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Shares of India’s Adani group fall 20% after US bribery and fraud allegations
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Shares of India’s Adani group fall 20% after US bribery and fraud allegations

NEW DELHI (AP) — One of Asia’s richest men, controversial Indian tycoon Gautam Adani, is back in the spotlight. Shares in his companies fell as much as 20 percent on Thursday after he was indicted by US prosecutors on charges of defrauding investors in a massive solar project in India by concealing that it was facilitated by an alleged bribery scheme.

In an indictment filed Wednesday by federal prosecutors in New York, Adanage 62, was charged with securities fraud and conspiracy to commit securities and wire fraud.

One result of the US legal action is that the Adani group has decided not to proceed with a proposed US dollar denominated bond offering. Adani Renewables announced the decision through letters to the Bombay Stock Exchange and the National Stock Exchange of India.

In a statement, the group said the allegations against Adani Green executives “are baseless and are denied”. The US Department of Justice stated that “the charges in the indictment are allegations, and defendants are presumed innocent unless and until proven guilty.”

Who is Gautam Adani?

Adani is the son of a middle-class family in Ahmedabad, in the western Indian state of Gujarat. He dropped out of college to become a diamond merchant in Mumbai, India’s financial capital. In the 1980s, he started importing plastics before setting up Adani Enterprises, which traded in everything from shoes to buckets and remains his flagship company.

India opened up its economy in the 1990s and a new middle class emerged as tens of millions of people were lifted out of poverty and the economy grew, prompting Adani to bet on infrastructure and coal.

Adani’s first major project, Mundra Port in Gujarat, opened in 1998 and is now India’s largest. Adani Ports and Special Economic Zone Ltd. is the largest private port operator in India. Within a decade, Adani has become India’s largest developer and operator of coal mines. According to Adani Power’s website, it has expanded into Australia and Indonesia and is on track to become “one of the world’s largest mining groups”.

Adani Companies, India’s second largest conglomerate, operates airports in major cities, builds roads, generates electricity, manufactures defense equipment, develops agricultural drones, sells cooking oil and runs a media outlet. Despite its fossil fuel roots, billionaire Adani Green aims to become the world’s biggest renewable energy player by 2030.

Why is Adani controversial?

Adani is considered close to the Hindu nationalist government, and the political opposition has long accused Prime Minister Narendra Modi of having close ties to the tycoon. Both hail from the western state of Gujarat.

Critics of the businessman say much of his success stems from his close ties to the government and Modi. For example, they accused the government of tweaking tender rules to make it easier for Adani to win contracts to operate airports. The company denies this, saying the contracts were won relatively transparently.

Opposition Congress party leader Rahul Gandhi has called for Adani’s arrest for his criminal acts in the United States and India and accused Modi of protecting him.

India’s main opposition has also called for a parliamentary committee inquiry into the Adani Group deals, which Congress Party leader Jairam Ramesh said was causing “increasing monopolization in key sectors of the Indian economy, fueling inflation and it also creates huge foreign policy challenges. .”

Ramesh said his party “has brought to light the various dimensions of these scams and the intimate connection between the Prime Minister (Modi) and his favorite businessman. These questions remain unanswered.”

Adani companies lost $68 billion in market value last year after short-selling firm Hindenburg Research accused Adani of “perpetrating the biggest fraud in corporate history”, triggering a massive sell-off in the group’s shares .

US-based Hindenburg accused the Adani companies of share price manipulation and fraud just as the group began a share offering aimed at raising $2.5 billion.

The Adani Group has rejected Hindenburg’s allegations, saying none are based on independent or journalistic fact-finding. Adani’s response included documents and data tables and said the group had made all required regulatory disclosures and complied with local laws.

How Adani became the richest man in Asia

Adani’s net worth has risen by around 2,000% in recent years as share prices for its listed companies have risen.

Before Modi took office, Adani was friendly with the rival Congress Party, which ruled Gujarat state when many of its early projects began. Adani was “close to every politician in power,” RN Bhaskar, a journalist who wrote a biography of Adani, told The Associated Press.

Adani’s supporters say he has cleverly aligned the group’s priorities with those of the government, investing in key industries such as renewable energy, defense and agriculture. Its overseas projects in strategically important countries such as neighboring Sri Lanka help New Delhi compete with regional rival Beijing.

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