NEW DELHI (AP) — One of Asia’s richest men, Indian tycoon Gautam Adani, is again in the spotlight. His companies’ stocks plunged up to 20% in value Thursday after he was indicted by U.S. prosecutors on charges that he duped investors in a massive solar energy project in India by concealing that it was being facilitated by bribes.
In an indictment unsealed in New York, Adani, 62, was charged with securities fraud and conspiracy to commit securities and wire fraud. Seven other executives connected to Adani's business empire also face charges. The indictment alleges a scheme to pay about $265 million in bribes to government officials in India.
The full impact of the case on Adani's businesses is not yet known. Kenya's president on Thursday canceled the tycoon's multimillion dollar deals for airport modernization and energy projects.
The Adani group, meanwhile, decided not to proceed with a proposed U.S. dollar-denominated bond offering. AdaniRenewables announced the decision in letters to the Bombay Stock Exchange and the National Stock Exchange of India.
In a statement, the group said the allegations against directors of Adani Green “are baseless and denied.”
U.S. prosecutors said they brought the charges to protect investors. Deputy Assistant Attorney General Lisa Miller said in statement that the Department of Justice "will continue to aggressively prosecute corrupt, deceptive, and obstructive conduct that violates U.S. law, no matter where in the world it occurs.”
None of the people charged in the U.S. have been arrested, prosecutors said.
Who is Gautam Adani?
Adani is the son of a middle-class family in Ahmedabad in western India’s Gujarat state. He quit college to become a diamond trader in Mumbai, India’s financial capital. In the 1980s, he started importing plastics before establishing AdaniEnterprises, which traded in everything from shoes to buckets and remains his flagship company.
India opened up its economy in the 1990s and a new middle class emerged as tens of millions of people escaped poverty, prompting Adani to bet on infrastructure and coal.
Adani’s first big project, the Mundra port in Gujarat, opened in 1998 and is now India’s largest. Adani Ports and Special Economic Zone Ltd. is India’s biggest private port operator. Within a decade, Adani became India’s largest developer and operator of coal mines. According to Adani Power’s website, it has expanded to Australia and Indonesia and has ambitions to become one of the world's largest mining groups.
India's second-largest conglomerate operates airports in major cities, builds roads, generates electricity, manufactures defense equipment, develops agricultural drones, sells cooking oil and runs a media outlet.
How Adani became Asia’s richest man
Adani’s net worth shot up about 2,000% in recent years as share prices for his listed companies soared.
Before Modi took office, Adani was friendly with the rival Congress Party, which governed Gujarat state when many of his early projects began. Adani has been “close to every politician in power,” R N Bhaskar, a journalist who wrote a biography on Adani, told The Associated Press.
Adani’s supporters say he has cleverly aligned the group’s priorities with those of the government by investing in key industries like renewable energy, defense, and agriculture. His projects overseas, in strategically important countries like neighboring Sri Lanka, help New Delhi compete with rival Beijing in the region.
Why is Adani controversial?
Adani is considered close to the Hindu nationalist government. The political opposition has long accused Prime Minister Narendra Modi of having close ties with the tycoon. They both hail from the western state of Gujarat.
The businessman's critics say much of his success stems from his close ties to the government and Modi. For example, they have accused the government of adjusting bidding rules to make it easier for Adani to win contracts to operate airports. The company denies this, saying contracts were won fairly.
Opposition Congress party leader Rahul Gandhi called for Adani’s arrest and has accused Modi of protecting him.
India’s main opposition also demanded a parliamentary committee probe into Adani Group dealings, which Jairam Ramesh, a leader of the Congress Party, said are causing "growing monopolization in key sectors of the Indian economy, fueling inflation, and posing huge foreign policy challenges as well.”
When did allegations of wrongdoing surface?
Last year, the Adani companies lost $68 billion in market value after short-selling firm Hindenburg Research accused Adani of “pulling the largest con in corporate history,” triggering a massive sell-off of the group's stocks.
U.S.-based Hindenburg accused Adani companies of stock price manipulation and fraud just as the group began a share offering meant to raise $2.5 billion.
The Adani group dismissed Hindenburg’s allegations, saying none were “based on independent or journalistic fact finding.” Adani’s response included documents and data tables and it said the group had made all necessary regulatory disclosures and has abided by local laws.
What happens next?
Adani and five of the six other defendants live in India, which has an extradition treaty with the U.S. The other lives in Singapore, which also has an extradition treaty.
The indictment charging Adani and his co-defendants was returned on Oct. 24, but it remained under seal and out of public view until Wednesday.
On Oct. 31, court records show, U.S. prosecutors asked, and a judge agreed, to partially unseal Gautam Adani’s indictment and arrest warrant “for the limited purpose of providing these documents to foreign law enforcement.”
The arrest warrants are not yet publicly available.
U.S. officials could ask their foreign counterparts to detain the defendants and then send them to New York, where they would have to appear in a federal court for arraignment and other proceedings. As of Thursday, no court hearings had been scheduled.
