Billionaire Gautam Adani and several others, who have been accused of bribery charges by US authorities in connection with solar energy contracts in India, can potentially attempt to settle the case through agreements and paying fines, while simultaneously going in for appeals.
The first recourse for the Adani group would be to file an appeal, as there could be a time limit on that, and while process was on they could explore settlement options, lawyers said. However there may be strict compliances attached including being restricted from issuing securities in US and European markets.
The US Department of Justice in its five-count criminal indictment, has charged Gautam Adani, his nephew Sagar Adani and Vneet Jain with conspiracies to commit securities and wire fraud and substantive securities fraud for their roles in a multi-billion-dollar scheme to obtain funds from U.S. investors and global financial institutions on the basis of false and misleading statements. The amount paid in bribes to Indian government officials to get solar energy contracts is allegedly over $250 million.
However U.S. laws allow for settlements in bribery cases, governed by the Foreign Corrupt Practices Act, often through Deferred Prosecution Agreements (DPAs) or Non-Prosecution Agreements (NPAs), said Narinder Wadhwa, Managing Director, SKI Capital in a note.
Companies can resolve charges by paying fines, admitting certain wrongdoing, and improving compliance practices, he added. Settlements typically involve substantial monetary penalties, enhanced compliance measures and independent monitoring and limited future restrictions, such as reduced access to US funding.
Lawyers said that in the US judges had the freedom to decide on the quantum of penalties and and they can impose very heavy fines as has been seen in the past.
- Also read: Here are the US charges against Gautam Adani
For instance in 2019 Ericsson agreed to pay over $1 billion in penalties to resolve the US government’s investigation into violations of Foreign Corrupt Practices Act arising out of the company’s scheme to make and improperly record tens of millions of dollars in improper payments around the world. In one of the largest payouts, in 2020 Goldman Sachs agreed to pay $2.9 billion for violating the FCPA. More recently in January, Germany’s SAP agreed to pay over $220 million to settle a case involving schemes to bribe government officials in South Africa and Indonesia.
Lawyers said that at present only allegations have been made and they have yet to establish guilt. It would be a long process. The trial is expected to be through a grand jury.
In the medium term, the most impact it would have on the Adani group would be its inability to approach the overseas markets for funding, since it has preferred the foreign currency-denominated bond routes so far.
“Future capital-raising efforts, especially internationally, could remain challenging,” said Wadhwa.
The Adani group has termed the allegations by US Department of Justice and the US Securities and Exchange Commission as baseless and denied it. It said all possible legal recourse will be sought.