India: How will PM Modi navigate the Adani firestorm?

Billionaire businessman Gautam Adani, chairman of Indian conglomerate Adani Group, was indicted in the US on Thursday, charged with paying over $250 million (€237.5 million) in bribes to secure contracts in India’s energy sector.
The bribes were allegedly offered to Indian government officials to secure “lucrative solar energy supply contracts” with state-owned electricity distribution companies.
“As alleged, the defendants orchestrated an elaborate scheme to bribe Indian government officials to secure contracts worth billions of dollars,” Breon Peace, US attorney for the New York district, said in a statement.
The indictment rekindled scrutiny of the Adani Group, already under pressure from earlier allegations of stock manipulation by the short-selling firm Hindenburg Research in January last year.
At the time, Hindenburg Research released a scathing report outlining allegations of accounting fraud and market manipulation at Adani Group, which contributed to a dramatic loss of over $140 billion in market value for its listed companies.
The massive industrial conglomerate is considered to have close ties with India’s ruling Bharatiya Janata Party (BJP) government and Prime Minister Narendra Modi.  
Lawmakers have called for investigations into Adani’s financial dealings and the potential impact of its projects on the environment and local communities in India. 
Losing no time, the leader of the opposition Congress party Rahul Gandhi fired a salvo at Modi alleging that the government is shielding Adani from investigation and arrest.
“We have been raising this again and again and again,” said Gandhi at a press conference, reiterating his demand for a Joint Parliamentary Committee probe into the transactions of the Adani Group.
“It is a vindication of what we have been saying. The prime minister is protecting Adani and the prime minister is involved in corruption with Adani. This is being clearly indicated.”
“It is now pretty clear and established in America that Adani has broken both American law and Indian law. He has been indicted in the United States and I am wondering why Adani is still running around a free man in this country?” added Gandhi.
Gandhi also called for an investigation into Madhabi Puri Buch, the head of a trading regulatory body known as Securities and Exchange Board of India (SEBI).
“Adani should be arrested immediately, and his ‘protector’ Buch should be probed,” Gandhi said.
Opposition lawmaker Sagarika Ghose told DW that the government needed to react to repeated demands for a formal inquiry into allegations of stock market manipulation and bribery.
“It is no secret that the Modi government actively promotes the Adani group at the cost of other business houses. We fully support Indian entrepreneurship but make a clear distinction between openness to business and cronyism,” Ghose told DW.
“Will Narendra Modi break his silence now that the US has formally indicted his favourite businessman?”
In a statement, the Communist Party of India said the Modi government “cannot hide behind smokescreen anymore” and demanded a Central Bureau of Investigation probe into the bribery charges against Adani made by US prosecutors.
The Adani Group has rejected the allegations that its chairman Gautam Adani had paid more than $250 million in bribes to secure lucrative government contracts.
“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,” the Adani conglomerate said in a statement.
“All possible legal recourse will be sought,” it added.
However, many investors reacted to the report by selling their Adani Group shares.
The impact of the allegations was immediately felt across the sprawling conglomerate. Shares in the group’s listed firms fell between 10% and 20%, wiping out just under $30 billion (€28.5 billion) in total market value on Thursday, according to Reuters data.
The share prices of publicly traded Adani Group companies tumbled in India with Adani Green Energy plunging about 19%.
When the Hindenburg report was released in January last year, Adani’s market value dropped by more than $100 billion (€93.21 billion), prompting the group to abandon a $2.5 billion stock offering.
There are seven India-listed companies bearing the Adani name, including firms in power transmission, green energy and port operation. The group also owns cement producers, airport operators, coal miners and a digital marketing company.
Adani Group’s financing via the LIC and the State Bank of India (SBI) has raised concerns over potential consequences for the institutions’ financial stability and for the savings of millions of Indians.  
The LIC is an investor in five Adani companies with stakes ranging from 1% to 9%. 
“People thought their money is safe in public sector banks and institutions,” said Ram Gopal Yadav, an MP from the Samajwadi Party. 
India’s ruling BJP has not come out openly on the issue. Modi is widely perceived to be a close ally of Gautam Adani, whose business interests often align with the government’s growth goals.
The BJP downplayed the issue, pointing out that the US indictment contains allegations rather than proven charges.
“The charges in the indictment are allegations and the defendants are presumed innocent unless and until proven guilty,” said the BJP’s IT department head Amit Malviya on social media platform X.
“All the states mentioned here were Opposition ruled during that time. So, before you pontificate, answer on the bribes the Congress and its allies accepted,” he added.
Modi’s government has previously faced scrutiny over its connections with large corporations, and the indictment could further intensify public concerns about corruption and governance.
Edited by: Keith Walker
This article was originally published on February 8, 2023. It was updated on November 21, 2024 with the latest developments and comments after Adani Group founder Gautam Adani was indicted in the United States.