AP’s NEW DELHI Gautam Adani, an Indian entrepreneur and one of the wealthiest men in Asia, may be facing his most difficult task to date after U.S. authorities indicted him for suspected bribery and fraud. However, it was uncertain how much the ramifications would impact the Indian government and economy, as well as his enterprises and personal destiny.
After plunging a day earlier after the accusations were announced in New York, shares of the Adani Group’s firms started to rise again on Friday. By midday, the stock prices of the majority of his ten listed firms had increased by 1% to 4%.
A Brooklyn, New York court charged Adani, a significant Indian power player thought to be connected to Prime Minister Narendra Modi, with conspiracy to conduct securities fraud and wire fraud.
The test is coming shortly after the 62-year-old founder and his vast business empire recovered from losing over $60 billion in market value in early 2023 due to claims of stock price manipulation and fraud by the short-selling firm Hindenburg Research. Adani’s multibillion dollar empire has produced everything from energy and ports to media and agriculture.
On Wednesday, prosecutors said that Adani had deceived investors in a large solar project in India by hiding the fact that bribes were being used to facilitate the project. Charges have also been brought against seven additional executives involved in Adani’s extensive corporate empire. According to the indictment, there was a plan to bribe Indian government officials with roughly $265 million.
Adani’s signage is seen on the facade of Adani’s corporate house in Ahmedabad, India, Thursday, Nov. 21, 2024. (AP Photo/Ajit Solanki)
Ajit Solanki/ASSOCIATED PRESS
The Adani company said they will pursue legal action and dismissed the accusations against the directors of Adani Green Energy, its renewable energy division, as unfounded. In the United States, none of the defendants have been taken into custody.
Regardless of how you look at it, this is a big hit for Adani. After the Hindenburg accusations, his public relations machine worked nonstop for almost two years to repair his reputation. All previous efforts to salvage his reputation and commercial empire were abruptly undone by this charge, according to Michael Kugelman, director of the Wilson Center’s South Asia Institute.
Adani has a profound impact on the Indian economy. He employs tens of thousands of people, runs many ports and airports, and is the biggest coal mine operator and infrastructure developer in the nation. Despite his history with fossil fuels, Adani hopes to dominate the global renewable energy market by 2030.
His ability to match his group’s goals with those of the Modi administration and invest in vital sectors like agriculture, military, and renewable energy, according to analysts, has been a major contributor to his rapid ascent over the years. Adani has good relations with previous ruling parties prior to Modi.
The most recent scandal is likely to place Modi’s government, which is governed by the Bharatiya Janata Party and is perceived as being close to Adani, in a difficult position. In a post on X, Amit Malviya, the head of the BJP’s IT department, stated that the U.S. charges are accusations and that the defendants are deemed innocent unless and until proven guilty. Critics took this statement as an endorsement of the Adani group.
Taking advantage of the controversy, the main opposition party demanded that Adani be arrested and accused Modi of shielding him by using an Adani plane during his campaign. Next Monday, when the winter session of parliament starts, opposition legislators are expected to increase their pressure on Modi.
Adani’s international interests have already been impacted by the scandal since the U.S. indictment on Wednesday. The president of Kenya suspended multimillion-dollar agreements with the Adani company for energy and airport upgrading projects. In Bangladesh, where a court on Tuesday ordered an investigation into an energy project, Adani is also expected to come under examination.
Adani’s issues may also make it more difficult for the Indian government to maintain relations with other nations, like Sri Lanka, where Beijing and New Delhi are vying for strategically significant markets.
Kugelman stated that this is undoubtedly a poor time for New Delhi because it coincides with the city’s efforts to take advantage of the corporate community’s desire to shift production from China to other places for investment.
Although experts think the damage will be localized and primarily limited to the Adani group and its reputation, the story also shows business dangers in India that could frighten investors.
Since the impact is concentrated on the group rather than the market, there are currently no concerns about a financial contagion. Since it will be harder for Adani to raise money, it might hold down the group’s growth and expansion, according to independent market expert Ambareesh Baliga.
The revelation isn’t particularly shocking to many Indians, though. “The public and business people here are aware that everything has a rate card,” he remarked. Investors are well aware of how deeply embedded corruption and bribery are in the Indian economy; it is impossible to overlook.
Investors may initially withdraw for a time, but they will eventually return (to Adani). “They can’t disregard this small or medium-sized group,” Baliga stated.
The Associated Press, 2024. All rights reserved. All rights reserved. It is prohibited to publish, broadcast, rewrite, or redistribute this content without authorization.
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