The Adani Group has experienced a significant $26 billion drop in market value after the U.S. Department of Justice (DOJ) and Securities and Exchange Commission (SEC) accused the conglomerate’s chairman, Gautam Adani, of involvement in a $250 million bribery scheme. The allegations have rattled investors, forcing the company to cancel a planned bond deal and stirring fears of legal and financial consequences.
Adani Group swiftly rejected the charges, calling them “baseless” and assuring stakeholders of its commitment to lawful business practices. “We are a law-abiding organization, fully compliant with all regulations,” the company stated.
The Corruption Allegations
The U.S. complaint centers on Adani Green Energy, a subsidiary of the Adani Group, which allegedly paid bribes to win contracts for solar energy projects in India. The payments were supposedly tracked using Excel and PowerPoint documents and were not disclosed to U.S. investors or financial institutions during fundraising efforts.
The SEC claims that Adani Green raised over $175 million from American investors, with the illicit payments taking place during that period. The case also ties Azure Power Global, which was listed on the New York Stock Exchange at the time, to the scheme. Azure was delisted last year.
U.S. prosecutors have accused Gautam Adani and his nephew of orchestrating a $265 million bribery scheme, aiming to influence Indian officials and secure power supply contracts. The allegations have surfaced amid state elections in Maharashtra and Jharkhand, adding a layer of political sensitivity to the controversy.
Investor Panic and Market Impact
The bribery claims triggered panic in global markets, with Adani Group companies suffering sharp declines. Adani Enterprises’ stock fell 23%, and other key companies like Adani Ports & Special Economic Zone and Adani Green Energy also saw significant drops. Although there was some recovery on Friday, the damage to investor confidence remains substantial.
Ratings agency Moody’s described the legal developments as “credit negative,” raising concerns about the group’s governance and its ability to meet liquidity needs. “The allegations cast a shadow over the group’s financial integrity,” said Moody’s.
Australian-based investment firm GQG Partners, a significant Adani investor, saw its stock drop by 19%. GQG emphasized that over 90% of its portfolio is not related to Adani Group, yet the impact on its reputation was unavoidable.
Political Fallout in India
In India, the bribery allegations have sparked intense political debate. Opposition leader Rahul Gandhi of the Congress Party has seized on the scandal to attack Prime Minister Narendra Modi and his government. Gandhi accused Modi of protecting Adani, suggesting that the business tycoon will escape legal action in India due to political connections.
“Adani won’t face investigation or arrest in India because the government is shielding him,” Gandhi asserted, calling for the tycoon’s immediate arrest. He also demanded the removal of the head of India’s securities regulator, Madhabi Puri Buch, who was previously linked to offshore funds associated with the Adani Group by Hindenburg Research.
Gandhi compared the scandal to the Bofors corruption case of the late 1980s, which played a pivotal role in shaping Indian politics. He called for a parliamentary probe into the matter, citing the alleged violations of both Indian and American laws.
Previous Scrutiny and Damage to Reputation
This is not the first time Adani Group has faced accusations. Last year, Hindenburg Research accused the conglomerate of market manipulation and accounting fraud, although the Indian Supreme Court found no substantial evidence of wrongdoing. Despite this, the allegations from Hindenburg and now the U.S. authorities have tarnished Adani’s reputation.
Impact on Adani’s Wealth and Future Plans
The controversy has taken a personal toll on Gautam Adani, whose net worth has plummeted by $12 billion, according to Forbes. His fortune is now estimated at $58 billion. Despite the setback, Adani remains committed to his business plans, including a $10 billion investment in U.S. energy and infrastructure projects, signaling his intent to continue expanding globally.
However, analysts warn that these bribery allegations could undermine Adani Group’s international ambitions and make it more challenging to attract investors or raise capital in global markets.
