Indian billionaire Gautam Adani now faces a United States indictment for alleged fraud and bribery, a case that could significantly affect both himself and his business moving forward.
What Are the Charges Against Adani?
Adani is accused of defrauding investors of billions of dollars by failing to inform them about a plan to secure solar energy supply contracts by paying over $265 million in bribes to Indian officials. For some time, Adani has been perceived as close to Indian Prime Minister Narendra Modi. The charges against Adani involve securities fraud and conspiracy to commit securities and wire fraud.
Impact of the Announcement on Adani’s Businesses
Following the announcement of the charges against Adani by a court in Brooklyn, New York, shares in the Adani Group’s companies fell dramatically. While six of his 10 listed companies’ stock prices began to recover slightly, Adani and his multi-billion-dollar empire are already feeling the impact of the charges.
Even a year ago, in 2023, Adani lost more than $60 billion in market value following allegations of stock price manipulation and fraud from Hindenburg Research, a United States-based short-selling firm. His businesses recovered from those accusations, but these new charges further threaten the security of his enterprises.
For its part, the Adani Group denied the allegations made against Adani and the directors of Adani Green Energy, stating that they were “baseless” and that the group would respond legally. As with many of Adani’s businesses, shares in Adani Green Energy fell dramatically. Most of his companies’ shares fell by anywhere from 4% to 10% following the announcement, with Adani Green Energy falling 7.26% today alone.
“For Adani, this hits hard, no matter how you slice it,” Director of the South Asia Institute at the Wilson Center Michael Kugelman explained. “His public relations machine was in overdrive for nearly two years rehabilitating his image following the Hindenburg allegations. This indictment came like a bolt from the blue and instantly reversed all recent progress in salvaging his reputation and business empire.”
Further Impact on the Indian Economy and Government
The new charges might hit Adani hard, but the impact on the Indian economy and government is also worth noting. Across his network of companies, Adani employs tens of thousands of people and plays a major role in the renewable energy sector. Furthermore, his group aligns with the Modi government by investing in the country’s renewable energy resources, defense, and agriculture.
Due to his ties with the Indian government, the struggles of Adani’s businesses have the potential to harm the nation’s ties with other countries. As Kugelman puts it, it’s “bad timing for New Delhi when it’s trying to capitalize on the business world’s desire to move production out of China and find alternate investment destinations.” If the investigation moves forward, it might make India seem like a less appealing investment opportunity for foreign businesses.
“India would like nothing more than for Trump to halt the investigation once he takes office,” Kugelman continued. “That’s unlikely. Trump, however, could take a positive view of Adani, a fellow businessman who has praised Trump effusively.”
Issues of Bribes and Corruption
As it stands, the charges against Adani are reflective of wider bribes and corruption issues in the Indian economy. Adani’s businesses have been able to recover from allegations in the past because of their sheer size and impact on the nation’s market, and investors recognize that whatever business they turn to will have some level of corruption involved.
Will the Charges Have an Impact?
Whether a drop in investment in Adani’s business empire will have a lasting impact remains to be seen, but the charges will likely be subject to changes in the American political climate. Many investors and researchers anticipate that Adani’s business will recover, so long as the charges don’t gain a foothold as investigations move forward.
