U.S. bribery allegations against Adani Group founder Gautam Adani have spotlighted a pressing issue for Indian renewable energy developers: the struggle to secure buyers for their power. Despite India’s commitment to transitioning from coal to solar and wind, state-run power distribution companies have been slow to finalize renewable energy purchase agreements. Analysts warn that this delay could jeopardize the nation’s ambitious clean energy goals.
The allegations against Adani, chairman of the $32 billion conglomerate with interests in ports, airports, and power generation and transmission, severely blow his attempts to rehabilitate his image after previous fraud accusations surfaced. In a statement, the company called the allegations “baseless” and promised to take legal action. It said the indictment was linked to just one more minor Adani Green Energy division contract that accounts for no more than 10% of the business.
Prosecutors in New York accused Gautam Adani and his nephew Sagar, along with co-defendants Vneet Jaain, Ranjit Gupta, and Cyril Cabanas, of agreeing to bribe Indian officials and lying to investors and banks to raise capital for projects. The scheme spanned a decade and included a variety of alleged illegal actions, including secret offshore entities, forgery, and accounting manipulation, according to prosecutors.
The criminal charges against the Adanis and their co-defendants have spotlighted what critics see as a shoddy corporate culture at the global conglomerate. The company has faced multiple investigations in India, where authorities have uncovered secret foreign entities, forgery, and accounting manipulation.
Critics also point to controversies involving Adanis’s personal assets and his links to controversial business partners. He has also been criticized for his coal and power projects in Australia and India, where opponents accuse him of favoritism from Prime Minister Narendra Modi’s government.
The US charges against the Adanis have also highlighted a significant issue facing many renewable developers: balancing project development risk with financial rewards. Investing in a renewables developer carries the risk that a project might never get built on its original timeline and budget. That is why private equity firms like KKR & Co Inc, Brookfield Asset Management Ltd, and EQT AB have been buying renewables development platforms this year.
But there is a catch to that strategy: the buyers must thoroughly vet both the track record of the development platform and the company’s staff before signing off on a project. That can involve extensive due diligence on things like the track record of senior management, a company’s internal controls and processes, and its commitment to fighting corruption. “There’s a real concern that we live in a broken system where corporate behemoths seem to be able to run an intricate fraud in broad daylight,” says Jonathan Melmed, a partner at the law firm King & Spalding who specializes in power and infrastructure private equity.