NEW DELHI: India’s Adani Group has reported a staggering loss of nearly $55 billion in market value after the group’s founder was charged with fraud in the US.
The indictment, made public on November 20, accuses the conglomerate’s founder, Gautam Adani, and several of his associates of engaging in a bribery scheme to influence Indian government contracts.
The US Department of Justice alleges that Adani and his subordinates orchestrated bribes worth $250 million to secure favourable government deals.
The charges include securities fraud, wire fraud conspiracy, and accusations related to fraudulent conduct, but the Adani Group has vehemently denied all claims, calling them “baseless.”
In a statement released Wednesday, the group revealed that since the U.S. indictment, its combined market capitalization across 11 listed companies had been slashed by nearly $55 billion.
Despite a modest uptick in Adani Enterprises’ stock by 1.8% on Wednesday, the conglomerate’s flagship firm has seen more than 20% wiped off its market value since the indictment was made public.
The company denies any involvement in bribery, with a spokesperson saying that the legal proceedings relate solely to securities fraud and wire fraud, not bribery.
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The fallout from the indictment has been swift and significant. In Kenya, President William Ruto announced that the Adani Group would no longer be involved in the expansion of the country’s electricity network and airport infrastructure.
The group was expected to invest over $2.5 billion in projects such as the $1.85 billion development at Jomo Kenyatta International Airport and $736 million in the state-owned Ketraco utility.
Sri Lanka has also initiated an investigation into the Adani Group’s local operations, including a $442 million wind power project and a deep-sea port terminal in Colombo, which is expected to cost over $700 million.
The Adani Group, with its vast holdings in coal, cement, airports, and media, is no stranger to controversy.
In 2023, the conglomerate faced a similar stock market rout following accusations of corporate fraud by short-seller Hindenburg Research, which claimed that Adani’s firms engaged in extensive financial manipulation. The group denied the allegations, labelling them a deliberate attempt to damage its reputation.
Adani’s rapid expansion, particularly into capital-intensive sectors, has raised concerns among financial analysts. In 2022, CreditSights, a Fitch subsidiary, warned that the group was heavily over-leveraged, posing potential risks to its financial stability.
Gautam Adani, born into a middle-class family in Gujarat, India, rose from humble beginnings to become one of the wealthiest individuals globally. He founded the Adani Group in 1988, initially focusing on the export trade before expanding into diverse industries.
Political Repercussions
The legal storm surrounding the Adani Group has also spilled into Indian politics.
The lower house of India’s parliament was suspended for a second consecutive day on Wednesday due to disruptions by opposition lawmakers who demanded a discussion of the US fraud charges.
The opposition, particularly the Congress Party, has accused Prime Minister Narendra Modi’s Bharatiya Janata Party (BJP) of shielding Adani from scrutiny and blocking investigations in India.
Rahul Gandhi, a vocal critic of Adani, called for Gautam Adani’s arrest. “The gentleman has been indicted in the United States … and the government is protecting him,” Gandhi told reporters outside parliament.
In response, the ruling BJP distanced itself from the controversy, with spokesperson Gopal Krishna Agarwal saying that the government has no reason to defend Adani.
“Let him defend himself,” said the spokesperson, Gopal Krishna Agarwal.
