Shares of Indian group Adani plunge 20% after accusations of corruption and fraud in the United States

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NEW DELHI — Asia’s richest man, Indian tycoon Gautam Adani, is once again in the spotlight. Shares of his companies plunged as much as 20% on Thursday after he was indicted by US prosecutors for misleading investors in a massive solar power project in India by concealing that it was facilitated by an alleged corruption scheme.

In an indictment unsealed Wednesday by federal prosecutors in New York, Adani, 62, was charged with securities fraud and conspiracy to commit securities and wire fraud.

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One of the consequences of the US legal action is that the Adani group has decided not to proceed with an offering of bonds denominated in US dollars. Adani Renewables announced the decision in letters to the Bombay Stock Exchange and the National Stock Exchange of India.

Who is Gautam Adani?

Adani is the son of a middle-class family from Ahmedabad, in the western Indian state of Gujarat. Adani left university to become a diamond trader in Mumbai, India’s financial capital. In the 1980s, he began importing plastic before setting up Adani Enterprises, which sold everything from shoes to buckets and remains his flagship business.

India opened its economy in the 1990s and a new middle class emerged as tens of millions escaped poverty and the economy boomed, prompting Adani to focus on infrastructure and coal.

Adani’s first major project, the Mundra port in Gujarat, opened in 1998 and is now India’s largest. Adani Ports and Special Economic Zone Ltd. is India’s largest private port operator. Within a decade, Adani became India’s largest developer and operator of coal mines. According to Adani Power’s website, it has expanded to Australia and Indonesia and is poised to become « one of the world’s largest mining groups. »

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Adani Companies, India’s second-largest conglomerate, operate airports in major cities, build roads, generate electricity, manufacture defense equipment, develop agricultural drones, sell cooking oil and run a media. Despite his roots in fossil fuels, billionaire Adani Green aims to become the world’s largest player in renewable energies by 2030.

Why is Adani controversial?

Adani is seen as close to the Hindu nationalist government and the political opposition has long accused Prime Minister Narendra Modi of having close ties to the tycoon. They both hail from the western state of Gujarat.

Critics of the businessman say much of his success comes from his close ties to the government and Modi. For example, they accused the government of adjusting tender rules to make it easier for Adani to win airport operating contracts. The company denies this, saying the contracts were won in a relatively transparent manner.

India’s main opposition immediately demanded an investigation by a parliamentary committee into the Adani group’s dealings, which Jairam Ramesh, head of the Congress Party, said were causing « increasing monopolization in key sectors of the Indian economy, fueling the inflation and also posing enormous foreign policy challenges. .”

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Ramesh said his party “brought out the various dimensions of these scams and the intimate connection between the Prime Minister (PM Modi) and his favorite businessman. These questions remained unanswered.

Last year, Adani companies lost $68 billion in market value after short-selling firm Hindenburg Research accused Adani of « running the biggest scam in the company’s history », triggering a massive sale of the group’s shares.

US-based Hindenburg has accused Adani Companies of share price manipulation and fraud just as the group began a share offering intended to raise $2.5 billion.

The Adani Group rejected Hindenburg’s allegations, saying none were « based on an independent or journalistic investigation. » Adani’s response included documents and data tables and indicated that the group had made all necessary regulatory disclosures and complied with local laws.

How Adani became Asia’s richest man

Adani’s net worth has soared around 2,000% in recent years as the share prices of its listed companies soared.

Before Modi took office, Adani was friendly with the rival Congress Party, which governed the state of Gujarat at the start of many of his early projects. Adani has been “close to every politician in power,” RN Bhaskar, a journalist who wrote a biography on Adani, told the Associated Press.

Adani’s supporters say he has cleverly aligned the group’s priorities with those of the government by investing in key sectors like renewable energy, defense and agriculture. Its projects abroad, in strategically important countries like neighboring Sri Lanka, are helping New Delhi compete with rival Beijing in the region.

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