MUMBAI: The business empire of Gautam Adani is again in turmoil after the billionaire Indian tycoon was charged in the United States with paying exorbitant bribes to secure lucrative government contracts.
Who is Gautam Adani?
Adani, 62, is a publicity-shy school dropout of humble origins who rose to become fabulously rich.
Moving to Mumbai in his teens to work sorting diamonds, he formed his own import-export business.
His big break came in 1995 when he acquired a shipping port just as India’s economy was opening up.
Today, Adani Group has interests in everything from power generation and Australian coal mines to cement, media, food, airport terminals and Israeli ports.
The meteoric rise in the share prices of Adani’s units — the flagship Adani Enterprises rose more than 1,000% in five years — helped make the conglomerate staggeringly wealthy and fund further expansion.
What is his relationship with the government?
Adani is considered a close ally of Prime Minister Narendra Modi, a fellow Gujarat native.
The tycoon’s conglomerate offered Modi the use of a private company jet during the 2014 election campaign that swept his Hindu-nationalist Bharatiya Janata Party (BJP) to office.
Two years ago, Adani executed a hostile takeover of broadcaster NDTV, a television news service considered one of the few media outlets willing to outwardly criticise Modi.
Adani batted away press freedom fears, but told the Financial Times that journalists should have the “courage” to say “when the government is doing the right thing every day”.
Critics, including Indian opposition leader Rahul Gandhi, have accused Adani of improperly benefitting from his relationship with Modi to win business and avoid proper oversight — allegations Adani Group and its founder have consistently denied.
Why has he been charged?
Wednesday’s indictment in New York accuses Adani Group’s leadership of paying more than $250 million to Indian government officials to secure lucrative contracts worth more than $2 billion.
It further charges Adani and seven other officials with lying about the bribery in order to raise capital from international investors, including those in the United States.
“These offences 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,” US Deputy Assistant Attorney General Lisa Miller said in a statement.
The indictment accuses Adani of personally meeting with an Indian government official to “advance” the bribery scheme, and of meeting with other defendants to “discuss aspects of its execution”.
What is the reaction in India?
Adani Group acknowledged the charges against its founder and several others on Thursday when it cancelled a US bond sale it initiated just hours before the indictment was published.
But it has not otherwise commented on the allegations against the tycoon or his subordinates, none of whom have been taken into custody.
Modi’s government has likewise yet to comment, but BJP spokesman Amit Malviya said in a statement that the indictment appeared to implicate opposition parties, rather than the prime minister’s.
Jairam Ramesh, of India’s key opposition Congress Party, said the indictment “vindicates” their demand for a parliamentary inquiry into Adani.
He added that the indictment demonstrated what he called the “abject failure” of the Securities and Exchange Board of India (SEBI) to properly investigate Adani Group in the past.
Has Adani Group faced scrutiny before?
Last year, Hindenburg Research — an activist US investment group that bets on stocks falling — accused Adani Group of committing “a brazen stock manipulation and accounting fraud scheme over the course of decades”.
This included funnelling money from offshore accounts controlled by Adani’s brother, Vinod Adani, into listed units to inflate their share prices.
The Hindenburg report has sparked a huge sell-off in shares in Adani’s firms, wiping out more than $150 billion in market value in the following weeks.
Adani’s finance chief dismissed the report as a “malicious combination of selective misinformation and stale, baseless and discredited allegations that have been tested and rejected by India’s highest courts”.
