US indictment brings focus on certain disclosures made by Adani Group companies

The indictment filed before the United States District Court, Eastern District of New York against Gautam Adani and others

The indictment filed before the United States District Court, Eastern District of New York against Gautam Adani and others have brought into focus certain disclosures made by the Adani Group.

The indictment claims the company did not make disclosures to US investors on the ongoing investigation while selling bonds to investors in 2023 and 2024.

It also cites the group’s response to Indian exchanges after an article published by Bloomberg on March 15,2024 alleged  that the US Government was probing Gautam Adani over potential bribery charges.

These documents were filed by the Department of Justice and United States Attorney for the Eastern District of New York. Indictments are akin to launching of government prosecution in India. It is basically the government filing a criminal case against a person. For any adverse action, these allegations have to be proved before the New York court.

An email sent to Adani Group remained unanswered.

In a statement, Adani Group refuted the allegations made by the US Department of Justice and the US Securities and Exchange Commission against directors of Adani Green, calling them baseless.

“As stated by the US Department of Justice itself, the charges in the indictment are allegations and the defendants are presumed innocent unless and until proven guilty. All possible legal recourse will be sought,” the statement added.

Disclosure pertaining to US investors

The US DOJ has accused the company of not disclosing developments pertaining to the anti-bribery probe to the US-based bondholders while selling them bonds. This despite the group being aware of the proceedings.  One of the specific transactions being cited by the DOJ was the $1.36-billion project financing loan availed by Adani Green in December 2023 from a clutch of foreign lenders.

The US government has also cited another $409-million green bonds issued by Adani Green in March 2024 from a clutch of international banks. It has been alleged that Adani Group did not disclose the ongoing proceedings to the bondholders during the fund raising.

Statement to Exchanges

On March 18, Moneycontrol had reported that all Adani Group company stocks ended in the red due to the Bloomberg report.

Stock exchanges had subsequently sought clarification from Adani Enterprises on the story. In response, the company had issued a denial.

“This is in relation to the article titled ‘US Probing Indian Billionaire Gautam Adani and His Group Over Potential Bribery’ published by Bloomberg on March 15, 2024. Adani Enterprises Limited (“Company”) states that it has not received any notice from the Department of Justice of U.S. in respect of the allegation referred to in the said article. The Company states that the report is false.”

However, Gautam Adani and his nephew Sagar Adani were aware of the US anti-bribery probe at least since March 2023, as per the indictment. According to the court documents, the US Federal Bureau of Investigation(FBI) had revealed its investigation and existence of a Grand Jury to Sagar Adani in March 2023.

“In or about March 2023, FBI special agents took steps in furtherance of the FBI Investigation and the Grand Jury Investigation that revealed the existence of those investigations, as well as certain crimes and individuals under investigation, to the defendant Sagar R. Adani, which information was shared with the defendant Gautam S. Adani. Thereafter, in furtherance of the Fraud Scheme, Sagar  Adani and Gautam Adani made or caused others to make false and misleading statements regarding the Bribery Scheme to investors, potential investors and financial institutions.”

“FBI special agents provided Sagar Adani with a copy of the search warrant and served him with a grand jury subpoena. The search warrant identified offenses, individuals and entities under investigation by the United States government, specifically: violations of the FCPA, securities fraud, wire fraud and related conspiracies involving Sagar Adani and the defendants Gautam Adani and Vneet  Jaain, as well as the Indian Energy Company.”

The DOJ also claimed Gautam Adani was aware of the development. “On or about March 18, 2023, the defendant Gautam  Adani emailed himself photographs of each page of the search warrant executed and a grand jury subpoena served on the defendant Sagar Adani,” said the court filing.