It will surprise no one that the Adanis have managed to get themselves off the hook in multiple US investigations into their corporate conduct. Given their heft in the corridors of power in India and the transactional nature of the Trump administration in the US, a free pass was always on the cards. However, while they will claim that this is a clean chit, the damage done to due process, both in India and the US, and to India’s corporate image will remain.
In the latest instance, Gautam Adani and his nephew Sagar Adani walked free after the US Department of Justice decided to drop bribery charges launched against them when Joe Biden was the US President. The allegations were that companies headed by them paid bribes to government officials in India to secure solar power contracts worth $250 million and then raised $3 billion in bonds from American entities on the basis of those deals. That attracted charges of fraud and conspiracy under the US Foreign Corrupt Practices Act.
In a sudden, but not entirely unexpected, move this week, the US Department of Justice applied to a federal court in New York to drop all charges, now and forever, because it had no evidence to sustain the allegations. The settlement followed a pledge by the Adani Group to invest $10 billion in US to generate 10,000 jobs. The uncle-nephew duo also engaged the services of lawyers closely associated with Trump, who let it be known in the American media that the bribery investigation was coming in the way of that juicy promised investment. The Adanis are not the first foreign businessmen to have leveraged a quid pro quo with the current US administration. It’s the way America does business now.
In a separate case, the Adanis’ flagship company Adani Enterprises has come to a settlement with the US Treasury Department on allegations that it violated sanctions by purchasing liquefied petroleum gas originating from Iran. This get-out-of-jail card will cost the conglomerate $275 million, to be paid to the Office of Foreign Assets Control (OFAC), the agency that administers America’s trade sanctions.
A fair question to ask at this juncture is: From where will the Adanis raise the money for their promised US investment of $10 billion and their settlement of $275 million? Their critics suppose that they will approach Indian banks, by extension, the Indian public, to fund their free passes. Not necessarily, although it would indeed be a travesty if they did. The Adani Group has been raising capital globally and plans to raise $12.5 billion in equity over the next five years to fund its ambitious global expansion. We know from the Hindenburg revelations in 2023 that the group companies have been receiving copious, but opaque, flows from foreign sources, which were not convincingly explained when the Securities and Exchange Board of India (SEBI) investigated them. Apparently, some investors operating out of Mauritius trusted the Adanis enough to concentrate 95% of their investments in Adani companies.
A further question arises then: If, after all these investigations, the conglomerate again approaches foreign lenders, will they be welcomed back as a business group that can be trusted with their money? Will the Adanis’ reputation have recovered? Chances are that international finance will flow into Adani projects again, regardless of the integrity question. It’s just the way of a modern capital.