Adani says founder not named in US FCPA charge, shares rise
INDIAN billionaire Gautam Adani and his aides have not been charged under the US Foreign Corrupt Practices Act (FCPA), an Adani Group entity said, seeking to clarify some media reports claiming so. Shares rallied.
The Department of Justice’s indictment does not mention Gautam Adani, Sagar Adani or Vneet Jaain in any count related to conspiracy to violate the FCPA, Adani Green Energy said in a filing to the stock exchange on Wednesday (Nov 27).
Gautam, Sagar and Vneet have only been charged with securities fraud conspiracy, wire fraud conspiracy and securities fraud, the company said. In general, the penalties for such charges are less severe than bribery.
Gautam and Sagar also face a civil complaint over violation of sections of the Securities Act, and aiding and abetting Adani Green to violate the Act, the company said.
Adani Group stocks surged after the statement. Adani Enterprises gained as much as 8.3 per cent, most since June three and Adani Green jumped as much as 10 per cent. Adani Energy Solutions and Adani Total Gas rallied 10 per cent and 11 per cent, respectively.
The group previously denied all allegations, and said it would seek legal recourse to defend itself.
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The FCPA makes it a crime for a company or person with US links – such as a public listing, American investors or a joint venture – to pay or offer something of value to another government’s officials for favourable treatment. While the Adani Group doesn’t trade in the US, it does have American investors.
Federal prosecutors alleged last week that Adani, one of the world’s richest people, and other defendants promised to pay more than US$250 million in bribes to Indian government officials to win solar energy contracts, and concealed the plan as they sought to raise money from US investors.
“Investors will find this clarification from the group helpful and it is working favourably for the stocks,” said Deven Choksey, managing director at DRChoksey FinServ. “Professional investors, however, would like to see lot of transparency from the group on every front going ahead.”
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FCPA investigations can typically take years, complicated by the need to gather evidence and interview witnesses who may be outside the US. The cases, however, are often high-profile and can result in huge fines for companies and big wins for prosecutors.
Adani Green on Wednesday said that it faces monetary penalties under the civil complaint, but said the amount has not been quantified. The group, in a separate statement also Wednesday, said that it suffered an erosion of nearly US$55 billion in market value across 11 listed companies after the US indictment. BLOOMBERG
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