Gautam Adani is no ordinary Indian billionaire. Over the past 10 years he has become in effect an extension of India’s government. His conglomerate, Adani Group, builds and buys ports, factories and power plants, often under state contract or license. It operates airports. It even owns a TV news channel.
Mr. Adani’s business empire has become central to India during the rise of Narendra Modi, first elected as prime minister in 2014.
As Mr. Modi brought India to the center of the world stage, he brought Mr. Adani in tow. Today, Mr. Adani’s flagship company is worth about 10 times more than it was at the start of the Covid-19 pandemic.
On Wednesday, the U.S. government charged Mr. Adani, one of the world’s richest people, with multiple counts of fraud. Federal prosecutors accused him and his associates of offering $265 million to Indian officials and lying about the bribery scheme to Wall Street investors when raising money for a massive renewable energy project.
The Adani Group denied prosecutors’ claims, calling the allegations “baseless.” A spokesman said the company wanted to “assure our stakeholders, partners and employees that we are a law-abiding organization, fully compliant with all laws.”
Doubts about the Adani business are not new. Less than two years ago, a small investment firm in New York accused the company of stock manipulation and accounting fraud in what it called “the largest con in corporate history.” Hindenburg Research, a short seller that makes money by betting that stocks will drop, published these claims in a scathing report, which pummeled the prices of Mr. Adani’s stocks and bonds. At one point, Mr. Adani’s empire had lost $150 billion on paper.
But after the dust kicked up by Hindenburg had settled, Adani’s stocks recovered most of what they had lost. New investors made a killing.
Mr. Adani himself also ventured back into public view, posing with Eric Garcetti, the U.S. ambassador to India, who visited an enormous Adani solar project this summer. Afterward, Mr. Garcetti declared himself “inspired.”
Now, once again, India’s corporate champion has been roughed up. Together, its stocks lost about 20 percent of their value on Thursday, or more than $30 billion, and an imminent bond sale was canceled.
Mr. Adani’s current troubles promise a rockier ride: The criminal charges by the U.S. government, brought by federal prosecutors in the Eastern District of New York, along with a complaint by the Securities and Exchange Commission, take aim at Gautam Adani personally.
According to the indictment, the defendants, in keeping track of their bribes to Indian officials, used “code names” for different participants in the scheme. Several of the defendants referred to Mr. Adani as “Mr. A,” “Numero uno” and “the big man.”
Within India, Mr. Adani’s reputation is of a politically connected businessman who gets things done. After the accusations by Hindenburg, India’s Supreme Court appointed a panel to look into the allegations but gave up when India’s markets regulator admitted to “drawing a blank” in its investigation. The regulator’s chair, Madhabi Buch, was subsequently accused of holding stakes in an offshore entity used by Mr. Adani’s family. Despite protests by employees of the agency she oversees, Ms. Buch has kept her job.
Mr. Adani is “being protected by all the investigative agencies, all the regulators. Even by the courts,” said Prashant Bhushan, a lawyer who has battled in court against both Mr. Adani and Mr. Modi’s government.
Mr. Modi is Mr. Adani’s “main person and protector,” Mr. Bhushan said. Mr. Adani has relationships with other politicians too, according to Mr. Bhushan. “The only person he has not been able to control or get to his side is Rahul Gandhi,” a leader of India’s opposition Congress party.
Mr. Gandhi, speaking to the press on Thursday at Congress headquarters, said that “the prime minister is involved in corruption” and that “Mr. Adani should be arrested.” Moments later, in Hindi, he said that “this won’t happen, because India’s prime minister is behind Mr. Adani.” The news channel Mr. Adani bought two years ago carried none of Mr. Gandhi’s statement.
Sambit Patra, a spokesman for Mr. Modi’s Bharatiya Janata Party, or B.J.P., said “the company will defend itself and the law will take its course.” Mr. Gandhi’s allegations, he said, were designed to “bring down the Indian market” and harm “25 million small investors.”
The U.S. indictment implied that enormous sums were offered to state governments controlled by parties other than Mr. Modi’s B.J.P. Mr. Adani is known to make deals across the political spectrum.
Mr. Adani is so central to India’s politics that he can broker deals between sworn rivals. Last week, Ajit Pawar, a former ally of Mr. Gandhi’s who is fighting an election in Maharashtra state, stunned a television interviewer by mentioning that Mr. Adani hosted the dinner at which his new alliance with the B.J.P. was hashed out. Mr. Pawar took it back a few days later, saying he had misremembered.
Mr. Adani is not the only business leader whose interests meld with those of the Indian government. Another billionaire who has thrived during the Modi years, Naveen Jindal, has been pulling in government contracts to support infrastructure projects like India’s biggest green-hydrogen steel plant, announced in September as part of a $2.5 billion investment.
Rohit Chandra, a political scientist and economic historian at the Indian Institute of Technology in New Delhi, explained why governments like Mr. Modi’s find it useful to partner with private companies.
Spending on “infrastructure is great for short-term growth,” and hopefully for the broader economy. And, “as in most of the world, infrastructure contracts are very close to politics.”
Finding money to pay for these projects is the tricky part. After a financial crisis under the previous government, India’s banks became hesitant to lend to projects like Adani’s. So, Mr. Chandra said, “this government has made a very strong effort to attract interest” to projects like “solar, highway, and ports” from investors abroad.
“The problem is that when you borrow from foreigners, you have to play by their rules,” he said. It was because Mr. Adani’s assets succeeded in attracting investors at the New York Stock Exchange that Mr. Adani has fallen under U.S. legal jurisdiction.
Mr. Chandra also pointed out that infrastructure “tends to be front and center as a part of Indian diplomacy and geopolitics these days.” Adani has become an interface between India and the rest of the world, not only its capital markets.
Adani Group has bid for giant contracts in India’s back yard. Bangladesh, Nepal and Sri Lanka are all negotiating with the company and often the Indian government at the same time. Mr. Modi’s travels farther abroad, to Indonesia, Israel, Kenya and Tanzania, have also been followed by the announcements of offers or deals with Adani companies.
It is unclear how the U.S. Department of Justice under a new administration will pursue the case. President-elect Donald J. Trump is thought to have a rapport with Mr. Modi that is warm, if transactional. Mr. Trump has spoken against the Foreign Corrupt Practices Act, under which Mr. Adani was indicted, arguing that its rules put American companies at a disadvantage.
The day after Mr. Trump’s re-election this month, Mr. Adani posted congratulations on social media, praising the president-elect as “the embodiment of relentless determination and the courage to stay true to his beliefs.” Last week, he pledged to invest $10 billion in American projects.
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