Adani Green’s US fundraise & Azure’s NYSE listing: Two reasons why the US is taking action in an alleged bribery scam in India

The reasons, as mentioned in the SEC complaints and the indictment, mainly pertain to the companies’ activities and presence in the US and them having American investors. The connection with the Adani group primarily pertains to an Adani Green corporate bond issuance in 2021, which involved US investors. As for Azure, even as it primarily did business in India through a subsidiary, it had securities listed on the New York Stock Exchange (NYSE).

US laws, primarily the country’s Foreign Corrupt Practices Act (FCPA), prohibits certain classes of persons and entities from making payments to foreign government officials obtaining or retaining business. In other words, it is unlawful for such persons and entities to offer, promise, or pay bribes to government officials in other countries. These classes of persons and entities include certain foreign issuers of securities in the US and companies whose stock is publicly traded on US bourses.

According to the SEC, those named in its complaints also used “the means or instrumentalities of (US) interstate commerce” to communicate with each other regarding the bribery scheme. Communications using various modes—like email, text message, or fax—in or from the US come under the purview of US interstate commerce for the purpose of the FCPA.

In its complaint against Gautam Adani and Sagar Adani, the SEC alleged that Adani Green in September 2021 told purchasers of its corporate bonds worth $750 million—including more than $175 million to investors in the US—that none of the company’s directors or officers had paid or promised to pay bribes to government officials or attempted to unduly influence those officials.

The SEC alleged that this was not true, adding that in the months and weeks before making these representations, Gautam Adani and Sagar Adani were “personally involved in paying or promising the equivalent of hundreds of millions of dollars in bribes to Indian state government officials”. Apart from this bond issuance, the indictment mentions that Adani Green and its arms raised dollar-denominated loans of over $2 billion from lender groups comprising international financial institutions and US-based investors.

“As alleged, the defendants orchestrated an elaborate scheme to bribe Indian government officials to secure contracts worth billions of dollars and Gautam S. Adani, Sagar R. Adani and Vneet S. Jaain (Adani Green managing director) lied about the bribery scheme as they sought to raise capital from US and international investors,” Breon Peace, the US Attorney for the Eastern District of New York, said while announcing the indictment.

In its complaint against Cabanes, the US securities market regulator accused the French national of violating the FCPA by being involved in the alleged bribery scheme along with the Adani group while serving on the board of a company whose stock was listed on a US bourse. Cabanes served as a director on the board of Azure Power Global as a representative of the company’s largest stockholder—Canada-based pension fund Caisse de dépôt et placement du Québec (CDPQ).

Azure is a limited company organised under the laws of Mauritius with India being its principal place of business. According to the SEC, for a large part of the period of the alleged bribery scheme—2020 to 2024—Azure stock traded on the New York Stock Exchange. It was delisted in November 2023 for “failure to file reports with the Commission (SEC)”.

The indictment alleged that between 2020 and 2024, the “defendants agreed to pay more than $250 million in bribes to Indian government officials to obtain lucrative solar energy supply contracts”, which were projected to generate billions of dollars in profits.

“On several occasions, Gautam S. Adani personally met with an Indian government official to advance the Bribery Scheme, and the defendants held in-person meetings with each other to discuss aspects of its execution. The defendants frequently discussed their efforts in furtherance of the Bribery Scheme, including through an electronic messaging application. The defendants also extensively documented their corrupt efforts,” the US Attorney’s Office for the Eastern District of New York said in a release.

“During this same period, Gautam S. Adani, Sagar R. Adani and Vneet S. Jaain allegedly conspired to misrepresent the Indian Energy Company’s anti-bribery and corruption practices and conceal the Bribery Scheme from U.S. investors and international financial institutions in order to obtain financing, including to fund those solar energy supply contracts procured through bribery,” it added.

The alleged bribery scheme purportedly involved Azure in addition to Adani Green. The SEC alleged that senior executives and officials of the two companies schemed to pressure and bribe state government officials in India in order to get state power distribution companies to buy solar power at prices favourable to the companies. It is alleged that Azure’s share in the bribe paid or promised was one-third, while the remaining two-thirds was Adani’s share.

The indictment also alleged that Cabanes and three others related to Azure and CDPQ conspired to obstruct the grand jury, the Federal Bureau of Investigation (FBI) and the SEC investigations into the alleged bribery scheme.

“Among other things, those four defendants agreed to delete electronic materials related to the Bribery Scheme, including emails, electronic messages and Bribery Analyses; caused the US Issuer’s Board of Directors to initiate an internal investigation into the Bribery Scheme and then withheld material information from that investigation; and falsely denied their participation in the Bribery Scheme to representatives of the FBI, DOJ (Department of Justice) and SEC at meetings in Brooklyn, New York,” the US Attorney’s Office for the Eastern District of New York said.