adani tried to hide the bribery scheme from banks and investors in the U.S. and other places. They also made false statements about their knowledge of the investigation.
GQG Partners on US Attorney Charges Against Adani Group
GQG stated that it is closely monitoring the charges filed today by the US Attorney’s Office for the Eastern District of New York and the US Securities and Exchange Commission against Gautam Adani and other executives and companies within the Adani Group.
“We are reviewing the evolving details and assessing what actions, if any, are appropriate for our portfolios,” the GQG statement said.
Additionally, GQG emphasized that in line with their portfolio construction guidelines, their portfolios are diversified, with more than 90% of clients’ assets invested in companies unrelated to the Adani Group.
As of the end of the quarter on September 30, GQG Partners held stakes in six Adani Group companies, with each ranging from 1.5% to 2%.
Fresh troubles at Adani Group threaten US-based GQG Partners LLC, which invested $10 billion in the conglomerate after a short-seller attack last year. US prosecutors’ bribery charges against Gautam Adani and executives caused Adani Enterprises to slump 23%, with overseas dollar notes plunging and a $600M bond scrapped. GQG’s Sydney-listed depository receipts fell 19%. Despite earlier optimism, the allegations put pressure on GQG’s contrarian bet on Adani.
Update
Adani Group’s dollar bonds fell by up to 10 cents on Thursday after US prosecutors charged Gautam Adani, the founder, with being part of a bribery scheme. The Adani Green Energy UP bonds, sold in March, saw their biggest drop. Adani Electricity Mumbai bonds due in February 2030 fell by 8.6 cents, the largest decline since Hindenburg Research’s 2023 report caused a $150 billion loss in Adani stocks and a selloff in its debt.
Adani Green Energy Ltd Announces Halt on Bond Offerings Amid U.S. Indictments of Board Members.
Adani Green Energy Ltd has announced that its subsidiaries have decided not to move forward with the proposed USD-denominated bond offerings.
The U.S. Department of Justice and the SEC have issued a criminal indictment and civil complaint against board members Gautam Adani and Sagar Adani.
Additionally, board member Vneet Jain has also been included in the criminal indictment by the U.S. Department of Justice.
Domestic Banks and NBFCs Increase Their Exposure to Adani Group’s Debt to 36.5%
Domestic banks and non-banking financial companies (NBFCs) now make up 36.5% of the Adani Group’s total debt, a big increase in their involvement with the company. Indian lenders have given Rs 88,100 crore to the Adani Group, out of a total debt of Rs 2,41,394 crore as of March 31, 2024. This is up from Rs 70,213 crore the previous year, when Indian lenders made up 31% of the group’s debt, which was Rs 2,27,248 crore.
Debt from domestic capital markets also went up to Rs 12,404 crore by March 2024, from Rs 11,562 crore a year before. On the other hand, debt from global banks slightly dropped to Rs 63,296 crore from Rs 63,781 crore, and debt from global capital markets decreased to Rs 69,019 crore from Rs 72,794 crore in the same period.
Adani Group Lenders’ Share Prices Drop Amid Bribery Allegations and Exposure Disclosures
Lenders to the Adani Group, such as State Bank of India (SBI) and Bank of Baroda, saw their share prices drop by 4-8% following allegations of a $250-million bribery scheme. Private banks like ICICI and Axis Bank experienced smaller declines.
Adani Enterprises’ FY24 report lists key lenders, including SBI, ICICI, and Axis. After the Hindenburg report in 2023, banks disclosed their exposure, with LIC at Rs 35,920 crore and SBI at Rs 27,000 crore, among others. These figures may have changed since then.
Moody’s Says Bribery Charges Against Gautam Adani Are Negative for Adani Group’s Credit.
Moody’s, a credit rating agency, has stated that the bribery charges against Gautam Adani, the chairman of Adani Group, are negative for the financial standing of the group’s companies.
In a statement, Moody’s explained that the legal charges against Adani and other senior officials are harmful to the group’s credit rating. The agency said its main concern when evaluating Adani Group is whether the companies can raise enough money to meet their financial needs and how well the company is managed.
Adani Group Denies Bribery Charges, Calls Allegations Baseless
Adani Group has released a statement denying bribery charges, calling the allegations baseless. They emphasized full compliance with all laws and stated that they will pursue all possible legal recourse to address the claims.
SECI Dismisses U.S. Bribery Charges Against Gautam Adani, Says No Basis for Investigation
Solar Energy Corporation of India (SECI) has issued a statement in response to charges filed against billionaire Gautam Adani in the United States over an alleged bribery scheme. SECI’s head stated that there is “no basis” for investigating the matter, emphasizing that the accusations do not have any direct connection to their operations or involvement.
Adani Stocks Partially Recover After US Bribery Charges Against Gautam Adani Are Denied by SECI Head
Adani stocks saw a partial recovery on November 21 after the company confirmed it is “fully compliant with all laws,” following charges by US prosecutors against chairman Gautam Adani. He, along with seven others, is accused of being involved in a scheme to pay a $250 million bribe to Indian officials for favorable solar power contracts. However, the head of the Solar Energy Corporation of India (SECI) has denied any basis for the investigation, stating there is no evidence supporting the allegations.
US prosecutors have charged Indian tycoon Gautam Adani and senior executives with offering $250 million in bribes to secure solar contracts. This scandal has affected Adani Green Energy’s clean energy initiatives and could hinder foreign investments vital for India’s energy transition.
Quant Mutual Fund Faces 27% Loss After Adani Shares Drop Amid Bribery Allegations
Quant Mutual Fund, an Indian asset management firm, bought nearly half of the $500 million worth of Adani Enterprises’ shares in October. However, it’s now facing a loss of up to 28% on that investment after a 24% drop in Adani’s stock on Thursday.
The drop followed US prosecutors’ allegations that Adani was involved in a $250 million bribery scheme. This has caused concern among investors, including those who bought shares after the stock recovered from a slump caused by a short-seller’s report.
Quant Mutual Fund is also under investigation by regulators for alleged front-running trades by some employees. The fund holds shares in Adani Power Ltd. and Adani Enterprises through various products.
Quant bought Adani stock for 2,962 rupees per share last month, but it dropped to 2,155 rupees on Thursday. Other investors in the placement include SBI Life Insurance, Tree Line Asia Master Fund, and Winro Commercial (India).
Indian Mutual Funds Hold Rs 43,455 Crore in Adani Group Amidst Market Losses
As of October 31, 2024, Indian mutual funds held Rs 43,455 crore in Adani Group’s 10 listed companies. This figure rose from Rs 41,814 crore in July. Adani Group stocks have faced a sharp decline following bribery allegations, with a loss of Rs 2.2 lakh crore in market capitalization by November 21. Among mutual fund investments, Adani Ports attracted the highest, with Rs 12,102 crore, mostly in passive funds like ETFs. Other notable holdings included Ambuja Cements (Rs 10,689 crore) and Adani Enterprises (Rs 8,714 crore). The drop in MF holdings will be disclosed on November 22. Key schemes like Quant Mutual Fund’s and Mirae Asset Nifty Metal ETF had significant exposure to Adani stocks, notably in Adani Power and Adani Enterprises.
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