Onmanorama Explains | What is Adani's 'Bribery Scheme' that enraged US Attorney Office

At the heart of Adani Group's latest troubles is a 'bribery scheme' put in place by Gautam Adani and his associates to secure a massive solar energy deal that in 20 years was estimated to generate more than two billion dollars in after-tax profits. 

The deal was between Solar Energy Corporation of India (SECI), a PSU under the Ministry of New and Renewable Energy, and two major players in the field of solar power -- Adani Green Energy Limited and Azure Power Global Limited, which is listed in New York Stock Exchange (NYSE). It was for the purchase of 12 GW (1 GW is 1000 MW) of renewable energy; of this, 8 GW was to be supplied by Adani Green and the remaining 4 GW by Azure.

It was up to the SECI to sell the purchased power, and this was planned to do by entering into power sales agreements (PSAs) with state power distribution companies (discoms). In 2021, this was touted as the "world's largest ever green power purchase agreement". 

What went wrong
Under the terms of the agreement, the SECI had to purchase solar power from these two private entities at a fixed price, which was pegged very high. 

Not surprisingly, there were no buyers. The SECI first had to enter into PSAs with state discoms to be able to strike power purchase agreements with Adani and Azure. The SECI's inability to find purchasers threatened to dash Adani's dreams of cashing in on the global renewable market.   

Need for bribery scheme 
So, according to the indictment of the US Attorney's Office, Eastern District of New York, Gautam Adani, his nephew Sagar R Adani, who is also the executive director of Adani Green, Vneet S Jaain, the CEO of Adani Green, Ranjit Gupta, the CEO of Azure and another individual referred to as "Conspirator #2", a high ranking Azure employee, came together for an elaborate scheme to bribe "Indian government officials" (a wider term that includes politicians) and use them to push state discoms into signing PSAs with the SECI. The two private entities agreed to share the bribe. 

How bribery scheme worked 
The US indictment states that the "co-conspirators" —Adani and Azure—undertook extensive efforts to "corruptly persuade government officials to cause state electricity distribution companies to execute PSAs and frequently discussed these efforts among themselves. The US Attorney's Office has proof of this in the form of electronic messages. 

The most critical move was made by Gautam Adani when he met "Foreign Official #1" (whose description seems to match that of then Andhra Pradesh Chief Minister Y S Jagan Mohan Reddy) in Andhra Pradesh. Not once, but thrice; in August, September and November of 2021. This "Foreign Official #1" was also promised more than 86 per cent or Rs 1750 crore of the total bribe amount of Rs 2029 crore. 

The US Attorney's Office infers that this could be why the discoms in Andhra Pradesh agreed to purchase 7 GW of solar power from the SECI, by far the largest purchase of solar power by any state in India. Since other "foreign officials" were also paid, discoms of states like Odisha, Jammu and Kashmir, Tamil Nadu, and Chhattisgarh also entered into relatively smaller deals with the SECI. 

Gains from bribery scheme
These PSAs with state discoms allowed the SECI to ink power purchase agreements with Adani Green and Azure Power. 

Azure was to supply 650 MW of solar power to Chhattisgarh, Tamil Nadu, Odisha and Jammu and Kashmir, and 2.3 GW to AP. Adani Green agreed to supply 4.7 GW to all these states, a substantial chunk of it to AP. When the pact was signed, on December 14, 2021, Gautam Adani said in a press release: "We are pleased to have signed the world's largest PPA with SECI." 

What is Adani's bribe chart
In the meantime, Sagar Adani was meticulously plotting a bribe chart that gave a graphic idea of the movement of the money and the sale of power that could be generated with the grease money. The US Attorney's Office, in its indictment, calls this the "Bribe Notes". 

The notes had three things. One, the government officials offered the bribe, and the states they belonged to. Two, the total number of bribes given. Three, the approximate amount of solar power the state would agree to purchase in exchange for the bribe. In most instances, the indictment says that the 'Bribe Notes' also identified the per megawatt rate for the total bribe amount offered (in some cases it was Rs 25 lakh per MW). The names of the bribe takers were given in abbreviations, just like in the case of the CMRL bribe scandal involving Kerala Chief Minister Pinarayi Vijayan's daughter Veena Vijayan. 

Was bribe-sharing a smooth affair?
The pact was that the Adani group would pay the bribes, and Azure would reimburse its share. 

The bribe-share of Azure was Rs 55 crore for the PPAs worth 650 MW and Rs 583 crore for securing the 2.3 GW supply to Andhra Pradesh. The Azure officials with whom the Adani Group had worked out the sharing formula was expelled by the company. 

However, the ousted ones were replaced by a set of officials willing to play along with Adani's alleged scam. Gautam Adani himself explained the bribe-share details to the new set of Azure officials. Azure's biggest shareholder, the Canadian pension company CDPQ, was also in on the deal, for which the US Attorney's Office has proof. 

It is not just enough to bribe; the illicit flow of money has to be masked, too. Adani, therefore, personally instructed Azure officials on how to reimburse their company's share without inviting any suspicion. His suggestion to Azure was to transfer its PPA for 2.3 GW to his company. 

Azure then did its own pay back analysis, which was called "commercial proposals" internally and was accessed by the US Attorney's Office. 

There were four options. One, repay its entire bribe-share of Rs 638 crore (55+583), and christen the outgo as "development fee". Two, get out of the shady deal and transfer all its PPAs to Adani. Three, transfer only the 2.3 GW PPA as suggested by Adani. Four, enter into a joint venture with Adani. Azure opted for the third option, which was to transfer its 2.3 GW PPA to Adani Green, and holding on to just the PPAs for 650 MW. 

This meant two things. Azure had to pay Rs 55 crore to Adani (for the bribes necessitated to strike deals for the PPAs worth 650 MW). And it had to ask the SECI to nullify its PPA for 2.3 GW PPA. 

The Azure officials, according to the US Attorney Office indictment, managed to hoodwink the board of directors and transfer Rs 55 crore to Adani. As reasons for pulling out of the 2.3 GW PPA , these officials cited "ongoing litigation" related to the solar project and "deteriorating economics". The US indictment said this was to "obfuscate the true reasons why the US Issuer (Azure) was returning the project to SECI". 

The Azure PPA was terminated in March 2024. Quickly after, the Adani Group "secretly influenced" the SECI process for reallocation of the 2.3 GW PPA to Adani Green and its subsidiaries. This "secret influence" allowed Adani to "obtain and revise" internal SECI documents, a charge that reveals Adani Group's illegitimate sway over a PSU like SECI. 

Why indictment in the US?
While the allegations were that the Adanis were trying to bribe Indian officials, they have been indicted in the US for raising money for the "bribery scheme" from US investors.

"Gautam S Adani, Sagar R Adani and Vneet S Jaain lied about the bribery scheme as they sought to raise capital from US and international investors," said Breon Peace, United States Attorney for the Eastern District of New York.

"These offences were allegedly committed… at the expense of US investors. The criminal division will continue to aggressively prosecute corrupt, deceptive, and obstructive conduct that violates US law, no matter where in the world it occurs," said Miller.

James Dennehy, FBI Assistant Director in Charge, said, "Adani and other defendants also defrauded investors by raising capital on the basis of false statements about bribery and corruption, while still other defendants allegedly attempted to conceal the bribery conspiracy by obstructing the government's investigation."