According to persons with knowledge of the situation, India’s capital markets regulator is investigating whether the Adani group broke regulations requiring the disclosure of information that moves the market.
According to persons who asked not to be named because the information is confidential, the Securities and Market Board of India has questioned stock market officials about whether Adani Green Energy Ltd. adequately disclosed the US Justice Department’s investigation into bribery claims. According to one of the persons, the fact-finding process is anticipated to go on for two weeks, after which Sebi may choose whether to launch a formal investigation.
A March 15 Bloomberg News story that US authorities were investigating whether an Adani firm or individuals connected to the company, including its billionaire chairman, were involved in paying Indian officials for preferential treatment on an energy project is at the heart of the investigation.
The Adani Group stated in that piece that it was completely compliant with anti-bribery legislation in India and other countries and that it was not “aware of any investigation against our chairman.” Adani Green stated in a filing to the stock exchanges on March 19 that it is aware that an unaffiliated third party may have violated US anti-corruption legislation.
Gautam Adani was accused by US authorities on Wednesday of being involved in a $250 million bribery plot to secure solar energy contracts in India. The group allegedly hid the scheme while trying to raise funds from US investors. The claims were refuted by an Adani Group representative.
Given that Adani’s nephew, Sagar Adani, had been served with a search warrant and grand jury subpoena a year prior, US prosecutors argue in their indictment that Adani’s March denial to Bloomberg was a false statement intended to enhance the alleged fraud plan. The biggest developer of renewable energy in India, Adani Green, has Sagar as its executive director.
India’s stock exchanges are regarded as front-line regulators, charged with, among other things, implementing Sebi’s disclosure regulations. Following the US indictment, Adani’s main company’s stocks fell as much as 23% on Thursday before reversing losses on Friday.
Sebi, which has the authority to respond to a complaint from the exchanges, has already looked into the Adani Group on issues including disclosure standards, notably in response to claims made by short-seller Hindenburg Research last year. The results of that investigation have not yet been made public. Only civil charges may be brought by Sebi, and disclosure violations usually result in a financial penalty.
Emails requesting comment from Sebi, BSE Ltd., and NSE Ltd. were not answered.
