How Adani built its green energy business, and what spurred US probe

This is the story of how a company poised to become the world's largest renewable energy producer embroiled itself in an alleged global scandal that casts a long shadow over India’s green ambitions.

In 2014, the Indian government announced a goal of achieving 175 GW of renewable energy production capacity in India, including at least 100 GW of solar energy production capacity by 2022.

At the time, renewable energy accounted for approximately 17 per cent of India’s energy production capacity. The Union government publicly announced that it was seeking to more than double that number.

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The US indictment

According to the US federal prosecutors' 39-page criminal indictment, in 2020, the public sector undertaking, Solar Energy Corp of India (SECI), unveiled its bold Manufacturing Linked Projects initiative, inviting bids to build solar manufacturing plants in exchange for long-term power purchase agreements.

Industrialist Gautam Adani, who had formed Adani Greens, and his nephew Sagar Adani saw an opportunity to cement the company’s position as a renewable energy titan.

In early 2016, Adani Green had a single power project with a power generating capacity of only 20 MW. Over the next three years, it grew its business and, by the end of 2018, had entered into long-duration contracts under which it intended to expand its renewable power generating capacity to 1,998 MW or 1.998 GW.

The start of the journey

In mid-2019, Adani Green stated in its annual report that by 2022, it intended to develop a portfolio of projects producing 10 GW of renewable power generating capacity — or five times the size of its portfolio at the end of 2018 — and that it was the “best positioned” company “to tap (the) Indian large renewable energy opportunity”.

By mid-year, the company had managed to secure the crown jewel of SECI’s offering — a commitment to produce 8 GW of solar power. The victory was monumental, promising billions in revenue. Yet, beneath the surface, a harsh reality loomed: the promised power would need buyers.

Indian state governments, through their electricity distribution companies (Discoms), baulked at SECI’s above-market tariffs. Without agreements from state governments, the project would stall — and so would Adani Green’s meteoric rise.

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Odisha: The first move

US federal prosecutors said the Adani team faced a tough sell in Odisha. The state Discom initially refused to sign agreements for 500 MW of power at SECI’s proposed rates.

Internal documents later talk about how Adani Green executives, at the direction of Gautam and Sagar, orchestrated bribes totalling hundreds of thousands of dollars to key state officials.

Adani Green maintained detailed internal records, cataloguing bribe amounts and recipient names. These documents were clear. They itemised payments to mid-level bureaucrats, senior Discom officials and political intermediaries tied to the chief minister’s office, says the criminal indictmen document.

By July 2021, SECI announced a breakthrough: Odisha’s Discom had signed on, agreeing to buy 500 MW of solar power. The US prosecutors claimed this was a significant milestone for Adani Green and set the stage for even bolder manoeuvres.

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Andhra Pradesh: $200-m gamble

Odisha’s success emboldened Gautam Adani. Andhra Pradesh, a state critical to the Manufacturing Linked Projects, represented a vastly larger opportunity: 7,000 MW of power capacity.

But the stakes were proportionately higher. Then Andhra Pradesh Chief Minister Jagan Mohan Reddy remained unconvinced, and his government was reluctant to lock in above-market tariffs.

In mid-2021, Gautam Adani flew to Andhra Pradesh to meet the Chief Minister personally. The SEC (US Securities and Exchange Commission) alleges this meeting was not a negotiation but a pivotal moment in a massive bribery operation.

Serious charges

Per the US prosecutor’s indictment document citing Adani Green’s internal records, Gautam Adani promised bribes totalling approximately $200 million to critical officials.

The money would be distributed across various levels, including senior advisors in the Chief Minister’s office, heads of state Discoms responsible for contract approvals and political operatives tasked with ensuring legislative support for renewable energy projects.

Weeks after the meeting with the Chief Minister, Andhra Pradesh announced its intention to sign agreements with SECI covering the 7,000 MW capacity. The payments unlocked the largest deal in the Manufacturing Linked Projects portfolio.

Also read | Adani's indictment in US triggers political upheaval in Delhi

A networked operation

The scale of the bribery went beyond Odisha and Andhra Pradesh. By December 2021, Adani Green had facilitated agreements in at least four Indian states, securing power supply agreements (PSAs) critical for its projects. The SEC complaint revealed a detailed map of these operations.

Payments were funnelled through shell companies, fronted by political allies and business intermediaries. According to the US prosecutors in their indictment, some transactions were disguised as consulting fees or development expenses to evade detection.

The document said executives of Adani Green, including Sagar Adani, began to pressure and propose to pay “incentives” (i.e. bribes) directly to Indian state government officials to persuade them to cause the state governments or their Discoms to agree to PSAs with SECI at prices favourable to Adani.

For example, in late 2020 and early 2021, Sagar Adani regularly communicated with others about the need to pressure and “incentivise” Indian states and his efforts to do so. Among many other communications, in writings to executives, he detailed how he had been proposing “incentives” to “motivate” Indian state officials and persuade them to agree to contracts with SECI and, subsequently, he said that he was substantially increasing those “incentives”.

‘Bribery works!’

Per the US document, Gautam Adani later made it clear to senior personnel that their bribery scheme "worked". Between July 22 and December 1, 2021, SECI entered power supply deals with Discoms in at least four Indian states.

These agreements allowed SECI to enter into PSAs with Adani Green, implementing the Letters of Award under which those two companies were expected to earn billions of dollars from the Manufacturing Linked Projects.

Adani Green’s management kept meticulous logs detailing the bribes paid, to whom, and for what outcome. The bribes ranged from $100,000 for minor agreements to tens of millions for state-wide deals.

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Bond issue documents

While the bribery network was unfolding in India, Adani Green raised $750 million through a bond offering marketed as “Green Bonds” to investors worldwide.

The Offering Circulars presented a narrative of ethical leadership: Adani Green’s circulars touted its “zero-tolerance” policy for bribery and commitment to the United Nations Global Compact’s anti-corruption principles.

These assurances misled US investors, who were unaware that Adani Green’s executives were orchestrating corruption on an unprecedented scale, said the US indictment document.

The document claimed Adani Green told purchasers of the Notes that none of Adani Green’s directors or officers, including defendants themselves, had paid or promised to pay bribes to government officials or attempted to influence those officials unduly.

Anti-corruption processes

Adani Green and defendants also emphasised to underwriters and potential investors that Adani Green had implemented robust anti-bribery and anti-corruption processes and that Adani Green was a leader in India in good corporate governance.

“None of this was true. In the months and weeks before making these representations in connection with the (bond) Offering, (the) defendants were personally involved in paying or promising the equivalent of hundreds of millions of dollars in bribes to Indian state government officials to induce Indian state governments to enter into contracts necessary for Adani Green to develop India’s largest solar power plant project, from which Adani Green stood to earn billions of dollars," said the indictment document.

Among the buyers of the bonds were significant institutional investors in the US, who collectively invested $175 million. These investors relied on Adani Green’s disclosures, which omitted any mention of the ongoing bribery scheme.

Legal and reputational damage

Earlier this month, the SEC filed a 39-page complaint detailing the full extent of the bribery and fraud.

The charges against Gautam and Sagar Adani included violations of anti-bribery laws, securities fraud and material misrepresentation. The SEC aims to impose massive fines, permanently bar Adanis from serving as officers or directors of public companies, and restrict Adani Green’s access to US capital markets.

Shares of Adani Green plummeted as the scandal unfolded, eroding billions in market value. Once captivated by the company’s ESG credentials, investors now questioned the integrity of the entire Adani Group.

Adani denies wrongdoings

The Adani Group has vehemently denied US prosecutors' bribery and securities fraud allegations against its chairman, Gautam Adani, and other key executives. 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", it said.

All possible legal recourse will be sought, an Adani Group spokesperson said.

In an official statement, Adani Green said: "The United States Department of Justice and the United States Securities and Exchange Commission have issued a criminal indictment and brought a civil complaint, respectively, in the United States District Court for the Eastern District of New York, against our Board members, Gautam Adani and Sagar Adani.

"The United States Department of Justice has also included our Board member, Vineet Jain, in such criminal indictment. In light of these developments, our subsidiaries have decided not to proceed with the proposed USD-denominated bond offerings."