Gautam Adani, Sagar Adani, Adani Green Energy, and the Adani group may have violated Securities and Exchange Board of India’s Listing Obligations and Disclosure Requirements, not disclosing to exchanges, shareholders the details of ongoing investigations by US authorities, laying itself open to regulatory action.

“SEBI should issue a show cause notice to the Adani group companies on the inadequate disclosures on the US investigations,” said Shriram Subramanian, founder and managing director of proxy advisory firm InGovern Research Services.

The US Department of Justice and Securities and Exchange Commission, which is probing the conglomerate and Gautam Adani on charges of bribing Indian officials to get solar energy contracts, have accused them of giving false and misleading information to investors, potential investors, and financial institutions.

Exchanges have already sought clarification from Adani Green about reports that said a global rating agency had revised the outlook on five Adani entities to negative. They also sought clarification from Adani Enterprises on reports of Kenya cancelling airport deals after the US indictment. There have been no responses from the companies so far.

In March 2024, Bloomberg had reported that US investigators were digging into an Adani company and officials linked to it involved in bribing Indian officials for favourable treatment on an energy project. The report contained a comment from the Adani group stating, “we are not aware of any investigation against our chairman.”

An exchange filing by Adani Green on March 19 in response to the news item said, “The company is aware of an investigation by the United States Department of Justice into potential violations of the United States anti-corruption laws by a third party,” but added, “the company has no relation with the said third party and is thus unable to comment on the scope of the present United States investigation that the company or any of its personnel are subject to or exposed to in connection with the company’s alleged dealings with the third party.

It also stated it had not received any notice from the Department of Justice in respect of the allegations referred to in the article.

“The Adani group can argue about the materiality of the investigations, but as the US indictment reports note, the disclosures in the annual reports were against the established norms of good corporate governance,” said Subramanian.

According to US Department of Justice, on or about March 17, 2022, as part of the SEC Investigation the SEC sent a general inquiry request to Adani Green Energy which included requests for information about all contracts Adani Energy had won or bid for since 2018, FCPA complaints and investigations and the solicitation of anything of value by or on behalf of foreign government officials.

It said the Federal Bureau of Investigation had approached Sagar Adani, executive director of Adani Green, on or about March 17, 2023, and took custody of electronic devices in his possession. They provided him with a copy of the search warrant and served him with a grand jury subpoena. The search warrant detailed all the offenses, violations of the FCPA, the wire fraud and related conspiracies. Gautam Adani came to know of the search warrant since he emailed to himself photos of the search warrant a day later, it said.

In one para the indictment states that Gautam Adani and Sagar Adani made or caused other conglomerate personnel to make false and misleading statements about Adani Energy’s awareness of the US government’s investigation and the company’s anti-bribery practices including in public statements to the media and market, public statements to Indian stock exchanges and private communications with financial institutions.

After the Bloomberg report, the corporate finance head of the Adani group sent an email to an employee of a financial institution, which was both a lender for a syndicated loan in 2021 and a joint bookrunner for 144A bond 2024, terming the news report as baseless, malicious, defamatory and that the conglomerate operates with the highest standards of governance.

The indictment stated that in or about March 2023 FBI special agents took steps in furtherance of the FBI investigation and Grand Jury investigation that revealed the existence of those investigations, and the information was shared with Gautam Adani.

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