Legal experts have voiced concerns of possible financial impact and reputational risk to the Adani Group companies arising out of the US indictment of Gautam Adani and group officials over bribery charges in US, an allegation that the group has denied.
An Adani Group spokesperson on November 21 said the group will seek 'all possible legal recourse' relating to the matter, calling the charges 'baseless'. Read More
In conversation with CNBC-TV18, Sanjay Asher, Crawford Bayley and Company said on November 21 that there is a possibility of a settlement in this matter, however, the group will have to fight the matter in US court. "There is a process of settlement under US laws in case of allegations of bribery," Asher said, adding that there is nothing 'earth-shattering' in the allegations, and the dust will settle down. Under the US Foreign Corrupt Practices Act, a settlement is a possibility in such matters, said Sanjay Asher, however, regarding criminal indictment, one need to see if it possible to settle those charges.
Read More: Key highlights of the 54-page US indictment in Adani bribery case
When asked if there could fresh implications for the group, Sanjay Asher did not rule it out. "There could be fresh legal challenges that vested interest could initiate in India, it is possible," he said.
InGovern's Shriram Subramaniam too concurred that a settlement could happen, but added that the charges by US Justice Department are 'much more serious' than what Indian courts had to contend with, last year. "This is a much more serious charge, and these securities have been mis-sold in the US," Shriram Subramaniam told CNBC-TV18, referring to the recent bond issuances by the group. He added the possibility that merchant bankers involved in the US fund raise may also face regulatory ire. Subramaniam also said many long-only funds may now 'shy away' from investing in the group over reputational risk, and may stay away citing corporate governance. He added that project financing for some of the group may get difficult, 'if these charges stick', adding to it the possibility of cost of borrowing rising by 200-300 bps.
Corporate Lawyer HP Ranina feared there could be wider implication, but sees settlement as a possibility. "There will be an attempt to come to a settlement, and heavy fines will definitely be imposed, if the charges stand," Ranina said.
"It will have an impact since the money will have to come from Indian companies to settle and pay the hefty fines, so it will impact Indian businesses and shareholders," Ranina told CNBC-TV18. He also raised concerns over a possible legal challenge from shareholders in India to remove concerned people from the boards, which 'could lead to litigation'.
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