SEC charges Gautam Adani, his nephew Sagar Adani in alleged bribery plot

The U.S. Securities and Exchange Commission (SEC) on Wednesday charged Gautam Adani, his nephew Sagar Adani and Cyril Cabanes, a former executive of Azure Power’s board, for an alleged bribery plot to secure multi-billion-dollar solar energy projects from the Indian government.

Adani Green raised more than $175 million from U.S. investors and Azure Power’s stock was traded on the New York Stock Exchange during the alleged scheme, the U.S. SEC says in a statement.

In one action, the SEC charged Gautam Adani, chairman of Adani Green’s board of directors, and his nephew, Sagar Adani, executive director of Adani Green’s board. According to the SEC’s complaint, Gautam and Sagar Adani orchestrated a bribery scheme that involved paying or promising to pay the equivalent of hundreds of millions of dollars in bribes to Indian government officials to secure their commitment to purchase energy at above-market rates that would benefit Adani Green and Azure Power.

“As alleged, 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 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,” the U.S. market regulator says.

Adani Green signed the world's largest single power purchase agreement for a green energy project with the Solar Energy Corporation of India (SECI), to supply 4,667 megawatt of green power in December 2021. The renewable energy arm of the Adani Group had bagged a manufacturing-linked solar tender of 8,000 MW from SECI, the public sector company mandated to promote solar energy in the country, in June 2020, which was the largest ever single tender for a solar project in the world. Azure Power was also awarded 4000 MW, besides mandating Adani and Azure to make 2 MW and 1 MW of solar equipment as part of the tender.

In the other action, the SEC charged Cyril Cabanes, a former member of Azure Power’s board, with Foreign Corrupt Practices Act (FCPA) violations for his role in the alleged bribery scheme. According to the SEC’s complaint, Cabanes allegedly facilitated the authorisation of bribes in furtherance of the scheme while in the United States and abroad.

“As alleged, Gautam and Sagar Adani induced U.S. investors to buy Adani Green bonds through an offering process that misrepresented not only that Adani Green had a robust anti-bribery compliance program but also that the company’s senior management had not and would not pay or promise to pay bribes, and Cyril Cabanes participated in the underlying bribery scheme while serving as director of a U.S. public company,” says Sanjay Wadhwa, acting director of the SEC’s Division of Enforcement. “We will continue to vigorously pursue and hold individuals, including senior corporate officers and directors, accountable when they violate our securities laws.”

The SEC’s complaint against Gautam and Sagar Adani charges them with violating the antifraud provisions of the federal securities laws. The complaint seeks permanent injunctions, civil penalties, and officer and director bars. The SEC’s complaint against Cabanes charges him with violating the FCPA and seeks a permanent injunction, a civil penalty, and an officer and director bar.

In a parallel action, the U.S. Attorney’s Office for the Eastern District of New York today unsealed criminal charges against Gautam and Sagar Adani and Cabanes, among other individuals connected to Adani Green and Azure Power.