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Informist, Thursday, Nov. 21, 2024

 

By Rajesh Gajra

 

MUMBAI – The Securities and Exchange Board of India will consider stepping in the matter of a US federal court's indictment of Gautam Adani and some other Adani Group officials for their alleged roles in a fraud scheme against US investors involving false statements and concealment of alleged bribery in state solar power projects only if cooperation is invoked under the inter-regulatory bilateral memorandum of understanding with the US Securities and Exchange Commission, a senior SEBI official said Thursday on the sidelines of an event in Mumbai.

 

The US SEC said in a press release Wednesday that it had charged Gautam Adani and Sagar Adani, in their capacity as officials of Adani Green Energy Ltd., "for conduct arising out of a massive bribery scheme". Given the charge, SEBI will soon decide if its intervention is required under the inter-regulatory cooperation pact with the SEC, the official indicated.

 

According to the SEC, "the bribery scheme was orchestrated to enable the two renewable energy companies to capitalize on a multi-billion-dollar solar energy project that the companies had been awarded by the Indian government". During the alleged scheme, "Adani Green raised more than $175 million from U.S. investors and Azure Power’s stock was traded on the New York Stock Exchange," the SEC said in a press release. The US market regulator has also charged an executive of Azure Power Global Ltd., Cyril Cabanes, for the same conduct arising out of the alleged bribery.

 

In its press release, the SEC said it was charging Gautam Adani and Sagar Adani with violation of the anti-fraud provisions of federal securities laws. The SEC is seeking "permanent injunctions, civil penalties, and officer and director bars" against the two Adanis. With regard to Cabanes, the commission said it was charging him with violating the Foreign Corrupt Practices Act and is seeking "a permanent injunction, a civil penalty, and an officer and director bar" against him.

 

The SEC said it had filed these complaints in the US District Court for the Eastern District of New York. On Wednesday, the United States Attorney's Office at the Eastern District of New York under the Department of Justice said in a press release that a five-count criminal indictment was unsealed in the federal court in Brooklyn charging Gautam Adani, Sagar Adani and Vineet Jaain, executives of an Indian renewable energy company with conspiracies to commit "securities fraud for their roles in a multi-billion-dollar scheme to obtain funds from U.S. investors and global financial institutions on the basis of false and misleading statements". The scheme involved more than $250 million in bribes promised to Indian government officials to secure solar energy contracts by the officials.

 

The Adani group Thursday denied the charges by the US Department of Justice and the SEC against directors of Adani Green and called them baseless. A group spokesperson said the charges in the indictment are allegations and as defendants the officials named "are presumed innocent unless and until proven guilty." The group is seeking all possible legal recourse in the cases, the spokesperson further said.

 

The memorandum of understanding between SEBI and the SEC is primarily regarding cooperation, consultation, and provision of technical assistance and was signed in March 1998. The memorandum also enjoins the two securities market regulators to assist each other in obtaining information and evidence to facilitate the enforcement of their respective securities laws. SEBI is also a member of the International Organization of Securities Commissions, which binds it to improve market insight and prevent fraud through regulator-to-regulator memoranda of understanding.

 

In the bribery charges, involving alleged meetings of Gautam Adani with an Indian government official to obtain lucrative solar energy supply contracts, since the plot was hatched and advanced within India, the SEC may choose to seek cooperation from SEBI. Even without a specific request from the SEC, the Indian markets regulator is expected to comply with the spirit of the rules of the International Organization of Securities Commissions to act independently and penalise Indian companies involved in fraud involving domestic or foreign investors.

 

Shares of Adani Green Energy ended 19% lower Thursday at INR 1,145.70 on the National Stock Exchange.  End

 

Edited by Rajeev Pai

 

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