Indian tycoon Adani's US indictment rattles stocks

Indian billionaire Gautam Adani has been indicted for fraud by U.S. prosecutors and arrest warrants issued for him and his nephew for their alleged roles in a $265 million scheme to bribe Indian officials to secure power-supply deals.

News of the charges wiped billions of dollars on Thursday from the market value of companies within Adani Group, and Adani Green Energy, the company at the center of the allegations, canceled a $600 million U.S. bond sale.

Adani Group said in a statement that the allegations made by U.S. federal prosecutors and in a parallel U.S. Securities and Exchange Commission (SEC) civil case were "baseless and denied", adding that it would seek "all possible legal recourse".

In the first major business fallout of the indictment, Kenyan President William Ruto said on Thursday he had ordered the cancellation of a procurement process expected to hand control of the country's main airport to Adani Group following the indictment of the company's founder in the United States.

The crisis is the second in two years to hit the ports-to-power conglomerate founded by Adani, 62, one of the world's richest people. In January 2023, short-seller Hindenburg Research issued a report that accused it of using offshore tax havens improperly, which Adani Group denied.

U.S. authorities said on Wednesday that eight people, including Adani and his nephew Sagar, had agreed to pay about $265 million in bribes to Indian government officials to obtain contracts expected to yield $2 billion of profit over 20 years, and to develop India's largest solar power plant project.

Sagar Adani is an executive director at Adani Green Energy and currently oversees its "strategic and financial matters".

They also said the Adanis and Adani Green Energy's former CEO Vneet Jaain had raised more than $3 billion in loans and bonds by hiding their corruption from lenders and investors.

Gautam Adani, Sagar Adani and Jaain did not respond to Reuters requests for comment.

Gautam Adani, Sagar Adani and Jaain were charged with securities fraud, securities fraud conspiracy and wire fraud conspiracy, and the Adanis were also charged in a civil case by the U.S. Securities and Exchange Commission.

"Gautam and Sagar Adani were engaged in the bribery scheme during a September 2021 note offering by Adani Green that raised $750 million, including approximately $175 million from U.S. investors," the SEC said in a press statement, adding that a company central to the scheme, Azure Power, used to trade on the New York Stock Exchange.

"The Adani Green offering materials included statements about its anti-corruption and anti-bribery efforts that were materially false or misleading in light of Gautam and Sagar Adani's conduct," it added.

Arrest warrants have been issued in the United States for Gautam and Sagar Adani and U.S. prosecutors plan to hand those warrants to foreign law enforcement, U.S. court records show.

Gautam Adani's current whereabouts are not clear.

None of the defendants is in custody, a spokesperson for U.S. Attorney Breon Peace in Brooklyn said.

"The Adani Group has always upheld and is steadfastly committed to maintaining the highest standards of governance, transparency and regulatory compliance across all jurisdictions of its operations," a group statement said.

"We assure our stakeholders, partners and employees that we are a law-abiding organization, fully compliant with all laws."

Shares in Adani Green Energy plunged 19% and stocks for many other firms in the conglomerate, including flagship Adani Enterprises , lost more than 10%.

The Adani Group companies as a whole lost about $27 billion in value in Thursday's trade in India, putting their combined market capitalization at about $142 billion.

Before Hindenburg's report sparked an approximately $150 billion meltdown, the group's market value was $235 billion.

Adani dollar bonds slumped, with prices down between 3-5c on bonds for Adani Ports and Special Economic Zone .

Indian authorities, including the Securities and Exchange Board of India (SEBI), did not respond to requests for comment on the U.S. charges. Azure said in a statement it had been cooperating with the U.S. agencies and that the people named by the U.S. had left the company more than a year ago.

Debopriyo Moulik, a criminal lawyer based in New Delhi, said he expected the Adani Group to seek a dismissal of the indictment.

"Since an arrest warrant has been issued, the U.S. authorities will have to approach the Indian government through the Indian embassy to execute such warrant in India," he added. India and the U.S. have an extradition treaty.

Indian opposition parties, which have long complained that Adani and his conglomerate have been treated favorably by Prime Minister Narendra Modi's government, called for an investigation into the allegations of wrongdoing. Modi and Adani, who both are from the western state of Gujarat, have denied impropriety.

A probe by SEBI in the wake of the Hindenburg report is ongoing.

Gautam Adani is worth $69.8 billion, according to Forbes magazine, making him India's second-richest person after Mukesh Ambani.