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Donald Trump halts US enforcement of law banning overseas bribes. What does it mean for Gautam Adani case?
Donald Trump signed an executive order pausing prosecutions under the Foreign Corrupt Practices Act. This could impact the Adani Group's legal situation.
US President Donald Trump on Monday signed an executive order directing the Department of Justice to pause prosecutions of Americans accused of bribing foreign government officials while trying to win or retain business in their countries.
Donald Trump's order pauses enforcement of the nearly half-century-old Foreign Corrupt Practices Act (FCPA), directs attorney general Pam Bondi to review current and past actions related to the law and prepare new guidelines for enforcement.
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The move comes as a significant boost just ahead of Prime Minister Narendra Modi’s visit to the US on Wednesday, February 12. During his two-day trip, Modi is set to hold bilateral talks with Donald Trump. Under the previous Joe Biden administration, the Department of Justice (DoJ) had indicted billionaire Gautam Adani on charges of “fraud” and allegedly orchestrating a bribery scheme.
Trump’s executive order to pause prosecutions under the FCPA could have significant implications for the Gautam Adani case, depending on its scope and enforcement.
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A breather from US investigations?
The US Justice Department was reportedly looking into whether the Adani Group violated the FCPA—a law that prohibits American entities from bribing foreign officials. With Trump pausing prosecutions under this law, any ongoing or potential investigations into Gautam Adani in the US could be delayed or even weakened.
Impact on Hindenburg Research allegations
Hindenburg Research had accused the Adani Group of stock manipulation and corporate fraud, also suggesting possible corrupt dealings with foreign officials. If the US was planning to investigate these claims under the FCPA, Donald Trump's decision might stall any legal action against Adani in the US.
Will India step up?
With the US stepping back, the real test now lies with Indian regulators such Securities and Exchange Board of India and the Enforcement Directorate (ED). If these agencies choose not to pursue a deeper probe, Gautam Adani could escape immediate legal trouble.
What about global investors?
While Donald Trump’s decision might shield Adani from US legal troubles, it doesn’t eliminate international scrutiny. Investors and watchdogs in the UK, EU, and other global markets may still closely monitor the group’s business practices.
Charges against Gautam Adani
The US Department of Justice indicted Gautam Adani, the founder of Adani Group, his nephew Sagar Adani, and other senior Adani Green executives for allegedly bribing or offering bribes to the tune of $265 million to Indian state government officials to get them to sign solar power contracts, while raising money for the same projects in the US by promising that the company abided by anti-bribery laws. This constitutes fraud under US federal securities law and, if proven, may invite criminal liabilities.
The US case rests on the premise that Adani Green bribed government officials in Odisha and Andhra Pradesh, and possibly Tamil Nadu, Chhattisgarh, and Jammu and Kashmir (J&K), to get their power distribution companies (discoms) to commit to purchasing solar power at above market rates.
The timeline of the alleged bribes is from the middle of 2021 to the end of 2021. Biju Janata Dal, YSR Congress, DMK, and Congress governed four of the states mentioned, while J&K was effectively under central BJP rule.
Adani group denied the allegations as baseless and said it is fully compliant with all laws.
What is FCPA?
The Foreign Corrupt Practices Act or FCPA is a US law that prohibits American companies, individuals, and foreign firms listed in the US from bribing foreign officials to secure business deals. It also mandates accurate financial records to prevent fraud. The FCPA has led to major corporate investigations worldwide.
What's Donald Trump's opinion?
Donald Trump is ordering attorney general Pam Bondi to pause actions taken under the FCPA until she issues new enforcement guidelines, according to a fact sheet on the executive order.
“U.S. companies are harmed by FCPA overenforcement because they are prohibited from engaging in practices common among international competitors, creating an uneven playing field,” the fact sheet said.
“It turns out that in practicality it’s a disaster,” Trump said in the Oval Office on Monday afternoon. “Nobody wants to do business with the Americans.”
“This is a horrible idea that US companies DO NOT WANT,” Richard Nephew, a senior research scholar at Columbia University and former anti-corruption coordinator at the State Department, said on X.
“Sure, you may find one or two, but most appreciate the fact that FCPA allows them to be firm in refusing bribes because most private sector companies — sensibly — see bribery as an unproductive cost.”
