What irked the US was that Gautam Adani had brazenly violated US law by using US investors’ money to bribe Indian officials and secure major contracts in the solar energy sector.

Indian billionaire Gautam Adani, who heads a multinational business empire worth tens of billions of dollars, is now facing an arrest warrant issued by a New York court.

According to Reuters, prosecutors are planning to hand the arrest warrant to foreign law enforcement.

If executed, the warrant would leave an indelible black mark on Adani’s reputation as India’s foremost businessman with the greatest influence on the powerful Prime Minister, Narendra Modi.

More importantly, an arrest, or even a warrant of arrest, could significantly affect India’s relations with the US, which are crucial for India’s defence against China and America’s efforts to curb Chinese expansion in Asia.

The case is of considerable importance to the US, as Adani allegedly used funds from US investors to bribe officials in Indian State Electricity Companies to secure lucrative contracts in the burgeoning solar energy sector. This constitutes a blatant violation of the US Foreign Corrupt Practices Act.

One of Adani’s associates has been charged with conspiracy to violate the Foreign Corrupt Practices Act (FCPA). Legislated in 1977 following a series of corporate scandals, the FCPA makes it illegal to offer, pay, or promise anything of value to foreign officials in exchange for a business advantage.

Thus, even though the alleged bribery occurred in Indian states, American authorities initiated investigations because the case involved US entities, investors, and US laws governing them.

On Wednesday, a grand jury in New York indicted Gautam Adani and seven others on charges of bribing Indian officials to the tune of US$265 million to secure contracts worth US$ 2 billion in the booming Indian solar energy sector. The bribe money had been collected and paid by perpetrating a fraud on US investors, the court indictment said.

Lisa H Miller, Deputy Assistant Attorney General for the Justice Department’s Criminal Division, accused Adani of conspiring to obtain lucrative supply contracts “through corruption and fraud at the expense of US investors.”

A five-count criminal indictment charged Gautam S. Adani, Sagar R. Adani, and Vneet S. Jaain, executives of Adani Green Energy (AGE), with conspiring to commit substantive securities fraud. The accused played key roles in a multi-billion-dollar scheme to raise funds from US investors and global financial institutions through false and misleading statements, the indictment said.

The indictment also charged Ranjit Gupta and Rupesh Agarwal, former executives of a renewable-energy company whose securities traded on the New York Stock Exchange from 2016 to 2023.

Others implicated include Cyril Cabanes, Saurabh Agarwal, and Deepak Malhotra, former employees of a Canadian institutional investor.

The indictment alleged that Gautam S. Adani, Sagar R. Adani, and Vneet S. Jaain lied about their “bribery scheme,” which involved paying over US$ 250 million in bribes to Indian government officials. They also deceived investors and banks to raise billions of dollars while obstructing justice.

“The Criminal Division will continue to aggressively prosecute corrupt, deceptive, and obstructive conduct that violates US law, no matter where in the world it occurs,” the filing said.

Getting Solar Contract

Between 2020 and 2024, the defendants agreed to pay more than US$250 million in bribes to Indian government officials to obtain lucrative solar energy supply contracts, which were projected to generate more than US$2 billion in after-tax profits over an approximately 20-year period.

On several occasions, Gautam S. Adani personally met with an Indian government official to advance the “bribery scheme”. The defendants held in-person meetings with each other to discuss aspects of its execution, court filings said.

The defendants frequently discussed their efforts to further the bribery scheme, including through an electronic messaging application. They extensively documented their corrupt actions.

Sagar R. Adani used his cellular phone to track specific details of the bribes offered and promised to government officials. Vneet S. Jaain used his cellular phone to photograph a document summarising various bribe amounts the US partner owed the Indian Energy Company for its respective portion of the bribes.

Rupesh Agarwal prepared and distributed to other defendants multiple analyses using PowerPoint and Excel that summarised various options for paying and concealing bribe payments, as well as deleting incriminating messages.

US authorities accessed documents showing conversations and other material records that show money raised from US investors was used to bribe government officials in India.

Power Pacts Signed

According to the court filings, following the promise of bribes to Indian government officials, between July 2021 and February 2022, electricity distribution companies in Odisha, Jammu and Kashmir, Tamil Nadu, Chhattisgarh, and Andhra Pradesh entered into Power Sale Agreements (PSAs) with the Solar Energy Corporation of India (SECI), an Indian government-owned enterprise.

Andhra Pradesh’s electricity distribution companies entered into a PSA with SECI on or about 1 December 2021, pursuant to which the state agreed to purchase approximately seven gigawatts of solar power – by far the largest amount of any Indian state or region.

The allegation is that a large chunk of the bribe was directed at officials in Andhra Pradesh.

Ranjit Gupta and Rupesh Agarwal, who were working for Azure Power (an Indian company listed on the New York Stock Exchange between 2016 and 2023), joined Adani’s bribery scheme to convince state power distribution organisations to buy power from SECI.

Azure Power and the Adanis concealed the bribery scheme from US banks and investors from whom they raised billions for the solar energy project.

“Adani Green Energy tried to raise money from US and international investors with a 2021 bond offering on the basis of false and misleading statements about the firm’s anti-corruption and anti-bribery efforts,” The New York Times reported.

The non-disclosure and bribery, serious charges, lie at the heart of the US federal probe and indictment.

NYT reports that the US Securities and Exchange Commission (SEC) “filed a parallel civil case saying that Adani Green Energy raised more than US$175 million from US investors.”

The report adds that one of Adani’s associates was charged with conspiracy to violate the Foreign Corrupt Practices Act (FCPA). That law makes bribing foreign officials a crime for companies operating in the US. The FCPA, established in 1977 after a series of corporate scandals, makes it illegal to offer, pay, or promise anything of value to foreign officials to gain a business advantage.

Therefore, even though the allegations of bribery might have taken place in Indian states, American authorities started investigations because the case involved American entities and investors.

In Adani’s case, following the indictment, the trial will likely move to the “arraignment” stage. The judge will communicate the charges and decide whether to grant bail to the accused. The accused can decide whether to plead guilty or not guilty in response to the charges. If they plead not guilty, the case will proceed to a “jury” trial.

Impact on India and Indo-US Relations

The Adani group has dismissed the allegations as baseless and stated that it will pursue all legal means to counter the charges. However, the Congress party, which has accused Prime Minister Narendra Modi of colluding with Adani for mutual benefit, has called for Adani’s immediate arrest.

While Modi and the government remain silent, BJP leader Sambit Patra said that the law could take its course.

Experts say that the case will undoubtedly harm the reputation of the Adani group in both the Indian and international markets, especially among foreign investors who will take a dim view of corporate governance in India.

Shares of Adani Group companies fell by up to 20% on the Bombay Stock Exchange in Thursday’s intra-day trade after Gautam Adani was charged by US prosecutors. Adani Green called off the issuance of US dollar-denominated bonds worth US$600 million.

If the case proceeds unfavourably for Adani, it will further damage his position in India. But as Wilson Centre South Asia expert Michael Kugelman says, it will be difficult for Indian businesses and state institutions to extricate themselves from Adani, as he is heavily involved in the infrastructure and energy sectors, which also happen to be Prime Minister Modi’s favoured sectors.

As for India-US relations, Kugelman points out that US President-elect Donald Trump and Indian Prime Minister Modi share a symbiotic relationship, with some of Trump’s key appointees being pro-India, such as Marco Rubio (Secretary of State), Michael Waltz (National Security Advisor), and Tulsi Gabbard (National Intelligence Chief). They are also hawkish on China. 

For any US administration, India is vital to countering China’s ambitions in South Asia and the Indo-Pacific. Pro-Modi elements in India believe that the Trump administration may downplay the damage caused by the Adani affair and continue to maintain strong political, economic, and defence ties with India, especially considering the looming threat from China.

However, others argue that since US investors were defrauded and Trump has established a special department to oversee business practices in the US, with Elon Musk at its helm, he would be obliged to let the law take its course in Adani’s case, regardless of how it affects India or Modi.