(May 19): The US Justice Department (DOJ) on Monday sought to drop criminal charges against Indian billionaire Gautam Adani, taking him closer to resolving a long-running saga that once threatened the future of his giant conglomerate.
Adani Group’s flagship Adani Enterprises Ltd also agreed to pay US$275 million ($352 million) to settle a probe by the Treasury Department’s Office of Foreign Assets Control (OFAC) that related to Iran sanctions violations. Those allegations had involved the company’s purchases of liquefied petroleum gas (LPG) that originated from Iran.
Together with last week’s move by the US Securities and Exchange Commission (SEC) to settle a civil fraud case against Adani and his nephew Sagar Adani for US$18 million, the combined US actions were the culmination of months of behind-the-scenes negotiations and manoeuvring by Asia’s richest man and his cadres. They also marked a stark reversal by American officials on two high-profile legal cases brought at the end of the Biden administration, and could set the stage for a comeback by the 63-year-old tycoon.
This “removes a big regulatory overhang on the Adani Group”, said Shriram Subramanian, the founder and managing director of InGovern Research Services, a proxy advisory and corporate governance firm based in India. “More importantly, it paves the way for settlement of other regulatory scrutiny.”
Indian markets were rocked in November 2024 when US prosecutors alleged that Adani and other defendants helped drive a US$250 million bribery scheme in India to lock in solar-power contracts. The DOJ had claimed that Adani and others promised bribes to Indian government officials to win solar energy contracts, and concealed the plan as they sought to raise money from US investors. The conglomerate has multiple listed companies in India, and some of its units have also issued US dollar bonds.
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US prosecutors said in a court filing on Monday that following a review, they had decided “not to devote further resources to these criminal charges against individual defendants”.
Adani Green Energy said in a stock exchange filing that prosecutors had moved to dismiss charges against Gautam Adani, as well as its executives Sagar Adani and Vneet S Jaain, and other individuals. It said the US DOJ sought a dismissal of the case with prejudice, meaning the charges can’t be refiled.
The judge overseeing the case will review the motion. A spokesperson for US attorney’s office in Brooklyn declined to comment.
See also: DOJ said to likely drop fraud cases against Gautam Adani — Bloomberg
The Adani Group’s listed companies lost almost US$42 billion in combined market value following the US prosecutors’ charges in November 2024. As a group, they have more than recouped those losses, though some companies, including Adani Enterprises and Adani Green Energy, have yet to fully recover. Dollar bonds of some Adani Group companies have also recouped their earlier losses.
On Tuesday, Adani Enterprises’ shares gained as much as 3.2% in Mumbai trading, taking their gains for the year to more than 22%. The flagship unit’s stock is on pace for its first annual gain since 2022.
Investment pledges
Over the past year and a half, the Adani Group had consistently denied the allegations and none of the defendants had appeared in court over the DOJ’s charges. The case was effectively stalled as a result.
But even though the case wasn’t progressing, it had political and financial repercussions for Adani and limited the fundraising avenues for the group’s companies.
To fight the criminal and civil cases, Adani built a political influence operation in the US that included white-shoe law firms and lobbyists. He also sought to build up goodwill with the Trump administration.
Shortly after Donald Trump won the 2024 US presidential election and before the DOJ and SEC unveiled their cases, Adani congratulated the US president and pledged to invest US$10 billion in US energy and infrastructure projects.
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More recently, the conglomerate discussed plans to triple that pledge to US$30 billion, focusing on sectors including data centres, infrastructure and green energy. But the investments were unlikely to start until the companies had more clarity on their US legal issues, said people familiar with the matter, who asked not to be identified discussing private conversations.
The Adani Group has now battled several crises dating back to early 2023, when US-based short seller Hindenburg Research released a lengthy and scathing report accusing Adani and his companies of fraud, causing a steep sell-off in their shares. Adani strongly denied those allegations.
The end of the US legal threats could make investors more comfortable buying the companies’ shares and bonds again, said Deven Choksey, the managing director of DRChoksey FinServ. He sees as much as 19% upside for the shares of Adani Enterprises, which has a market capitalisation of around US$36 billion. The group is also likely to regain access to the international loan and capital markets, said debt research firm CreditSights.
Adani Enterprises had faced a maximum civil penalty of US$384.2 million from Treasury’s OFAC, but the settlement amount ended up being lower.
The company had said earlier this year that it received a request for information related to transactions that may have involved Iran. It had purchased LPG starting in 2023 from a Dubai-based trader that purported to supply Omani and Iraqi gas for imports into India, but the shipments had actually originated from Iran, the OFAC said. US financial institutions processed payments totalling US$192.1 million for 32 such shipments that Adani Enterprises purchased.
The OFAC said there were red flags that should have alerted Adani Enterprises as to the origin of the shipments. Mitigating factors include the Ahmedabad-based company’s “substantial cooperation” with the OFAC that included conducting an “internal investigation on an expedited basis and at substantial cost”, and providing large volumes of data regarding the apparent violations, it said. The OFAC also said the company implemented “significant remedial measures” after discovering the conduct.
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