• Gautam Adani, founder of the Adani Group, has been indicted by U.S. prosecutors over an alleged $265 million bribery scheme, causing a sharp decline in the company's stocks and bonds.
• The indictment has led to the cancellation of several lucrative deals for the Adani Group, including a procurement process in Kenya and a $600 million U.S. bond sale by Adani Green.
• The fallout from the indictment is expected to impact India's renewable energy sector, potentially reducing international investment.
• The case has triggered political uproar in India and is reminiscent of similar cases where high-profile business leaders have faced legal action in foreign countries.

The Indian business community is reeling from the news of Gautam Adani, the billionaire founder of the Adani Group, being indicted by U.S. prosecutors over an alleged $265 million bribery scheme. This development has led to a sharp decline in the stocks and bonds of the Adani Group, with the company's market value plummeting by $33 billion. Adani Green Energy, the company at the heart of the case, saw its value drop by 8% in early Friday trade, losing a total of $7 billion since the news of the indictment broke.

The U.S. prosecutors have charged Adani and seven others with agreeing to pay bribes to Indian government officials to secure contracts that could yield $2 billion of profit over 20 years. These contracts were also aimed at developing India's largest solar power plant project. In response to these charges, the Adani Group has vehemently denied the allegations, labeling them as baseless and vowing to seek all possible legal recourse.

The indictment has had a significant impact on the Adani Group's financial standing. Adani Ports and Special Economic Zone debt maturing in 2027 traded at 91.5c on the dollar, down more than a cent on the day and more than 4c below Wednesday prices. Longer-dated maturities have fallen around 5c in two days and trade near 80c.

Impact on Adani Group's Business Ventures

The indictment has also led to the cancellation of several lucrative deals for the Adani Group. Kenya, for instance, has cancelled a procurement process worth nearly $2 billion that had been widely expected to award control of the country's main airport to the Adani Group. It also nixed a separate 30-year, $736-million public-private partnership deal that an Adani Group firm signed with the energy ministry last month to construct power transmission lines.

The fallout from the indictment is expected to have far-reaching implications. India's renewable energy sector, a critical pillar for global climate goals, may face reduced international investment as a result of this controversy, said Nimish Maheshwari, an independent analyst who publishes on Smartkarma. Investors may demand greater transparency and due diligence, slowing down the pace of project financing.

The indictment has also led to the cancellation of a scheduled $600 million U.S. bond sale by Adani Green. U.S. prosecutors allege that Adani, his nephew Sagar Adani, and others bribed Indian officials to gain business advantages in renewable energy projects in India that benefitted Adani Green and a company called Azure Power, which was listed on the New York Stock Exchange until late 2023.

Political Repercussions and Historical Precedents

The indictment has triggered uproar in India, with Congress leader Rahul Gandhi, who is also the leader of the Opposition in the Lok Sabha, demanding Gautam Adani's arrest. The BJP on Thursday targeted the Congress over its attack on the central government after US prosecutors charged industrialist Gautam Advani with bribery and fraud, saying all the states mentioned in the indictment were at that time ruled by opposition parties.

The indictment of Gautam Adani is reminiscent of similar cases in the past where high-profile business leaders have faced legal action in foreign countries. One such case is that of Indian tycoon Vijay Mallya, who is currently fighting extradition to India from the UK over allegations of financial fraud. Another is that of Nirav Modi, a diamond merchant who is also fighting extradition to India from the UK over allegations of a massive bank fraud.