Adani Green Energy chairman Gautam Adani and other employees have not been charged for bribery or any violations of the U.S. Foreign Corrupt Practices Act (FCPA), the company said on Wednesday (November 27, 2024), in its first counter to the U.S. Court indictment and the civil charges pressed by the American market regulator that became public on November 21, 2024.
It also told the stock exchange that the indictment would not have any financial implications for the company as it does not quantify any penalty. Adani Group stocks subsequently recovered ground in Wednesday’s (November 27, 2024) trading.
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The U.S. Court indictment does, in fact, include the charge of conspiracy to violate the FCPA and outlines details of the bribery scheme, where Mr. Adani and his fellow Adani Green Energy Limited (AGEL) directors Sagar R. Adani, Vneet S. Jaain, and Ranjit Gupta have been named along with co-conspirators in a plan to pay bribes to government officials to secure lucrative solar power contracts.
‘Not charged with FCPA violation’
In an early morning stock exchange filing, AGEL said that it was incorrect to say that its directors had been charged with FCPA violations. “Mr. Gautam Adani, Mr. Sagar Adani and Mr. Vneet Jaain have not been charged with any violation of the FCPA in the counts set forth in the indictment of the U.S. DOJ [Department of Justice] or civil complaint of the US SEC [Securities Exchange Commission]. These directors have been charged on three counts in the criminal indictment namely (i) alleged securities fraud conspiracy, (ii) alleged wire fraud conspiracy, and (iii) alleged securities fraud,” the company said.
The group’s stocks, that had taken a hammering since last Thursday and were beaten down across the board on Tuesday, recovered sharply following this filing. AGEL saw the first uptick since the indictment came to light, rising 10% after hitting a fresh 52-week low in the previous trading session. Adani Total Gas, whose partner TotalEnergies has decided to freeze fresh investments into the group, and Adani Power, both surged 20% on the National Stock Exchange.
‘Penalties not quantified’
In a separate detailed submission under India’s stock market listing regulations, AGEL intimated that the indictment of those directors is not expected to have financial implications as the indictment does not specify any quantum of any fine or penalty.
On the SEC’s civil complaint in the U.S. District Court Eastern District of New York against Mr. Gautam Adani and Mr. Sagar Adani, AGEL said they have been accused of violating certain sections of the Securities Act of 1933 and the Securities Act of 1934, and of aiding and abetting AGEL’s violation of these U.S. laws.
“Although the complaint prays for an order directing the defendants to pay civil monetary penalties, it does not quantify the amount of penalty,” the company said about the anticipated financial impact of the move.
What the indictment says
As per the U.S Department of Justice indictment, the alleged bribery scheme was systematically piloted over time and across jurisdictions using ‘Bribery Notes’, code words, in-person meetings, PowerPoint slides and Excel analyses of different payment options. The co-conspirators used code names, with Gautam Adani referred to as “Mr [.]A,”, “Numero Uno” and “the big man” while Jaain was referred to as “V”, “snake” and “Numero Uno minus one.”
It added that the co-conspirators regularly discussed the progress of the plans on their cell phones, using “an electronic messaging application”. Mr. Gautam Adani “personally met with “Foreign Official #1 in Andhra Pradesh” in August, September and November 2021. The “co-conspirators” promised to Indian government officials around ₹2,029 crore ($265 million) of bribes. Of this, around ₹1,750 cr was offered to AP’s “foreign official #1”.
Downgrade rationale
Rating agencies like Moody’s that downgraded the outlook on several group firms to negative on Tuesday, had listed out the charges against AGEL and the group promoter in their rating action rationale.
“These rating actions follow the indictment of AGEL chairman Gautam Adani and several senior management team members by the U.S. Attorney’s Office in a criminal case and the filing of charges by the US Securities and Exchange Commission (SEC) in a civil case. The charges and allegations include: (1) bribery of Indian government officials, (2) securities and wire fraud, (3) conspiracy to violate the US Foreign Corrupt Practices Act and obstruct justice, (4) false statements made in AGEL’s annual reports, and (5) false statements made to the U.S. government in relation to its investigation into the group,” Moody’s had pointed out on Tuesday.
The rating agency also noted that the indictment of Mr. Adani and other senior Adani executives on bribery and other charges will likely weaken the Adani Group’s access to funding and increase its capital costs. Moody’s said it recognises the possibility of broader weaknesses in the governance structure across the rated Adani group entities as well as potential operational disruptions, including on their capital spending plans, while legal proceedings are going.
Published - November 27, 2024 10:33 am IST
