Adani case fallout: CM Naidu promises action

Andhra Pradesh will investigate bribery claims against Adani Group amid a US indictment, causing massive stock fluctuations and international banking scrutiny.

Andhra Pradesh promised on Friday to look into and “act” on charges that the Adani Group and its top executives paid massive bribes in the state for solar power contracts, while the Congress vowed to press for action in Parliament and global banks began reviewing fresh credit to the conglomerate, as fallout intensified from the US indictment of Gautam Adani that has wiped nearly $28 billion off his empire’s value in two days.

The largest alleged bribes — approximately ₹1,750 crore — were reportedly offered to officials in Andhra Pradesh when YS Jagan Mohan Reddy was the chief minister. (REUTERS)

Stocks of some Adani Group companies rallied — Ambuja Cements rose 3.50%, ACC climbed 3.17%, and the flagship Adani Enterprises advanced 2.16% — while value eroded rapidly from some others, including Adani Green Energy, which tanked 8.20%, Adani Energy Solutions that slumped 6.92%, and Adani Power that dropped 3.23%.

“I have all the chargesheet reports filed there (US). It is in the public domain. Will study it (the allegations and indictment). Will act on it and inform you,” Andhra Pradesh chief minister N Chandrababu Naidu told the state assembly, terming it a “very sad development” that had hurt the state’s prestige.

The largest alleged bribes — approximately ₹1,750 crore — were reportedly offered to officials in Andhra Pradesh when YS Jagan Mohan Reddy was the chief minister. The state’s power distribution companies had entered into agreements with the Solar Energy Corporation of India (Seci) on December 1, 2021, for approximately seven gigawatts of solar power.

The Biju Janata Dal (BJD), which governed Odisha where prosecutors say the bribery scheme began, strongly rejected the allegations. “The types of allegations made in the name of Odisha are baseless and not based on facts,” former Odisha energy minister and BJD MLA PK Deb told PTI. He insisted the state government had no role in the agreements, which “remained confined among Gridco, the distribution company and the SECI.”

Congress president Mallikarjun Kharge demanded immediate government action against the tycoon. “As he (Adani) is in India, action should be taken against him, he should be arrested. The government knows everything, so they should quickly take action against him in corruption cases,” Kharge told reporters.

He said the Congress will raise the issue in Parliament’s upcoming session and demand an inquiry into the charges. “We will raise the issue in the Parliament and we will demand an inquiry,” Kharge said, accusing Prime Minister Narendra Modi of “shielding” Adani.

Adding to Adani’s troubles, global banks are considering halting fresh credit to his group while maintaining existing loans, sources told Reuters. Senior executives at two of Adani’s global lenders said they have had multiple internal calls to discuss their exposure and potential impact of the indictment.

“We believe domestic, as well as some international banks and bond market investors, look at Adani entities as a group, and could set group limits on their exposure,” ratings agency S&P warned in a statement, noting the group will need regular access to equity and debt markets given its large growth plans.

The Securities and Exchange Board of India (SEBI) is making preliminary checks to see if disclosures made by Adani entities were inadequate and if they breached local market regulations, a SEBI official told Reuters. The regulator did not respond to requests for comment.

The fallout of the indictment had till Thursday led to Adani Green cancelling a scheduled $600 million US bond sale, while Kenya scrapped both a $2 billion airport control deal and a $736 million power transmission line contract with the group.

Research firm CreditSights highlighted refinancing for the conglomerate’s green energy business, which is at the center of the allegations, as its biggest near-term concern. Adani Group dollar bonds dropped sharply for a second day on Friday.

The US Department of Justice indictment alleges that between 2020 and 2024, Adani executives collaborated with those from another company, Azure Power, to pay bribes to Indian government officials in five states to obtain solar energy supply contracts projected to generate more than $2 billion in profits over 20 years. The scheme allegedly began in Odisha before expanding to other states including Andhra Pradesh, Tamil Nadu, Chhattisgarh and Jammu & Kashmir.

The Adani Group has strongly denied the allegations as “baseless” and vowed to “seek all possible legal recourse.” Adani has not appeared in public or commented on social media since the indictment and his whereabouts remain unclear.

The White House too briefly referenced the issue, saying it was confident India and the US can navigate the crisis surrounding the bribery charges. Press secretary Karine Jean-Pierre emphasising that U.S.-India relations “stand on an extremely strong foundation,” while referring specific questions about the indictment to the Justice Department and Securities and Exchange Commission.

The fresh controversy comes almost two years after US short-seller Hindenburg Research accused the group of improper use of offshore tax havens and stock manipulation -- charges that Adani denied but which led to a stock rout wiping more than $100 billion in market value. The conglomerate’s market capitalisation, which stood at $235 billion before last year’s Hindenburg report, has now fallen to $148 billion.

(With inputs from Reuters)