Source: Yahoo Finance

The allegations over the Adani Group

The Adani Group, a major Indian conglomerate led by billionaire Gautam Adani, is at the center of a massive scandal following allegations by U.S. authorities of involvement in a $265 million bribery scheme against Indian government officials. The indictment accuses Gautam Adani, his nephew Sagar Adani, and six others of orchestrating a massive bribery scheme to secure lucrative power supply contracts in India. The charges also include misleading investors and banks to raise over $2 billion in funding and obstructing justice during the investigation.

Adani Group, with operations spanning energy, infrastructure, logistics, and agriculture, denies the allegations, calling them baseless. However, the fallout has been severe, with the group losing up to $55 billion in market capitalization across its 11 listed companies. In the following days part of the losses were erased. In the past week, Adani Enterprises’ shares fell 15%, Adani Green Energy plunged 30%, and Adani Energy saw its share decline by 24%.* At the same time, international credit agencies like Fitch and Moody’s downgraded their outlook for the conglomerate.

Aftermath of the indictment

The repercussions have gone global. Kenya canceled infrastructure projects worth $2.5 billion, including investments in an airport and a power network. Sri Lanka is reevaluating a $442 million wind power deal and a $700 million deep-sea port project led by Adani. In Bangladesh, a government panel is investigating power purchase agreements, while the Indian state of Andhra Pradesh is reconsidering its energy contracts with the group. Additionally, French oil major TotalEnergies has paused all further investments in Adani ventures, and U.S. agencies are reassessing their financial backing for Adani-led projects.

The political fallout in India has also been significant. The opposition in Indian National Congress has demanded an investigation into Adani’s dealings, with calls for Gautam Adani’s arrest. The scandal has reignited accusations that Adani benefited from his close relationship with Indian Prime Minister Narendra Modi, though both the ruling party and Adani Group deny any impropriety.

What will be next?

Gautam Adani faces charges of foreign bribery, securities fraud, and conspiracy, which could result in decades of imprisonment if convicted. The U.S. Securities and Exchange Commission has directed him to respond to the allegations within 21 days. Despite the serious charges, Adani has not been arrested and is believed to be in India. On the other hand, the Adani Group responded to the allegations and called them “baseless” and the possibility of legal recourse.

This scandal has raised broader concerns about corporate governance, transparency, and the risks of rapid expansion driven by debt by India’s richest family. We will closely monitor Adani Group's fight against the charges, its ability to rebuild investor confidence and all future news.

* Past performance is no guarantee of future results.