On November 20, 2024, the United States Securities and Exchange Commission filed a complaint in the United States District Court for the Eastern District of New York against Gautam Adani and Sagar Adani. The complaint alleges that the defendants engaged in a large-scale bribery scheme, amounting to hundreds of millions of United States dollars, to secure contracts for renewable energy projects in India. The complaint further alleges that the defendants misrepresented their adherence to anti-bribery principles in connection with a United States bond offering worth USD 750 million.
In 2015, Gautam Adani founded Adani Green Energy Limited as a renewable energy subsidiary of the Adani Group. Sagar Adani, his nephew, was appointed Executive Director in 2018. Over the years, Adani Green Energy Limited positioned itself as a leader in renewable energy development and a proponent of strict anti-bribery and corporate governance standards.
In June 2019, the Solar Energy Corporation of India issued a tender for projects collectively known as the Manufacturing Linked Projects. Adani Green Energy Limited secured two-thirds of the projects, which required long-term power purchase agreements with state-owned power distribution companies. By 2020, however, state governments and energy companies were unwilling to sign agreements at the offered prices, stalling progress on the projects.
Between 2020 and 2021, Gautam Adani and Sagar Adani allegedly put together a bribery scheme to persuade state governments to sign agreements favorable to Adani Green Energy Limited. It is alleged that bribes totaling hundreds of millions of United States dollars were promised or paid, including USD 200 million to officials in Andhra Pradesh. These payments allegedly facilitated the completion of agreements critical to the Manufacturing Linked Projects.
In September 2021, Adani Green Energy Limited conducted a USD 750 million bond offering, targeting investors in the United States. The defendants allegedly misrepresented their compliance with anti-bribery principles and claimed a good corporate governance. The offering documents explicitly stated that neither Adani Green Energy Limited nor its directors had engaged in bribery or corruption, which the United States Securities and Exchange Commission alleges was false.
The United States Securities and Exchange Commission prays United States District Court for the Eastern District of New York to provide the relief in its complaint to provide an order of permanent Injunction against Gautam Adani and Sagar Adani from engaging in violations of United States federal securities laws; along with imposition of civil monetary penalties under United States Securities Act Section 20(d) and United States Securities Exchange Act Section 21(d)(3). The penalties are expected to be substantial, in line with the gravity of the alleged violations and their financial implications; and permanent prohibition on Gautam Adani and Sagar Adani from serving as officers or directors of any company required to file reports under United States Securities Exchange Act Section 15(d); and defendants must relinquish any financial gains and disgorgement obtained through the alleged violations, with interest as determined by the court. The court may grant any other relief deemed just and proper under the circumstances.
The complaint alleges that Gautam Adani and Sagar Adani violated several provisions of United States federal securities laws, including, United States Securities Act Section 17(a): which prohibits fraud in the offer or sale of securities and United States Securities Exchange Act Section 10(b) and United States Securities and Exchange Commission Rule 10b-5: which prohibits fraud in connection with the purchase or sale of securities. The US SEC’s complaint alleges that the defendants aided and abetted Adani Green Energy Limited in violating United States Securities Act Section 17(a)(2), United States Securities Exchange Act Section 10(b), and United States Securities and Exchange Commission Rule 10b-5(b).
The United States District Court for the Eastern District of New York has jurisdiction over this case under United States Securities Act Section 22(a) and United States Securities Exchange Act Section 27. The jurisdiction is supported by the fact that the bond offering targeted United States investors, and transactions related to the alleged violations occurred within this district. The offering involved the use of United States interstate commerce and the transfer of funds through this jurisdiction.
(Source: https://www.sec.gov/newsroom/press-releases/2024-181, https://www.sec.gov/files/litigation/complaints/2024/comp-pr2024-181.pdf)
