A viewpoint on US Indictment of Adani
By Philip Mudartha
Bellevision Media Network
08 Dec 2024:
The Corrupt Solar Project:
Indian billionaire Gautam Adani has been indicted by a US federal court for his alleged role in a $265 million scheme to bribe Indian officials, sending shockwaves not only across his business conglomerate but across Indian politicians and business leaders. The charges stem from alleged bribery related to power supply deals from energy projects in India. US court is naming it "The Corrupt Solar Project".
The accusations reignited debates about the growing global scrutiny of Indian businesses with global ambitions.
The fresh charges on Adani come less than two years after Hindenburg Research accused the group of financial improprieties. The US indictment has kept Adani Group’s debt and equity under pressure. Its dollar bond prices have fallen to almost a one-year low. The indictment appears to have ramifications across the globe, including news that some bankers are considering pausing fresh lending to the group.
Adani is not alone in feeling the US heat. In October 2024, 19 Indian firms and two Indian nationals were sanctioned by the US Treasury Department for allegedly aiding Russia’s war effort and evading sanctions. These firms are suppliers of electronic components, aircraft parts, and machine tools etc.
Crisis of Quality:
India’s food & pharmaceuticals have built reputation as global suppliers in their domain. In May 2024, spice manufacturers MDH and Everest came under regulatory scrutiny in several countries after their products were allegedly found to contain carcinogenic elements. MDH with 2290 crore Rupees and Everest with 1510 crore Rupees annual revenues are household names. Following the scrutiny, Hong Kong, Singapore, New Zealand, the US, Australia among others implemented stringent crackdowns, impacting all Indian spices.
Indian pharmaceutical firms have faced quality issues of medicines manufactured in India. Since 2022, the WHO has connected the deaths of at least 141 children in Gambia, Uzbekistan, and Cameroon to toxic cough syrups produced by small Indian pharmaceutical companies. As expected, all Indian medicines manufacturers came under a cloud of suspicion.
Thwarting China’s Reach:
These Indian companies, by sheer merit, have thwarted China’s global outreach by winning contracts against Chinese bids. Adani Ports and Special Economic Zone Limited, a key player in India’s global ambitions, is developing a terminal at Colombo port, directly competing with China’s existing operations there.
Adani’s acquisition of Haifa Port in Israel for $1.03 billion in January 2022 is a bold move to counterbalance China’s influence in the region where Shanghai International Port Group operates.
The recent Securities and Exchanges Commission’s bribery case against Adani is seen by many as a strategic effort to block him from raising funds in US markets and slow his aggressive expansion in ports, airports, and renewable energy. Adani Green Energy had to cancel a $600 million sale of bonds following the indictment.
Kenya has ordered the cancellation of Adani infrastructure deals worth over $2.5 billion, mainly of improvising the Kenyata Jomo International Airport in Nairobi and an energy project.
It is more year since the U.S. International Development Finance Corporation (DFC) had announced that it would loan the Adani controlled project for Colombo Port more than half a billion dollars. After the US indictment, the DFC said that it is “continuing to assess the situation” and had not so far disbursed any of the funding promised. A DFC is quoted in Indian media that the agency is still conducting its “due diligence” on the project in order to ensure it meets its “rigorous standards”.
In Bangladesh, the interim government formed after the ouster of former PM Sheik Hasina has formed its panel to investigate power deals with Adani. Adani Power meets a tenth of Bangladesh’s electricity needs. Under exclusive power purchase agreement, Bangladesh receives nearly 1,600 MW of power from Adani Power’s twin coal-fired power generation units situated in Godda, Jharkhand.
Preparing for the Storm:
India’s private contribution to global infrastructure building, from supplying electricity in Bangladesh to building and managing ports around the world, is a matter of national pride. According to Hindol Sengupta, a professor of international relations, a proactive approach is necessary to counter the global attacks. Both businesses and the Indian state must find "ways and means to predict, defend, and counter such attacks." At the same time, real issues of bribery and corruption in the Indian system must be tackled with urgency.
As India is vying to become the pharmacy of the world by selling off-patent drugs worth billions of dollars to treat everything from the common cold to cancer, the cough syrup delinquency was not an isolated incident. To preserve its leadership, India must undertake comprehensive reforms, aligning regulations with international standards, investing in cutting-edge facilities and technology, and prioritising the training of its workforce.
Adani’s indictment by US court is a beginning of a new era of corporate scrutiny. It won’t be the last. India must be smart: it must prepare for what is ahead in order to sustain its global momentum.