Mumbai: Gautam Adani’s business empire is in turmoil once again after the billionaire Indian businessman was accused in the US of paying exorbitant bribes to secure lucrative government contracts.
Who is Gautam Adani?
Adani, 62, is a publicity-shy school dropout from humble origins who has risen to become fabulously wealthy.
He moved to Mumbai as a teenager to work as a diamond sorter, and founded his own import and export company.
His big break came in 1995 when he acquired a shipping port just as India’s economy was opening up.
Today, the Adani Group has interests in everything from power generation and Australian coal mines to cement, media, foodstuffs, and Israeli airport and port terminals.
A surge in the share prices of units of Adani – Adani Enterprises’ flagship company – by more than 1,000% in five years – has helped make the group 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 native of Gujarat.
The businessman’s group offered Modi the use of a private plane during the 2014 election campaign that brought the Hindu nationalist Bharatiya Janata Party to power.
Two years ago, Adani carried out a hostile takeover of the broadcaster NDTVa television news service that is considered one of the few media outlets willing to outwardly criticize Modi.
Adani overcame concerns about press freedom, but told… Financial Times That journalists must have the “courage” to say “when the government does the right thing every day.”
Critics, including Indian opposition leader Rahul Gandhi, have accused Adani of improperly leveraging his relationship with Modi to win business and avoid proper oversight — allegations that the Adani Group and its founder have consistently denied.
Why was he accused?
The indictment issued Wednesday 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.
Adani and seven other officials are also accused of lying about bribery in order to raise capital from international investors, including investors in the United States.
“These crimes were allegedly committed by senior executives and managers to obtain and finance massive government energy supply contracts through corruption and fraud at the expense of American investors,” Deputy Assistant U.S. Attorney Lisa Miller said in a statement.
The indictment accuses Adani of meeting personally with an Indian government official to “promote” the bribery scheme, and meeting with other defendants to “discuss aspects of its implementation.”
What is the reaction in India?
Adani Group admitted charges against its founder and several others on Thursday when it canceled a US bond sale it had initiated just hours before the indictment was published.
But it has not commented otherwise on the accusations against the businessman or his subordinates, none of whom have been detained.
The Modi government has not yet commented, but BJP spokesman Amit Malviya said in a statement that the indictment appears to implicate opposition parties, not the prime minister’s party.
Jairam Ramesh, of India’s main opposition Congress party, said the indictment “justifies” their demand for a parliamentary inquiry into Adani’s case.
He added that the indictment showed what he called the “abject failure” of the Securities and Exchange Board of India (SEBI) to properly investigate the Adani Group in the past.
Has Adani Group faced audit before?
Last year, Hindenburg Research – an activist US investment group that bets on stocks to fall – accused Adani Group of committing a “decades-long brazen stock manipulation and accounting fraud”.
This included transferring funds from offshore accounts controlled by Adani’s brother, Vinod Adani, to listed units to inflate their share prices.
The Hindenburg report sparked a massive sell-off in Adani shares, resulting in a loss of more than $150 billion in market value in the following weeks.
Adani’s CFO dismissed the report as a “malicious mix of selective misinformation and baseless and discredited allegations that have been tested and rejected by India’s highest courts”.