Two whistleblower complaints lodged at Azure Power Global in May and September 2022 triggered a two-year U.S. investigation, culminating in the indictment of Gautam Adani and seven others in a $250 million bribery scheme.
The allegations, involving improper payments to Indian government officials, have rattled markets and raised serious questions about corporate governance at the Indian conglomerate.
Azure Power, a New York Stock Exchange (NYSE)-listed firm until its delisting in November 2023, is directly tied to the allegations. While Azure primarily operated through its Indian subsidiary, its activities intersected with the Adani Group. Both companies are accused of colluding to pressure Indian state officials into approving lucrative solar energy contracts.
The bribery scheme allegedly involved Azure Power owing specific amounts to Adani Green as its share of the bribes: Rs 55 crore for 650 MW Power Purchase Agreements (PPAs) and Rs 583 crore for 2.3 GW PPAs. The scheme, valued at approximately $265 million (Rs 2,029 crore), included a Rs 1,750 crore bribe to Andhra Pradesh officials.
Instead of direct payments, Azure reportedly repaid its share by transferring the 2.3 GW PPAs to Adani Green and continuing to develop the 650 MW PPAs. These repayments it is claimed were disguised as “development fees” or project transfers to mask the transactions.
Azure Power first disclosed the whistleblower complaints in January 2023, despite receiving them in May and September 2022, and an internal investigation uncovered issues such as weak internal controls, misrepresentation of project data, and material weaknesses in financial reporting, leading to the decapitalization of Rs 24.3 crore in fixed assets and an estimated potential liability of Rs 1.6 crore; the company also failed to file required SEC documents, resulting in its delisting from the NYSE in November 2023, while continuing to cooperate with U.S. authorities.
The Adani Group’s connection to the scandal became more apparent during its $750 million corporate bond issuance by Adani Green Energy in 2021.
U.S. authorities allege that Gautam Adani and his nephew, Sagar Adani, misled U.S. investors by falsely claiming no bribes had been paid. “The defendants orchestrated an elaborate scheme to bribe Indian government officials and lied about it while raising capital from U.S. and international investors,” said Breon Peace, U.S. Attorney for the Eastern District of New York.
The indictment also accuses executives from both companies of obstructing investigations by deleting electronic evidence and withholding information from U.S. agencies.Adani Group denied the allegations, calling them “baseless.” A spokesperson said, “The Adani Group has always upheld the highest standards of governance, transparency, and compliance. All possible legal recourse will be sought.”