In November 2024, the United States Department of Justice (DOJ) filed an indictment against persons associated with the India-based multi-national Adani conglomerate including founder, Gautam Adani and his nephew Sagar Adani for engaging in a bribery scheme of $250 Million to obtain solar energy contracts from various Indian states. The Securities and Exchange Commission (SEC) also filed a complaint only against Gautam Adani and Sagar Adani asking for penalties to be imposed for falsely touting the company’s compliance with anti-bribery policies while raising money through corporate bonds worth $750 Million. The allegation of the U.S. agencies is that out of the bonds offered (Debt Securities or Notes)[1] by Adani Green Energy Limited in 2020-21, at least $175 Million of the Notes were offered and sold to investors in the U.S. while simultaneously engaging in a $250 Million bribery scheme to develop India’s largest solar power plant project. The allegations in the DOJ indictment are for violations of the Foreign Corrupt Practices Act by bribing Indian Government officials while raising money through U.S. Markets. The allegations in the SEC complaint include violations of the provisions that prohibit misrepresentation, fraud, use of deceptive or manipulative devices, making false statements or omitting relevant information while buying or selling securities.
Adani Green Energy Limited[2] sold and offered the Notes in the U.S. Market by utilizing regulations that allow capital to be raised by companies through qualified institutional buyers even though they are not registered with the SEC or publicly traded on a U.S. Stock Exchange (The regulations still require compliance with U.S. securities laws). The SEC complaint mentions that Adani Green marketed these bonds to U.S. Investors as “Green Bonds” that would fund projects like “solar energy generation facilities.” The allegations are premised on the fact that the Adanis knew or recklessly disregarded that they had not disclosed to potential investors in their offering circulars[3] that their portfolio of solar power projects was dependent on and had been obtained through payments or promises to pay bribes. The allegations also claim that a subscription agreement based on which ten financial institutions agreed to be underwriters to purchase a minimum amount of notes was also predicated on the same false and misleading statements about effective anti-bribery programs or not having engaged in any undisclosed transactions or arrangements.
The U.S. agencies care about bribes paid to Indian Government Officials by an Indian company that is not listed, registered, based or operating in the U.S. because a part of the money for the Indian company was raised through U.S. Investors utilizing U.S. laws and regulations that permit foreign capital to be raised. As a result, this case is a prime example of how the links to the U.S. don’t have to do with a U.S. based company for American laws against fraud, bribery and misrepresentation like the FCPA to be applicable to an Indian Company. Any Indian citizen who has information on an Indian Company raising money in the U.S. to bribe officials in India can become a whistleblower, while staying anonymous. Whistleblowers are also eligible for rewards from penalties recovered by U.S. agencies like the SEC as a result of the information provided by the Indian whistleblower. While it is sadly, not surprising to hear about bribes in the context of large infrastructure and power projects, Indian citizens don’t end up utilizing American whistleblower laws available to them despite having information on violations by companies. Especially in situations like this one, where Indian anti-corruption enforcers are unlikely to investigate a bribery scheme, anyone with relevant information can access whistleblower provisions and protections from other countries.
[1] Pursuant to Rule 144A which permits resale of privately placed securities to qualified institutional buyers and Regulation S of the Securities Act, 1933 S which exempts from registration offers and sales of securities that occur solely outside of the United States.
[2] Adani Green is listed and traded in Indian stock exchanges (NSE and BSE) and names Adani Enterprises Limited as its parent company and the S.B. Adani Family Trust (controlled by Gautam Adani and his brother) as its “Ultimate Controlling Entity.”
[3] Offering Circulars are meant to give potential investors important information about the entity issuing the notes and the notes offering, to enable those investors to make informed decisions about whether to invest in the notes.