US authorities likely to drop case against Adani Group chief soon
New Delhi, May 14
The US authorities are moving to resolve the allegations of fraud against Adani Group Chairman Gautam Adani and bring to an end the case, which has been lingering for more than a year, according to sources.
The US Justice Department may announce the dropping of charges as early as this week. Besides, the Securities and Exchange Commission (SEC) is also moving to settle a parallel civil fraud case it brought against the billionaire industrialist and others in November 2024, according to people in the know of the matter.
While the Justice Department could effectively move to drop the charges with the defendants out of the country, a resolution to the SEC would likely involve a monetary penalty, sources said.
The case brought by the SEC, alongside a criminal complaint by the Department of Justice, alleges that the Adanis sought to pay over $250 million in bribes to Indian officials to secure solar energy contracts and concealed the scheme from US investors and banks when they raised funds.
The counsel for Gautam Adani and his nephew Sagar Adani stated in court that there was no credible evidence supporting the alleged bribery scheme. They pointed out that the SEC lacked necessary jurisdiction over the two men and that the alleged misstatements underpinning the case weren't actionable.
The Adani Group has denied all allegations, stating that none of its entities or executives has been charged under the US Foreign Corrupt Practices Act, and that Adani Green Energy - the renewable energy arm that raised the funds - is not a party to the proceedings.
Last month, a US judge granted a request from Gautam Adani to schedule a hearing to dismiss the US SEC case of alleged fraud. The plea states that the case represents an impermissible extraterritorial application of US law and that the SEC has failed to establish actionable claims under US securities laws.
In filings, Adani's legal team has argued that the case lacks a sufficient jurisdictional basis and fails to establish actionable claims under US securities laws.
The plea also argues that the SEC's claims over a 2021 bond sale by the Group's renewable energy arm, Adani Green Energy, are legally flawed on multiple grounds.
The $750-million bond sale was conducted outside the United States under Rule 144A and Regulation S exemptions, with securities sold to non-US underwriters and only later resold in part to qualified institutional buyers, they said.
The Adanis argued that the SEC lacked personal jurisdiction, saying neither of them had sufficient contacts with the US or direct involvement in the bond offering.
The plea filed by the lawyers added that the complaint does not allege that Gautam Adani approved the issuance, attended key meetings, or directed any activity at US investors.
The plea also highlights that the SEC does not allege that there were any investor losses, and there were none. "The bonds have matured, and Adani Green repaid all principal and interest in full to investors in 2024," it added.
The filing also contends the SEC's case is impermissibly extraterritorial, noting the securities were not listed in the United States, the issuer is Indian, and the alleged misconduct occurred entirely in India.
— IANS
Reader Comments
Happy if charges are dropped because it means there was genuinely no evidence. But let's not celebrate prematurely - the legal process should play out properly. Also, Indian authorities should independently verify if any bribes were paid to Indian officials as alleged. That part affects us directly!
As an American following this, I always felt the DOJ overreached. The bribery allegations were vague, and the SEC's case seemed weak given the bonds were sold outside US jurisdiction. This outcome makes sense legally, even if it's disappointing for those who wanted a big conviction.
Classic case of US trying to flex its legal muscle globally. Our companies operate worldwide, they shouldn't be subject to US laws for transactions that happen entirely in India. But we also need stronger domestic corporate governance so foreign agencies don't have reasons to probe. Win-win for Adani though!
The legal arguments about extraterritorial jurisdiction are spot on. India needs to be more assertive about protecting our businesses from such overreach. However, the bribery allegations against Indian officials - whether proven or not - damage our country's reputation. Hope we investigate that independently. 🤔
I work in international finance and this case always seemed weak. The SEC was trying to create a precedent for extraterritorial enforcement. The fact that investors suffered no losses and bonds were repaid in full makes the case even weaker. Glad common sense is prevailing.
We welcome thoughtful discussions from our readers. Please keep comments respectful and on-topic.