India’s Securities and Exchange Board (SEBI) is scrutinizing Adani Green Energy Ltd. for potential disclosure lapses concerning a U.S. Department of Justice (DOJ) bribery investigation. The probe focuses on whether Adani Green adequately informed investors about the DOJ’s inquiry, especially regarding the involvement of individuals associated with the Adani Group.
SEBI has approached stock exchange officials to determine if Adani Green failed to properly disclose the DOJ’s investigation into bribery allegations. This fact-finding mission is expected to continue for two weeks, after which SEBI may decide on initiating a formal investigation.
The inquiry stems from a March 15 Bloomberg News report indicating that U.S. prosecutors were investigating whether an Adani entity or individuals linked to the company, including its billionaire chairman Gautam Adani, were involved in bribing Indian officials for favorable treatment on an energy project. In response, the Adani Group stated it was not “aware of any investigation against our chairman” and affirmed its compliance with anti-bribery laws in India and elsewhere. Subsequently, on March 19, Adani Green filed a statement to stock exchanges acknowledging awareness of an investigation into potential violations of American anti-corruption laws by an unrelated third party.
On November 20, U.S. prosecutors charged Gautam Adani with orchestrating a $250 million bribery scheme to secure solar energy contracts in India, alleging that the conglomerate concealed this plan while seeking funds from U.S. investors. A spokesperson for the Adani Group denied these allegations.
The indictment also claims that Adani’s denial to Bloomberg in March was a false statement intended to further the alleged fraud, noting that Adani’s nephew, Sagar Adani, had received a grand jury subpoena and search warrant a year earlier. Sagar Adani serves as the executive director of Adani Green, India’s largest renewable energy developer.
In response to the U.S. indictment, shares of Adani’s flagship firm plummeted by as much as 23% on Thursday before recovering some losses on Friday.
SEBI, which can act on complaints from stock exchanges, has previously investigated the Adani Group for issues such as disclosure norms, including following allegations by short-seller Hindenburg Research last year, though findings have yet to be disclosed. SEBI’s authority allows it to file civil charges, with disclosure violations typically resulting in monetary penalties.
Neither SEBI, the Bombay Stock Exchange Ltd., nor the National Stock Exchange Ltd. responded to requests for comment.
The Adani Group, a multinational conglomerate headquartered in India, has faced increased scrutiny over its corporate governance practices. In January 2023, Hindenburg Research accused the group of stock manipulation and accounting fraud, leading to significant market volatility. The Adani Group denied these allegations, asserting compliance with all regulatory requirements.
The recent U.S. indictment has intensified concerns about the conglomerate’s transparency and adherence to international anti-corruption standards. Analysts suggest that the outcome of SEBI’s investigation could have far-reaching implications for investor confidence and the regulatory landscape in India.
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As the situation develops, stakeholders are closely monitoring the actions of both SEBI and the Adani Group to assess the potential impact on India’s financial markets and the conglomerate’s future operations.