The DOJ has unsealed an indictment in Brooklyn federal court charging billionaire Gautam Adani, his nephew Sagar Adani, and Vneet Jaain with substantive securities fraud and conspiracy to commit securities and wire fraud.

The five-count indictment relates to accusations that the trio bribed Indian officials $250m between 2020 and 2024 in order to be awarded multi-billion-dollar solar energy contracts by the Indian government for their company, Adani Green Energy.  

Those contracts were projected to generate more than $2 billion in profits over the course of 20 years. That caught the interest of US investors and global financial institutions, who contributed upwards of $3 billion in loans and bonds to Adani Green Energy.

Pattern of corruption

According to a DOJ press release, the Adanis and Jaain openly exchanged messages about their scheme on WhatsApp. The defendants also allegedly stored electronic documents summarizing bribes owed, and strategies for paying and concealing them.

The DOJ also charged Cyril Cabanes, Saurabh Agarwal and Deepak Malhotra, former employees of Quebec’s Caisse de dépôt (CDPQ), a public pension fund, for aiding the scheme. They were accused of violating the Foreign Corrupt Practices Act, which prohibits the facilitation of bribery abroad for those associated with companies whose stock is traded in the US.

CDPQ is a top stakeholder in Azure Power, another Indian beneficiary of the alleged bribes. As a representative of CDPQ, Cabanes sat on Azure Power’s board.

The former CDPQ employees were also charged with conspiracy to obstruct justice by deleting incriminating messages. Azure Power was delisted from the New York Stock Exchange in 2023 for failing to file its forms 20-F and 6-K.

“These offenses were allegedly committed by senior executives and directors to obtain and finance massive state energy supply contracts through corruption and fraud at the expense of US investors.”

Lisa H Miller, Deputy Assistant Attorney General

The SEC filed parallel civil fraud charges against the Adanis, alleging that they swindled $175m from US investors in 2021 by proffering false statements during fundraising for Adani Green Energy, a corporate beneficiary of the illicitly-secured contracts. According to the complaint, Adani Green’s offerings included false statements about its anti-bribery and anti-corruption measures.

The SEC also civilly charged Cabanes for his role in facilitating the briberies in violation of the FCPA.

“These offenses were allegedly committed by senior executives and directors to obtain and finance massive state energy supply contracts through corruption and fraud at the expense of US investors.  The Criminal Division will continue to aggressively prosecute corrupt, deceptive, and obstructive conduct that violates US law, no matter where in the world it occurs,” said Deputy Assistant Attorney General Lisa H Miller.

The value of Adani Group’s stock plummeted 20% after the indictment was unsealed on Wednesday, and the Kenyan government cancelled a contract with the company for an airport.

In India, the charges have led to renewed calls to investigate Adani’s companies, as well as scrutiny over his relationship to the Bharatiya Janata Party (BJP), the country’s ruling political party.

The US criminal charges carry maximum sentences of 25 years in prison.

Rule violations

For fraud connected to the IPO of Adani Green Energy, the SEC charged Gautam and Sagar Adani with violating

• 17(a) of the Securities Act and;
• Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder.

Cabanes was individually charged with violated the Anti-Bribery Provisions of the Foreign Corrupt Practices Act Exchange Act (Section 30A).