Editorial: Adani in trouble
The case raises serious questions over symbiotic relationship between monopolistic business houses and politicians
The controversial billionaire industrialist Gautam Adani is in trouble again. A year after Hindenburg Research, an American firm, had accused the Adani Group of engaging in accounting fraud and stock market manipulation, prosecutors in the United States have indicted him, his nephew Sagar Adani and six others in an alleged bribery case. They have been accused of paying about $265 million in bribes to Indian officials and politicians to secure lucrative solar energy supply contracts with the state distribution companies. The matter is said to involve the States of Andhra Pradesh, Tamil Nadu, Odisha, Jammu & Kashmir and Chhattisgarh and the Solar Energy Corporation of India, a government-owned company, with whom these States signed the power sale agreement under the manufacturing linked project. These power contracts were expected to generate more than $2 billion in profit after tax for the Adani Group over the coming two decades. As per the indictment, extensive documentation was maintained on the bribery efforts. The allegations caught the attention of the US Justice Department and Securities and Exchange Commission as Adani’s companies were raising funds from American investors in several transactions starting in 2021. As the scandal triggered political furore with Congress leader Rahul Gandhi demanding Adani’s arrest, there is an urgent need to order a thorough investigation into the business practices of the conglomerate which, according to the opposition parties, enjoys the patronage of the NDA government.
Following the shocking indictment by the district court in New York, the shares of the Adani Group companies have tanked. The Group has also scrapped its $600-million bond offering. The indictment levies multiple charges, ranging from conspiracy to violate the Foreign Corrupt Practices Act to securities and wire fraud, and conspiracy to obstruct justice. The case raises serious questions over flaws in corporate governance and the symbiotic relationship between monopolistic business houses and politicians. Though the Adani Group has dismissed the bribery allegations as baseless, the credibility of the company has taken a serious hit and it has to brace for what looks like a prolonged legal battle. The indictment has given the opposition fresh ammunition to attack the Narendra Modi government over crony capitalism, while the saffron party has launched a counter-attack, training its guns on non-BJP parties that were in power in States where government officials allegedly received bribes. A comprehensive probe, preferably monitored by the Supreme Court, is needed to get to the bottom of this murky matter. It would require close cooperation not only between the Centre and States but also between the Indian and US authorities. While the conglomerate managed to weather the Hindenburg storm to a great extent, it is facing far stronger headwinds this time. The indictment has also turned the spotlight on the ongoing probe by the Securities and Exchange Board of India (Sebi) into the allegations of stock manipulation and accounting fraud.
