After US fraud indictments over bribery allegations, Adani Group faces global fallout

The U.S. Department of Justice (DoJ) accused Adani and others of conspiring to commit securities and wire fraud while orchestrating a scheme to deceive U.S. investors and financial institutions through false and misleading statements.

The U.S. Securities and Exchange Commission (SEC) has also filed civil charges against Adani, his nephew Sagar Adani (head of Adani Green Energy), and Cyril Cabanes, an Azure Power executive, over the alleged bribery scheme.

Fraud allegations and legal implications

The DoJ charges, which are criminal in nature, include violations of the Foreign Corrupt Practices Act (FCPA) and the Foreign Extortion Prevention Act (FEPA).

Meanwhile, the SEC has filed civil charges, accusing the group of securities and wire fraud.

Legal experts highlighted the gravity of the charges under U.S. law.

With its extraterritorial reach, the FCPA prohibits bribery of foreign officials to gain business advantages and allows for prosecution of foreign nationals if their actions intersect with U.S. commerce or financial systems.

Market Fallout: Adani bonds and shares hit hard

The indictment triggered significant pressure on Adani Group’s financial assets. Bonds issued by the group faced a second day of sharp declines on Friday, while shares struggled to recover after a $27 billion loss in market value on Thursday.

Adani Ports and Special Economic Zone’s 2027 bonds traded at 92 cents on the dollar, with longer-dated bonds around 80 cents.

The conglomerate described itself as a "law-abiding organization" and dismissed the allegations as "baseless and denied."

However, six Adani group companies recovered on Friday, following the previous day's decline, aligning with a strong market rally where the BSE Sensex surged 1,961 points.

Kenya and Sri Lanka rethink deals

The fallout from the indictment extended beyond financial markets. Kenya cancelled two major agreements with the Adani Group, including a $2 billion airport modernization deal and a $736 million power transmission project.

Sri Lanka is reportedly reconsidering a power project with Adani, while Bangladesh’s High Court has ordered a probe into a power purchase agreement with Adani Power. These developments hint at growing international scrutiny of the group’s global projects.

Impact on India’s renewable energy sector

Analysts warned the controversy could harm India’s renewable energy ambitions, a critical component of global climate goals. Independent analyst Nimish Maheshwari noted that reduced international investment and heightened demands for transparency could slow project financing.

The Securities and Exchange Board of India (SEBI) has initiated preliminary checks to determine if Adani entities violated local market regulations through inadequate disclosures.

Funding crunch looms

Global banks are reportedly reconsidering their exposure to the Adani Group, with some evaluating a temporary halt on fresh credit while maintaining existing loans. Internal discussions at two major lenders are underway to assess financial risks following the indictment, according to sources.

Broader implications for India’s business environment

Experts emphasized the potential ripple effects of the allegations on India’s regulatory and investment landscape.

“Domestically, agencies like SEBI and the Reserve Bank of India may face pressure to investigate Adani’s operations to reassure investors about the integrity of Indian markets,” Nilesh Tribhuvann, managing partner at White & Brief Advocates & Solicitors was quoted as saying by Business Standard.

Internationally, the indictment could strain India-U.S. business relations, deterring foreign investments and increasing scrutiny of Indian conglomerates.

Business Standard also quoted Supreme Court advocate Ayush Jindal as saying: “The ramifications of these accusations underscore the importance of accountability at all levels of leadership, as financial misbehaviour can disrupt markets, harm reputations, and erode investor confidence.” 

The indictment not only threatens the Adani Group’s global standing but also raises critical questions about regulatory oversight and transparency in India’s corporate ecosystem.

The group tried to assure investors it was a “law-abiding organization” and said the accusations were “baseless and denied”.

That did not stop its companies losing about $27 billion in market value on Thursday.

In early Asian trade on Friday, Adani companies’ US dollar bonds were kept under pressure, nursing heavy loss from a day earlier. Adani Ports and Special Economic Zone debt maturing in 2027 traded at 92 cents on the dollar and longer-dated maturities around 80 cents.