Adani Green shares drop 19% as SEC, U.S. prosecutors frame charges against Gautam Adani

Shares of Adani Green Energy Ltd fell as much as 19% on Thursday after U.S. Securities and Exchange Commission (SEC) charged Gautam Adani and his nephew Sagar Adani for an alleged bribery plot 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.

The renewable energy stock opened at ₹1,150 on the BSE before hitting a low of ₹1,145.85, down 19% compared with its previous closing price of ₹1,411.75. The company’s market cap fell to ₹1.84 lakh crore.

“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.

SEC also 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 renewable energy arm of the Adani Group had bagged a manufacturing-linked solar tender of 8,000 MW from state-run Solar Energy Corporation of India (SECI) in June 2020. It 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.