Naveen Patnaik then-CM of Odisha, PM Narendra Modi, and Tamil Nadu CM M K Stalin are seen in this collage with an inset image of Gautam Adani
Credit: PTI and Reuters Photos
Gautam Adani’s indictment in the United States and arrest warrant for defrauding American investors is an explosive event. It is likely to overshadow the results of the state elections in Maharashtra and Jharkhand.
Unlike Elon Musk, Adani may not have designated himself ‘First Buddy’ of the top political leadership, but India’s Opposition has long attributed that position to him. However, the heat on Adani may singe some in the Opposition as well.
An indictment by US federal prosecutors means that evidence has already been collected through investigation and presented to a Grand Jury before its permission was sought for an indictment. The investigation is over, and sufficient evidence was found to order a trial.
The Union government entity Solar Energy Corporation of India (SECI) was at the core of the bribery scheme which also included the state power distribution companies of Chhattisgarh (ruled by the Congress at that time), Tamil Nadu (ruled by the Dravida Munnetra Kazhagam), Andhra Pradesh (YSR Congress), Odisha (Biju Janata Dal) and Jammu and Kashmir (central rule).
The SECI signed power purchase agreements (PPAs) with Adani entities for supplying 2.3 gigawatts to Andhra Pradesh and 650MW in all to Chhattisgarh, Odisha, Tamil Nadu, and J&K. However, no state power distribution company wanted to sign power supply agreements (PSAs) at the high rates being offered.
It seems that only after bribes were paid to state government officials by Adani entities were state electricity distribution companies directed to purchase Adani supplied solar electricity from the SECI at exorbitant rates. Without this, the entire Adani solar power project — the world’s largest solar farm located at Khevda in Gujarat — would be endangered. While the scheme was on, Adani raised more than $175mn from US investors and financial institutions for this project as part of a $750mn corporate bond.
According to the US indictment, the bribes amounted to a total of $265 million (about Rs 2,029 crore in April 2022). Of this, about $228 million (Rs 1,750 crore) was offered to just one person alone — identified only as ‘Foreign official#1’ in the indictment — in Andhra Pradesh. The state had three distribution companies which agreed to purchase 7000 MW from the SECI — the largest by any state.
The US investigators have material evidence, including emails and a phone used by one of the accused, which detail “the state or region for which government officials had been offered a bribe”, “the total amount of the offered bribe”, “the approximate amount of solar power that the state or region would agree to purchase in exchange for the bribe”, “the per megawatt rate for the total amount of bribe amount offered”, “the abbreviated titles of the government officials who would receive the bribe”, and “the allocation of the total bribe among government officials within each state and region.”
Adani was referred to in the correspondence using codenames for him such as ‘SAG’, ‘Mr. A’, ‘Numero Uno’, and ‘the big man’. Another co-conspirator was called “snake” and “Numero Uno minus one”!
The indictment underlines “the steps that Gautam Adani personally took to offer bribes to government officials” and notes that he personally met with “the government official (the one offered the maximum bribe) of Andhra Pradesh “to advance the execution of the PSA between SECI and Andhra Pradesh’s state electricity distribution companies, including on August 7, 2021, on or about September 12, 2021, and on or about November 20, 2021.”
An equally damning aspect of the indictment is that even after the FBI told Adani officials about the Grand Jury inquiry in 2023, Adani continued to conceal the bribery scheme from financial institutions and to raise loans and issue bonds up to 2024. He also allegedly made false statements in his Indian company’s annual reports and lied to the media denying knowledge of US investigation against his entities.
This is perhaps the most explosive scandal that has hit the Indian government in the last decade. The Adani companies will pay for their sins, if committed, in the US courts. But his political patrons will also not remain unscathed.
The US cases will not go away through the subterfuge of an inquiry by SEBI as in the case of the Hindenburg report. That was a report by a short-seller. These lawsuits are filed by US government institutions — federal prosecutors and the US Securities and Exchange Commission (SEC). They cannot be wished away with a nudge and wink from friends in high places.
Nor is this a case of extra-territorial overreach by US authorities. An Adani entity registered in Mauritius, traded in the New York Stock Exchange (at least till November 2023).
One might recall how a SEC investigation into accounting fraud by Enron had led to the collapse of the company as well its auditors, Arthur Andersen. The US investigators are relentless irrespective of who owns the company.
The Adani bribery scam will blow to smithereens the highfalutin claims of Prime Minister Narendra Modi, 'Na Khaunga, Na Khane Doonga' (neither will I indulge in corruption, nor allow anyone else to indulge in it). The public will not forget that Aandi’s rise has been parallel, and Opposition claims, inextricably linked, to Modi’s political ascendency.
Could it be that the Union government knew nothing of Adani’s dealings with the PSU at the centre of the scandal, the SECI, a fully-owned company under the Ministry of New and Renewable Energy? Was the SECI itself unaware of how suddenly state government entities were signing the PSAs they had refused to sign earlier?
If the bribery scheme continued from 2020 to 2024, the Congress government in Chhattisgarh, the DMK in Tamil Nadu, the BJD in Odisha, the YSR Congress in Andhra Pradesh and the Lt Governor governing J&K under President’s Rule should all be held accountable. Who received the bribes, especially in J&K, when it was under President’s Rule, will also need an answer.
And further: Did the BJP governments which won the Assembly elections in Chhattisgarh and Odisha and its ally, the Telugu Desam Party in Andhra Pradesh, rescind the PSAs with the SECI once they assumed power? Did they deliberately overlook the scandalous PSAs?
The Opposition, despite the involvement of sections of it, is likely to raise Cain over the Adani indictment and arrest warrant in the winter session of Parliament beginning on November 25. They can ill afford to ignore the issue. Meanwhile, the woes of Adani will not end as the trial in the two cases begins in the US.
(Bharat Bhushan is a Delhi-based journalist)