Adani Green’s US Fundraise & Azure’s NYSE Listing: Two Reasons Why the US is Taking Action in an Alleged Bribery Scandal in India

Adani Green’s US Fundraise & Azure’s NYSE Listing: Why the US Is Taking Action in India’s Alleged Bribery Scandal

The recent indictment of Adani Group Chairman Gautam Adani and seven others, including senior Adani Green Energy executive Sagar Adani and Azure Power’s Cyril Sebastien Dominique Cabanes, marks a significant move by US authorities. With allegations of a $250 million bribery scheme involving Indian government officials to secure power supply contracts, this case has sparked questions: Why is the US stepping in on a bribery scandal that occurred in India?

Adani Green’s US Fundraise & Azure’s NYSE Listing: Why the US Is Taking Action in India’s Alleged Bribery Scandal

The answer lies in the US’s Foreign Corrupt Practices Act (FCPA), which extends US jurisdiction to companies with American investors or a US market presence, particularly those whose securities are traded in the US. In this case, the involvement of US investors and securities regulations has drawn intense scrutiny from American regulatory bodies, including the US Securities and Exchange Commission (SEC).

The Key Reasons Behind US Involvement: Adani Green’s Bond Issue and Azure’s NYSE Listing

1. Adani Green’s $750 Million Bond Issuance Involving US Investors

In September 2021, Adani Green raised $750 million through a corporate bond issuance that included over $175 million from US investors. As part of this process, Adani Green reportedly assured investors that its leadership had not engaged in any bribery or improper influence of foreign officials. However, the SEC has alleged these assurances were false. The SEC claims Gautam Adani and Sagar Adani were actively involved in offering and arranging hundreds of millions of dollars in bribes to Indian officials just before issuing these bonds.

This alleged deception to US investors is a direct violation of the FCPA, which prohibits US-linked entities from bribing foreign officials. As a result, the SEC and US Attorney's Office have a vested interest in pursuing legal action to hold Adani Green and its executives accountable.

2. Azure Power’s NYSE Listing and US Securities Regulations

Azure Power, while operating in India, has been listed on the New York Stock Exchange (NYSE), making it subject to SEC regulations. As a US-listed company, Azure Power must adhere to US anti-bribery laws and securities regulations, even for its business dealings outside the US. The SEC has charged Azure’s Cyril Sebastien Dominique Cabanes for his alleged involvement in this bribery scheme, leveraging the FCPA’s jurisdiction over US-listed entities involved in corrupt practices abroad.

The SEC argues that by listing on a US exchange, Azure Power falls within US oversight, meaning the company and its executives must abide by US laws prohibiting the bribery of foreign officials. The FCPA’s jurisdiction, therefore, extends to Azure, enabling US authorities to take action against alleged misconduct tied to its operations in India.

Why US Jurisdiction Applies Under the FCPA

The FCPA prohibits specific persons and entities from paying foreign government officials to secure or retain business. Its broad jurisdiction applies to:

• Foreign companies issuing securities in the US, like Adani Green and Azure Power.
• US-listed companies, such as Azure Power, which are legally obligated to avoid corrupt practices.

Since the SEC claims the accused parties used "the means or instrumentalities of US interstate commerce" (emails, messages, or calls within or from the US), they fall under the FCPA’s purview, allowing the US government to pursue action against the alleged misconduct.

Alleged Misconduct: What the SEC and US Prosecutors Claim

The SEC’s complaint outlines that Adani Green’s executives misled US investors in 2021 by asserting that neither Adani Green nor its directors had offered bribes to foreign officials. Breon Peace, the US Attorney for the Eastern District of New York, alleges that the defendants orchestrated a scheme involving hundreds of millions in bribes to Indian officials to secure contracts valued in the billions. Despite this, Adani executives reportedly claimed no such payments had been made, which the US prosecutors deem a violation of US law.

What This Means for Adani Green, Azure, and US Investors

This case underscores the risks associated with international corporate conduct for companies engaged in US financial markets. As both Adani Green and Azure Power face charges, US investors and regulators will closely watch how these allegations impact investor trust and the reputation of these companies.

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