Political wrangling in India as US charges billionaire Gautam Adani with bribery and fraud

NEW DELHI - Stunning bribery charges in the United States against Indian billionaire Gautam Adani, who is close to Prime Minister Narendra Modi, have ricocheted through India’s political circles and wiped billions from his firms’ market value.

On Nov 20, the US authorities announced that they had charged Asia’s second-richest person and head of the Adani Group, an Indian conglomerate whose businesses extend from energy to airports, over an alleged multi-billion-dollar bribery and fraud scheme.

Adani, his nephew Sagar Adani and six others were accused of promising more than US$250 million (S$336 million) in bribes to government officials in India to secure lucrative solar energy contracts.

They had lied about the bribery scheme as they sought to raise US and international capital, said Mr Breon Peace, United States Attorney for New York’s eastern district.

Adani, 62, is alleged to have personally met government officials in India on several occasions to advance the scheme.

Arrest warrants have been issued in the US for Adani and his nephew Sagar, and prosecutors plan to hand those warrants to foreign law enforcement, Reuters reported, citing court records.

Describing the charges as “baseless”, the Adani Group said in a statement: “All possible legal recourse will be sought.”

The bribery allegations have come as a shot in the arm for Indian opposition parties, which have long had the Adani Group in their crosshairs, alleging that Adani is bankrolling the ruling Bharatiya Janata Party (BJP) and accusing Mr Modi of favouring and protecting him in return, charges that the BJP has denied.

Mr Paranjoy Guha Thakurta, a veteran Indian journalist who has reported extensively on the Adani Group’s alleged wrongdoing, said no industrialist “was ever as closely identified with the head of the (Indian) government as Mr Adani is today”, which is why the latest development “is bound to have an impact on India’s overall political economy”.

“Politics, because the opposition will scream. And on the economy, because Adani’s stocks are very, very important in the market,” he told The Straits Times.

The impact of the allegations in faraway US have already been felt in the Indian stock market.

The combined market valuation of all 10 listed Adani Group firms fell sharply by 2.19 trillion rupees (S$34.8 billion) on Nov 21, according to a report from the Press Trust of India.

On the same day, Adani Green Energy, which is building the “world’s largest renewable energy plant” in Gujarat in western India, cancelled plans to raise US$600 million in US dollar-denominated bonds.

At a press conference on Nov 21, Mr Rahul Gandhi, Leader of the Opposition, said Adani should be arrested immediately and questioned, but acknowledged this was unlikely.

“We want to show the country that Mr Adani will not be arrested, and he won’t be arrested because India’s Prime Minister is standing behind him,” he said.

Mr Gandhi, a Congress party leader, also called for the sacking of Ms Madhabi Puri Buch, chairperson of the country’s securities regulatory body, the Securities and Exchange Board of India, accusing her of failing to investigate wrongdoings by the Adani Group.

Congress has demanded that a joint parliamentary committee probe be conducted to look into the Adani Group’s alleged wrongdoings, with leaders from Aam Aadmi Party and All India Trinamool Congress (TMC) - both opposition parties - calling for an independent judicial probe.

“This is deeply rotten... Biggest question is: how much is the involvement of Modi & BJP in this?” TMC spokesperson Saket Gokhale said in a post on X on Nov 21.

At a press conference on the same day, BJP spokesperson Sambit Patra refused to get drawn into the specifics of the charges and said the Adani Group would defend itself.

“The law will take its own course,” he added.

Mr Patra noted that the four states, including Chhattisgarh and Tamil Nadu, mentioned in the US indictment against Adani and his associates had non-BJP governments during the period from July 2021 to February 2022 when the bribes were allegedly promised to the government officials.

Mr Patra, however, did not mention Jammu and Kashmir, a region that also figures in the US criminal indictment.

A former state, the region has since 2019 been governed directly by the BJP-led central government as a federally administered territory.

Mr Gandhi has said he is open to an investigation in all states concerned, including those ruled by the Congress and other opposition parties.

“If Ambani and Adani follow due process, we have no problem but if they are working with criminality, working for monopolisation, working through corrupt means, then we have a problem,” he said, referring to Mr Mukesh Ambani, Asia’s richest person, and chairman and managing director of Indian conglomerate Reliance Industries.

The charges filed in New York are yet another blow to Adani, who had an estimated net worth of US$85.5 billion on Nov 20 and was the world’s 18th richest person, according to the Bloomberg Billionaires Index. 

In January 2023, he was accused by the US short-seller Hindenburg Research of a “brazen stock manipulation and accounting fraud scheme”, following which the group’s fortunes plummeted by over US$80 billion. The Indian mogul regained much of his wealth in early 2024.

The indictment in the US coincides with a Nov 19 ruling from the High Court in Bangladesh that directs the government to conduct a high-level inquiry into its electricity purchase deal with Adani Power Limited in 2017.

The firm’s energy exports to Bangladesh have been controversial, with claims that it forces Dhaka to buy power at exorbitantly high prices.

On Nov 20, Kenya announced the cancellation of a more than US$700 million deal its energy ministry had signed with a unit of the Adani Group to construct power transmission lines. Kenyan President William Ruto attributed the decision to “new information provided by investigative agencies and partner nations”.