NOVEMBER 2024

What is Adani Bribery Scandal?

The recent revelations surrounding the Adani Group’s alleged involvement in a bribery scandal have shaken the foundations of India’s business environment.

Indictments from the United States Department of Justice (DOJ) and the Securities and Exchange Commission (SEC) have painted a disturbing picture of corporate malfeasance and governmental complicity, casting a shadow over the world’s largest democracy and its economic aspirations.

• अडानी सुरक्षित क्यों है? 

At the heart of the controversy lies the Solar Energy Corporation of India (SECI), an agency whose silence amid allegations of inflated solar power prices and bribery schemes raises troubling questions.

The scandal centres around the development of the world’s largest solar project in India, with claims that Adani Group executives bribed Indian officials to secure lucrative power purchase agreements.

• Regulatory Capture - Government, Corporate and Democracy 

• Government and Corporates – Holy and Unholy Partnership 

According to the DOJ, this scheme was not just a domestic concern but an elaborate plan to manipulate global markets and attract billions in foreign investment.

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... scheme was not just a domestic concern but an elaborate plan to manipulate global markets...

Why is the United States Concerned?

The involvement of US authorities in a scandal that appears, on the surface, to be localized in India might seem surprising. However, two critical reasons underlie their engagement.

First, the US financial markets maintain stringent regulations to protect investors and uphold market integrity. 

These safeguards have positioned America as a top destination for global investments, and any deviation from these principles’ risks undermining its reputation.

Second, the money trail implicates the Adani Group in deceiving US investors. 

Adani Green, a subsidiary of the conglomerate, allegedly raised substantial funds from US markets under the guise of financing legitimate green energy projects, while a portion of this capital reportedly fuelled corrupt practices in India.

The Allegations and Evidence

The DOJ’s 54-page indictment outlines a series of grave allegations, including violations of the US Foreign Corrupt Practices Act (FCPA), securities fraud, wire fraud, and obstruction of justice.

Among the most damning revelations is the claim that Adani executives paid about Rupees 2,000 Crore ($260 million) in bribes to secure favourable agreements in states like Odisha, Chhattisgarh, Tamil Nadu, Andhra Pradesh, and Jammu & Kashmir.

• अडानी सुरक्षित क्यों है? 

These states, governed by different political parties—including the BJP, DMK, Congress, Biju Janta Dal and YSR Congress—are now embroiled in the scandal, raising concerns about bipartisan complicity.

Evidence gathered by the FBI, including searches of Sagar Adani’s electronic devices, reportedly links top Adani executives directly to the bribery scheme.

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...embroiled in the scandal, raising concerns about bipartisan complicity

Despite these findings way back in March 2023, India’s regulatory agencies—the Securities and Exchange Board of India (SEBI), the Enforcement Directorate (ED), and the Central Bureau of Investigation (CBI)—have failed to take meaningful action.

This inaction starkly contrasts with the publication of investigative reports in international outlets like Bloomberg and their reprinting in India by major newspaper like Economic Times.

Potential Consequences for the Adani Group

The Adani Group now faces a precarious legal battle in the United States, with four potential outcomes:

1.    Challenging the allegations in court, which would lead to a protracted and high-profile trial, likely damaging the group’s political connections and credibility.

2.    Negotiating a settlement, which may keep sensitive details confidential but could hurt India’s image on the global stage.

3.    Accepting a civil conviction, involving fines but no criminal penalties.

4.    Facing criminal conviction, potentially leading to prison sentences for key executives—a scenario feared by the group.

Broader Implications for India

Economic and Financial Fallout

The economic ramifications for India could be severe. The Adani Group’s debt, estimated at ₹8 lakh crore, poses a systemic risk to Indian banks, particularly if defaults occur. 

LIC, which holds significant stakes in Adani companies, has already faced losses exceeding ₹9,000 crore. Internationally, the group’s ability to raise funds from US and European markets is now under threat.

Political Instability

The scandal implicates political figures across party lines, from the BJP in Jammu & Kashmir to the Congress in Chhattisgarh. Once trials commence and names surface, the fallout could destabilize India’s political landscape.

National Security Concerns

The Adani Group’s control over critical infrastructure—spanning airports, ports, power, cement, media, defence, and energy—raises national security concerns. Any failure of the conglomerate could have cascading effects on India’s operational and strategic capabilities.

• अडानी सुरक्षित क्यों है? 

Geopolitical Repercussions

The United States may leverage this scandal as a diplomatic tool, pressuring India on key issues such as the Russia-Ukraine conflict or trade agreements favouring American businesses over riding Indian interests. 

This highlights the potential for global actors to exploit India’s vulnerabilities.

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The Adani Group’s control over critical infrastructure raises national security concerns

Systemic Failures in Governance

The scandal exposes glaring systemic failures in India’s governance. SEBI, tasked with protecting investor interests, failed to act on the allegations. The ED and CBI did not pursue findings unearthed by foreign agencies like the FBI. 

Even the judiciary did not take suo motu cognizance of the scandal, despite its far-reaching implications. 

This inertia reflects a troubling pattern of institutional decay.

A Broader Reflection on India’s Growth Model

India’s overreliance on conglomerates like Adani and Ambani underscores vulnerabilities in its economic and political systems. 

The unchecked corporate influence, combined with systemic failures in regulation and accountability, poses a threat to India’s aspirations as a global economic powerhouse. 

While Gautam Adani denies wrongdoing, the allegations tarnish India’s reputation as a secure and ethical investment destination.

Conclusion: Is This the New India?

The Adani bribery scandal serves as a stark reminder of the dangers inherent in a growth model rooted in political connections, bribery, and market manipulation. 

It jeopardizes not only the credibility of Indian businesses but also the nation’s governance, security, and diplomacy.

• अडानी सुरक्षित क्यों है? 

As India grapples with the fallout, it must confront an uncomfortable question: Is this the vision of a new India—one where the lines between politics, business, and corruption blur, leaving the common citizen to bear the costs?

India’s response to this scandal will shape its future, determining whether it emerges stronger and more transparent or succumbs to the weight of systemic failures and unchecked greed.

For now Adani is safe. Adani  Group is too Big to Fail.