Gautam Adani, Sagar not charged with violation of FCPA of US: Adani Green

Group shares gain Rs 1.22 trn on Wednesday

Three top executives of Adani Green Energy — Gautam Adani, Sagar Adani, and Vneet Jaain — have not been accused of violating the Foreign Corrupt Practices Act (FCPA) in the charges of US authorities, the company on Wednesday said in a statement to the stock exchanges.

 

The Department of Justice (DoJ) indictment, which has five counts or charges, does not have any mention of Chairman Gautam Adani, Executive Director Sagar Adani or Managing Director and Chief Executive Officer Vneet Jaain and excludes them in count one: “Conspiracy to Violate the FCPA”. Neither does it have any mention of these three names in count five: “Conspiracy to obstruct justice”. 

 

These directors have been charged on just three counts in the criminal indictment: Alleged securities fraud conspiracy, alleged wire fraud conspiracy, and alleged securities fraud, the company said in an early morning statement. 

The clarification comes six days after the US DOJ’s charges were filed in a New York court. 

 

The shares of the group’s listed companies jumped with stocks gaining Rs 1.22 trillion in combined market capitalisation by close on Wednesday.

 

The group found support from advocates Mukul Rohatgi and Mahesh Jethmalani, with Rohatgi, former attorney general, pointing out loopholes in the charges levelled by the DoJ and the Securities and Exchange Commission (SEC).

 

Addressing a press meet on Wednesday, Rohatgi said the “Count One and Count Five of the indictment are more important than the others, but neither includes charges against Adani or his nephew, Sagar. Count One pertains to certain other persons, excluding the Adanis. You must specifically state that so and so committed such acts and bribed certain individuals. This charge sheet alleges the Adanis bribed Indian entities in connection with power purchases, but it does not contain a single name or detail about who was bribed or how,” Rohatgi said.

 

Jethmalani said the US indictment against Adani was based on claims, not proven facts.

 

“There’s no allegation of bribery in India, only a speculative charge of conspiracy to bribe. The case revolves around bond issuances by Adani Green Energy, where the DoJ infers, without evidence, that bondholders were uninformed of potential violations. This is purely political -- used as a tool by the Congress and INDIA alliance, who repeatedly harp on issues influenced by foreign meddling,” Jethmalani said.

 

A detailed statement by the group said count one, which refers to the corruption and bribery charges, mentioned Ranjit Gupta, Cyril Cabanes, Saurabh Agarwal, Deepak Malhotra, and Rupesh Agarwal of Azure Power and CDPQ (Caisse de dépôt et placement du Québec, a Canadian institutional investor and Azure’s largest shareholder).

 

“No Adani official has been named by the DoJ under this. However, a flawed understanding of the DoJ indictment by various media — foreign as well as Indian — has led to incorrect and reckless reporting of Adani directors of being charged with corruption and bribery under or of all five counts by the US DoJ and SEC,” the statement said.

 

“The DoJ Indictment offers no evidence that bribes were paid by Adani executives to Indian government officials, the indictment and the complaint solely rest on claims that bribes were promised or discussed. All of this is based on likelihoods and hearsay from former employees of Azure Power and CDPQ places the US DoJ’s and US SEC’s action against Adani on dangerously shaky ground – both morally and legally,” the statement said.

 

“The ill-founded US action and reckless false reporting have led to significant repercussions for the Indian conglomerate, such as international project cancellations, financial market impact and sudden examination from strategic partners, investors and the public,” the statement said.

 

The group, the statement said, is India’s largest infrastructure player with sizable operations in global energy and logistics.

 

“Over the past few years, (the) Indian conglomerate has been expanding its operations in international markets and directly competes with several US and Chinese entities in Africa, Bangladesh, Sri Lanka, Israel, Australia, etc. Since the intimation of the US DoJ Indictment, the group has suffered a loss of near US$55 billion in its market capitalisation across its 11 listed companies,” the group said.

 

An executive of a proxy advisory firm and another independent lawyer, whom Business Standard reached out to, said they were unable to confirm or deny the above interpretation due to its technical nature.

 

“Different investors will read it differently. The allegations are serious and the statement by the group delves into legal nuances and their points of view. Investors will find it difficult to repose full trust until the air is cleared by the SEC itself,” said Shriram Subramanian, founder and managing director, InGovern Research Services, a corporate governance advisory firm. “Not many Indian mutual funds have any exposure to Adani group stocks,” Subramanian added.