MUMBAI: Following a directive from markets watchdog Sebi, the stock exchanges have sought information from Adani group companies cited in an alleged bribery case in the US, and the non-disclosure of the same to investors and exchanges here on time. The direction and the follow-up action by BSE and NSE are part of the “regular surveillance mechanism”.
Exchanges have written to the group companies seeking clarifications under listing obligation and disclosure requirements, a person in the know of the development said. They are checking if there were lapses or delays in disclosures on the probe in the US on which group chairman Gautam Adani and nephew Sagar Adani and six others charged on November 20, the person added.
If any lapses or delays are established, exchanges can take action or issue an advisory to the companies and the Sebi can take up the matter for adjudication, the person said, clarifying that exchanges are doing this as part of their regular surveillance mechanism.
Sebi spokespersons and exchanges didn’t respond to queries from TNIE. Adani Group chief financial officer Jugeshinder Singh said in a statement that allegations relate to one contract of Adani Green, 10% of overall business of renewable arm of the company.
In a social media post, the group CFO said it has a portfolio of 11 public companies and none are subject to indictment (defendants in any legal proceedings in the recent Department of Justice lawyers filings to a court in NYC) He further said none of the issuers (companies in the group’s portfolio or specific issuers that are subsidiaries of the public companies) are accused of any wrongdoing in the said legal filing.
The New York federal court prosecutors have alleged that the group gave misstatements and didn’t disclose developments around anti-bribery probe to bondholders in the US which began in March 2023 when the company was raising $700 million in debt.
The federal agents had in March 2023 served Gautam Adani’s cousin Sagar Adani who heads Adani Green Energy, a search warrant apart from serving him with a grand jury subpoena identifying the offences, individuals, and entities under investigation. They have taken away is laptops mobile phones etc as evidence.
The charges include Adanis making misleading statements to the media, market, Indian stock exchanges, and to financial institutions in their private communications about the US investigation.
Summons to Adanis
Meanwhile, US markets regulator Securities and Exchange Commission on Saturday issued summons to Gautam Adani and nephew Sagar to explain their stand on the alleged $265 million bribery to secure solar power contracts in the country. As per reports, summons were sent to Adani’s Shantivan Farm residence in Ahmedabad and Sagar’s Bodakdev residence in the same city on November 21, a day after the indictment. The SEC seeks their replies within 21 days.
Adani and seven others are indicted by the SEC, justice department and FBI and are charged with serious criminal offences of security and wire fraud. The group has so far issued only a short statement saying the allegations are baseless, and this denied.
A former whole-time member of the Sebi told TNIE that unless the charges are proved, neither Sebi nor exchanges or law enforcement agencies can act. “First they must investigate and prove the charges only after that actions can be taken. The US indictment is only allegations and they must be proven first before Sebi can take any action,” he said, adding that Sebi and exchanges must find facts and bring clarity to the issue at the earliest.
“This is a matter of great concern that anyone can cause such a loss of national wealth and damage reputations. It is necessary that Sebi should do a quick investigation and give clarity on the issue.”
Settlement: a forward
Virag Gupta, an advocate with the Supreme Court, said America’s two anti-corruption legislation--Foreign Corrupt Practice Act and the Foreign Extortion Prevention Act--make bribery illegal but offer settlement. But in our laws provides for no settlement except that for minor offences there is a provision for compounding of offences.
As per the US law, settlement neither means admission nor rejection of charges and it is not necessary that Adanis have to plead guilty for settling the matter. Matters are settled in the US without prejudice to the right of appeal against the charges by the accused. But paying a big fine for settling criminal trial in the US may be treated as deemed acceptance of bribery crime back home, and may compel state and central authorities and other regulators to lodge formal complaint and conduct the probe, Gupta told this paper. Settlement comes with huge penalties in the US. Some of the biggest settlements with the department of justice and SEC have run into a billion dollars or more.