Adani’s accusation shocked the Indian political and business world. The ball is in SEBI’s court

TThe week started with a lull in news. There was some excitement around the elections in Maharashtra and Jharkhand, but in election-dependent India even that was somewhat tepid. Then, on Thursday morning, news of US charges against Gautam Adani and several others (to borrow from Miley Cyrus) came like a wrecking ball. The slow spell was completely broken.

As India’s top businessman, who was allegedly very close to the Narendra Modi government, was accused of bribing state government officials, the fallout reverberated through the political, legal and business worlds, shaking them all. On top of this, the case exposed the inefficiencies of the Indian renewable energy market, which created the conditions for the alleged bribery scheme.

The indictments brought by the US Department of Justice and the Securities and Exchange Commission (SEC) were well drafted and laid out the charges in plain language. The crux of the matter was that Adani Green Energy and Mauritius-listed Azure Power, both formerly listed on US stock exchanges, allegedly misled American investors by claiming that they were not involved in corrupt activities abroad.

The allegations were clear: several members of senior management of Adani Green Energy and Azure Power allegedly conspired to bribe various state government officials to ensure that state-owned electricity distribution companies (DISCOMs) signed power supply agreements with the Solar Energy Corporation of India (SECI). . These PSA would, in turn, allow SECI to buy solar power from Adani and Azure at high prices.

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Also read: Adani should take lessons from Tatas and Birlas – keep arm’s length from politicians

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Friend…

While the Justice Department’s indictment did not name the main beneficiaries of the alleged bribe, it said that about 86 percent of the planned bribes were to be paid to a senior official in the Andhra Pradesh government. The SEC’s prosecution, by contrast, was less circumspect.

It categorically alleged that Gautam Adani met the Andhra Pradesh Chief Minister in 2021 – a position then held by YSRCP’s Jagan Mohan Reddy – and “at or in connection with that meeting paid or promised a bribe to government officials of Andhra Pradesh » conclude energy supply agreements with SECI.

The Adani group quickly rejected the allegations, calling them baseless and saying it would seek all legal remedies.

Notably, the Chandrababu Naidu-led Telugu Desam Party (TDP), which is usually very quick to find fault with the Jagan government, was unable to capitalize on this. Why? ThePrint has learned that the TDP, an ally of the BJP, is wary of launching an attack that could compromise Adani. A friend of a friend is a friend, and a friend of an enemy is an enemy. But what happens to someone who is both at the same time? This seems to be the mystery of Naidu.

The allegations also show an absolute lack of self-preservation on the part of Gautam Adani, his nephew Sagar and their associates. How else can one describe the fact that Sagar’s phone contained detailed information about the alleged amounts of bribes to be paid, or that Gautam Adani apparently emailed documents to himself that he then allegedly hid from the Indian stock exchanges?

However, the comedy of errors does not end there. Adani’s associates at Azure Power tried to throw him under the bus as the heat intensified under the watchful eye of US authorities. We are back to the friend-enemy concept.

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Also read: Charged by the US, sentenced by the market. The damage done to Adani will be deeper and more lasting this time.

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Hard times ahead

Overall, this is a serious issue for the company given that Adani shares lost a whopping Rs 2.6 lakh crore in market capitalization on Thursday, followed by another Rs 35,000 crore on Friday.

Adani Green Energy has also been forced to abandon plans to raise $600 million through dollar bonds, which will potentially impact its growth plans and could – to a limited extent – impact renewable energy development in India.

More worrisome for the Adani Group is the blow from Kenya, which announced it was terminating a $2.5 billion deal with the group, citing the indictment.

The allegations could also lead to a SEBI investigation following apparent misleading statements made in the media and on Indian stock exchanges.

But can Indian authorities launch their own investigation based on the findings of a foreign government? There is a precedent. In at least two cases in the past, the CBI initiated investigations following the findings of the US Department of Justice.

Finally, with SECI in the spotlight, this case strengthens the argument that perhaps DISCOMs and solar power producers should bargain and sign agreements among themselves.

All this happens just a few days before the winter session of parliament. Conspiracy theorists say the timing was no coincidence. Be that as it may, Prime Minister Narendra Modi faces difficult times upon his return from Guyana.

Opinions are individual.

(Editing by Teres Sudeep)