The Adani Group, led by Chairman Gautam Adani, is facing significant turmoil following a $250 million bribery scandal revealed by U.S. prosecutors. This has had a dramatic impact on the Indian stock market, with the group’s shares experiencing a steep decline of 10–20% on November 21.
Stock Market Impact:
- Adani Energy Solutions: Dropped by 20%, reaching ₹697.70 on the Bombay Stock Exchange (BSE).
- Adani Enterprises: Fell 10% to ₹2,538.20.
- Adani Ports and SEZ: Declined by 10%, closing at ₹1,160.15.
- Adani Green Energy: Plummeted by 19%.
- Adani Power and Adani Total Gas: Both saw an 18% drop.
- Adani Wilmar: Fell 10%.
- Ambuja Cements: Hit a lower circuit at ₹494.65, down 10%.
The sharp sell-off indicates investor concerns over the fallout of the allegations and its potential impact on the conglomerate’s operations and reputation.
Details of the Allegations:
The U.S. District Court for the Eastern District of New York has unsealed a five-count criminal indictment accusing Adani and several associates of:
- Bribery: Paying or planning to pay $265 million in bribes to Indian government officials to secure contracts worth billions.
- Fraud: Misleading investors to raise capital for Adani Green Energy’s massive solar energy project.
- Conspiracy: Engaging in securities and wire fraud while obscuring the bribery scheme.
- Obstruction: Attempting to hinder the investigation into these allegations.
Other individuals implicated include:
- Sagar R. Adani (Adani Group Executive)
- Vneet S. Jaain (CEO of Adani Green Energy)
- Former executives and employees from renewable energy companies and financial institutions in Canada and the U.S.
Allegations Specifics:
- The indictment accuses the group of obtaining billions of dollars in U.S. investments based on false statements while engaging in bribery to secure a 12-gigawatt solar power deal with the Indian government.
- Prosecutors allege the bribery scheme was orchestrated to ensure favorable contract awards and financing.
Statements from U.S. Authorities:
- U.S. Attorney Breon Peace: Labeled the scheme an elaborate fraud involving bribery and deceit on Wall Street and within the Indian government.
- FBI Assistant Director James Dennehy: Stated that the defendants sought to enrich themselves while defrauding investors and obstructing investigations.
Repercussions:
The allegations are a severe blow to the Adani Group, coming amidst scrutiny following the Hindenburg Research report earlier this year, which accused the conglomerate of stock manipulation and corporate malfeasance. While Adani had denied those allegations, this new indictment could:
- Lead to legal battles in international jurisdictions.
- Impact Adani’s ability to raise capital globally.
- Further erode investor confidence, domestically and internationally.
Adani Group’s Response:
As of now, there has been no official statement from the Adani Group addressing the allegations. A formal response is anticipated, given the significant market and reputational impact.