Gautam Adani, the billionaire chairperson of Indian conglomerate Adani group is accused of conspiring to pay about $265 million in bribes to key Indian government officials to obtain contracts worth an estimated $2 billion over 20 years. He could face a long road to trial in the US on criminal charges over his alleged role in the multi-billion-dollar fraud and bribery aimed at securing favourable terms for solar power contracts with officials at home. Arrest warrants have been issued in the United States for Gautam and his nephew Sagar Adani, and the charge has reverberated through both Indian and global markets, momentarily casting shadows over India’s renewable energy progress.
The accusations suggest a disturbing nexus between corporate malfeasance and state machinery, resonating beyond the Adani group into the core of Indian governance and its image on the world stage. Moreover, Adani’s reputation globally has taken a further beating since there were red flags over other transactions. In its January 2023 report, Hindenburg Research accused the group of extensive accounting fraud, stock price manipulation, and exploiting tax havens, one that persisted over decades. The development has gotten instant reactions worldwide and has seen markets tumble.
The current development had immediate reactions with the Kenyan government swiftly cancelling its airport modernisation and energy agreements with the Adani group. Recently, the Bangladesh High Court ordered a probe into the power purchase agreement entered into with Adani Power. Let us not forget, the Adani group has business interests in Australia, Greece, China, the United Arab Emirates and a few others.
Meanwhile, the development brings the Centre’s bonhomie with the group into sharp focus with the Opposition parties questioning whether Prime Minister Narendra Modi’s government will initiate action based on indictment and constitute a Joint Parliamentary Committee probe. Let’s not forget Adani has been getting overt support from the Indian government for its global projects under the pretext of geopolitics and geo-economic statecraft. The question is about the government distancing itself despite the issue having national and international implications, instead of taking the case head-on and launching an internal probe. There is so much at stake for India; the global credibility of other businesses could be tarnished and bring embarrassment.
India has positioned itself as a champion of renewable energy, and any setbacks to major players in this domain could undermine policymaking and investor confidence. Modi has outlined a major transformation in the solar sector over the next few years. Moreover, there are chances that Indo-US ties could be tested due to broader concerns about corruption and ethical business practices, given the backdrop that US President-elect Donald Trump has vowed zero tolerance towards corruption.
There is another fundamental question: How deep-seated are the institutional problems facing businesses operating in India? This corruption narrative is not new in the Indian context, but the new Adani episode can bring renewed scrutiny to the political and bureaucratic frameworks that enable such practices. Trust is a cornerstone of any business relationship, especially in sectors such as renewable energy that require substantial long-term investments and partnerships. International financiers, investors, and partners may grow wary, leading to difficulty in attracting new investments that are critical for expanding solar capacities and achieving ambitious targets.
We agree that governments understand their businesses, but the private business space needs systemic reform so that companies work within the parameters of ethical practices. Running away from the situation will not help.
