Gautam Adani Faces U.S. Indictment: Dollar Bonds Plunge Amid Bribery and Fraud Charges

Gautam Adani Indicted for Bribery and Securities Fraud in U.S., Adani Group Bonds Tumble Amid Legal Scandal and Market Reactions

In a serious legal blow to Indian billionaire Gautam Adani, his indictment by U.S. authorities has dropped the value of bonds issued by companies belonging to the Adani Group by a notable amount. On November 21, 2024, in early Asian trading, the debt instruments of Adani Group dropped sharply after news of the charges. The New York indictment, which relates to bribery and securities fraud allegations, is having a shock wave on financial markets.

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A report by Reuters claims that prices for dollar bonds issued by Adani Port and Special Economic Zone, maturing in 2027, declined by more than five cents on the dollar. Other bonds, such as those of Adani Electricity Mumbai, maturing in 2030, saw deeper declines, and Adani Transmission traded just above 80 cents on the dollar. All these cuts are the steepest the group has suffered since February 2023 after a report from short-seller Hindenburg Research raised concern over conglomerate mounting debt, as well as its tax practices in offshore bases.

The charges brought by U.S. prosecutors claim Gautam Adani and other key executives from the Adani Group have engaged in a bribery scheme worth over $250 million in an attempt to influence Indian government officials. The bribes, according to the prosecution, were kept secret from investors and financial institutions to help perpetuate fraud in fundraising. According to the U.S. authorities, this was with the intent of misleading investors and banks to allow Adani to raise billions by making false and misleading statements.

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Along with executives from Adani Green Energy Ltd and Azure Power Global Ltd, Sagar Adani, the nephew of Adani, was charged for his role in a multi-billion-dollar operation to secure investments. Adani along with these executives has been charged with conspiracy to commit securities and wire fraud as well as substantive securities fraud. A scheme was alleged to have helped Adani Green and Azure Power win funding from US investors by exaggerating the value of a huge solar energy project awarded by the Indian government.

The U.S. authorities, in a statement, claimed that the scheme violated multiple federal securities laws including anti-fraud provisions and sought civil penalties, permanent injunctions, and bans on the executives’ involvement in future corporate leadership roles. The SEC further stated that Adani Green raised over $175 million from U.S. investors and that shares of Azure Power were traded on New York Stock Exchange at the time.

At the same time, criminal charges were made public against Gautam Adani and others in the Adani Group. These charges include those violation offenses of the Foreign Corrupt Practices Act, pointedly, violations occurring as they bribe high-ranking business contract officials. U.S. officials further claim that the accused tried to obstruct investigations into their actions; a fact strongly supported by FBI Assistant Director James Dennehy.

Shadow over the financial stability of the Adani Group: The litigation continues; the Adani Group has been receiving a lot of attention ever since the Hindenburg report. In the meantime, the financial world is at the edge of its seat, especially as the multiple debt portfolio of the Adani Group continues to be challenged. With the Adani companies’ bonds tumbling, the legal outcome of the case may have a significant impact on both the Adani Group and the mainstream market confidence in Indian conglomerates.

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