As indicated in this prior post, the SEC’s FCPA enforcement action against Cyril Sebastien Dominique Cabanes (“Cabanes” an individual associated with Azure Power – a former U.S. issuer) and the SEC’s securities fraud action against two senior executives of Adani Green (Gautam Adani and Sagar Adani) in connection with an alleged Indian bribery scheme were just one prong of a broader enforcement action announced earlier this week.
As highlighted in this post, the DOJ also announced unsealing of a criminal indictment (originally filed on October 24th) against the following individuals in connection with the same alleged Indian bribery scheme.
- Gautam Adani (a citizen of India and founder of the Adani Group which includes numerous portfolio companies including Adani Green Energy – and Indian energy company). Charged with securities fraud conspiracy and wire fraud conspiracy.
- Sagar Adani (a citizen of India and Gautam Adani’s nephew and Executive Director of Adani Green’s Board of Directors). Charged with securities fraud conspiracy and wire fraud conspiracy.
- Vneet Jaain (a citizen of India who was the CEO of Adani Green and who is currently the Managing Director of Adani Green’s Board of Directors). Charged with securities fraud conspiracy and wire fraud conspiracy.
- Ranjit Gupta (a citizen of India who was the CEO of Azure Power Global Limited and CEO and Managing Director of an Azure subsidiary). Charged with conspiracy to violate the FCPA’s anti-bribery provisions.
- Cyril Cabanes (a citizen of Australia and France who was previously a member of the board of directors of Azure served as a representative of the company’s largest stockholder, Caisse de dépôt et placement du Québec (“CDPQ”). Charged with conspiracy to violate the FCPA’s anti-bribery provisions and conspiracy to obstruct justice.
- Saurabh Agarwal (a citizen of India employed by CDPQ who reported to Cabanes). Charged with conspiracy to violate the FCPA’s anti-bribery provisions and conspiracy to obstruct justice.
- Deepak Malhotra (a citizen of India employed by CDPA who was a member of the board of directors of Azure). Charged with conspiracy to violate the FCPA’s anti-bribery provisions and conspiracy to obstruct justice.
- Rupesh Agarwal (a citizen of India who served as a consultant for Azure and then as Chief Strategy and Commercial Officer for Azure). Charged with conspiracy to violate the FCPA’s anti-bribery provisions and and conspiracy to obstruct justice.
The bribery scheme is the same as alleged in the SEC matter and the prior post contains the relevant background which is essentially as follows.
Adani Green and Azure Energy were seeking various projects overseen by Solar Energy Corporation of India, Ltd. (“SECI”) [a company of the Ministry of New and Renewable Energy (“MNRE”), Government of India responsible for implementing Indian central government programs related to renewable energy, including funding large solar projects].
For various reasons, the projects were delayed and to facilitate the projects going forward Adani Green and Azure (and individuals associated with the companies) allegedly engaged in a scheme pursuant to which Adani Green paid or promised approximately $250 million in bribes to Indian state officials.
Pursuant to the scheme, Adani Green allegedly made the bribes payments on behalf of both companies and then sought payment from Azure for approximately one-third of the payments. To reimburse Adani Green for the portion of the bribe payments allegedly made on its behalf, Azure and Adani created allegedly schemed up a “a commercially doable deal.”
A reason Gautam Adani, Sagar Adani, and Vneet Jaain were not charged with FCPA offenses appears to be jurisdictional whereas the defendants charged with FCPA violations (all associated with Azure – a former U.S. issuer) allegedly engaged in certain discrete acts while in the U.S. such sending e-mails and having phone calls in furtherance of the bribery scheme.
In summary fashion, the DOJ indictment alleges:
“In or about and between 2020 and 2024, senior executives of (i) an Indian renewable-energy company, which was a portfolio company of an Indian conglomerate; (ii) an issuer company that operated in the renewable-energy sector whose securities were traded on a United States exchange; and (iii) that issuer’s largest shareholder, a Canadian institutional investor, participated in a scheme to bribe Indian government officials to ensure the execution of lucrative solar energy supply contracts with Indian government entities. During the same period, senior executives of the Indian renewable-energy company (i) conspired to misrepresent the company’s anti-bribery practices to United States-based investors and international financial institutions and (ii) concealed from those same investors and institutions their bribery of Indian government officials to obtain billions of dollars in financing for green energy projects, including the corrupt solar energy supply contracts. In addition, senior executives of the issuer company and its Canadian institutional investor conspired to obstruct the United States government’s investigations into the bribery scheme.”
Under the heading “The Bribery and Obstruction Schemes” the indictment alleges:
“Beginning in or about 2020, defendant RANJIT GUPTA and Co-Conspirator #2 [a citizen of India who held high-ranking executive positions at Azure] while acting within the scope of their employment as officers, employees and agents of the U.S. Issuer, knowingly and willfully conspired and agreed with each other and others, including but not limited to the defendants GAUTAM ADANI, SAGAR ADANI and VNEET JAAIN, to corruptly offer, authorize, promise to pay and to pay bribes to and for the benefit of government officials in India to cause Indian state electricity distribution companies to enter into contracts with SECI in order for the Indian Energy Company [Adani], the Indian Energy Company’s subsidiaries and the U.S. Issuer [Azure] to obtain and retain business. At various times in or about and between 2021 and 2022, other individuals, including but not limited to the defendants CYRIL CABANES, SAURABH AGARWAL, DEEPAK MALHOTRA, RUPESH AGARWAL and Co-Conspirator #1 [a U.K. citizen who was the Chairman of Azure’s Board of Directors], knowingly and willfully joined the conspiracy.
To accomplish the objectives of the then ongoing illegal bribery scheme, the defendants CYRIL CABANES, SAURABH AGARWAL, DEEPAK MALHOTRA, RUPESH AGARWAL and Co-Conspirator# 1, together with others, also agreed knowingly and corruptly to conceal the scheme from the United States government, including by obstructing an investigation by a grand jury in the Eastern District of New York (the “Grand Jury Investigation”), an investigation by the Federal Bureau of Investigation (the “FBI Investigation”) and an investigation by the SEC (the “SEC Investigation”) (collectively, the “Government Investigations”). As part of that scheme, beginning in approximately 2022, CABANES, SAURABH AGARWAL, MALHOTRA, RUPESH AGARWAL and Co-Conspirator #1 agreed with each other and others to destroy and suppress documents and communications and provide false information to the United States government in connection with the Government Investigations.”
Under the heading “The Securities Fraud and Wire Fraud Schemes,” the indictment alleges:
“In or about and between 2020 and 2024, in order to fund its operations, the Indian Energy Company and certain of its subsidiaries engaged in a series of financial transactions, including: (i) obtaining more than $2 billion of United States-dollar denominated bank loans from international financial institutions and United States-based asset management companies; and (ii) offering more than $1 billion in securities underwritten by international financial institutions and marketed and sold to investors in the United States, among other places. In connection with these financial transactions, investors irrevocably committed themselves in the United States to invest millions of dollars in the securities of the Indian Energy Company.
In connection with these transactions, the Indian Energy Company and its directors, management team and employees, including the defendants GAUTAM ADANI, SAGAR ADANI and VNEET JAAIN, made or caused others to make false and misleading statements, and omitted material facts that rendered certain statements misleading, to investors, joint bookrunners and lenders regarding the Indian Energy Company’s anti-bribery commitments and practices and the bribery scheme described herein.
The Indian Energy Company and its directors, management team and employees, including the defendants GAUTAM ADANI, SAGAR ADANI and VNEET JAAIN, relied on the United States financial system to perpetuate this fraudulent scheme by, among other things, seeking and securing investors and potential investors physically located in the United States and causing wires to be sent and received that passed through the United States, including through the Eastern District of New York.”
In the DOJ release, Breon Peace (United States Attorney for the Eastern District of New York) stated:
“As alleged, the defendants orchestrated an elaborate scheme to bribe Indian government officials to secure contracts worth billions of dollars and Gautam S. Adani, Sagar R. Adani and Vneet S. Jaain lied about the bribery scheme as they sought to raise capital from U.S. and international investors. My Office is committed to rooting out corruption in the international marketplace and protecting investors from those who seek to enrich themselves at the expense of the integrity of our financial markets.”
Lisa Miller (Deputy Assistant Attorney General for the Justice Department’s Criminal Division) stated:
“This indictment alleges schemes to pay over $250 million in bribes to Indian government officials, to lie to investors and banks to raise billions of dollars, and to obstruct justice. These offenses were allegedly committed by senior executives and directors to obtain and finance massive state energy supply contracts through corruption and fraud at the expense of U.S. investors. The Criminal Division will continue to aggressively prosecute corrupt, deceptive, and obstructive conduct that violates U.S. law, no matter where in the world it occurs.”
James Dennehy (Assistant Director in Charge, Federal Bureau of Investigation, New York Field Office) stated:
“Gautam S. Adani and seven other business executives allegedly bribed the Indian government to finance lucrative contracts designed to benefit their businesses. Adani and other defendants also defrauded investors by raising capital on the basis of false statements about bribery and corruption, while still other defendants allegedly attempted to conceal the bribery conspiracy by obstructing the government’s investigation. The FBI maintains its steadfast mission to expose all corrupt agreements, especially with international governments, and protect investors from related harm.”
In response to the DOJ and SEC matters, Adani Group release this statement:
“The allegations made by the US Department of Justice and the US Securities and Exchange Commission against directors of Adani Green are baseless and denied. As stated by the US Department of Justice itself, “the charges in the indictment are allegations and the defendants are presumed innocent unless and until proven guilty.” All possible legal recourse will be sought. The Adani Group has always upheld and is steadfastly committed to maintaining the highest standards of governance, transparency and regulatory compliance across all jurisdictions of its operations. We assure our stakeholders, partners and employees that we are a law-abiding organisation, fully compliant with all laws.”
