Loss of Reputation the Real Damage—for Adani and for India; Lawyers Explain How the US Case Against Adani May Proceed
Cop-out at COP29, Indian rupee hits fresh low, Chocolate makers look to India, is Jasprit Bumrah the new GOAT?
A newsletter from The Wire | Founded by MK Venu, Sidharth Bhatia, Pratik Kanjilal, Tanweer Alam, Seema Chishti, Sushant Singh and Siddharth Varadarajan | Contributing writer: Kalrav Joshi, with additional inputs by Anirudh SK
Snapshot of the day
November 22, 2024
Siddharth Varadarajan
Adani Green Energy, once hailed as a cornerstone of India’s renewables revolution, is now mired in controversy that raises grave concerns about its future, Azman Usmani and Ujval Nanavati report. The company’s debt-heavy growth strategy is on shaky ground, with repayments of Rs 4,804 crore in FY26 and Rs 7,029 crore in FY29 – most of which rely on refinancing. However, allegations of bribery against Gautam Adani and a US Department of Justice indictment cast doubt on its ability to secure funding. Adding to the turmoil, SEBI is investigating Adani Green for allegedly misleading Indian stock exchanges by concealing the U.S. probe, an accusation that undermines regulatory trust and investor confidence. These revelations follow the Hindenburg report, which already tarnished the group’s reputation. Unlike Hindenburg, this crisis directly threatens the financial core of Adani’s empire, potentially crippling its ambitions in the renewable sector. What once symbolised India’s green energy leadership now risks becoming a cautionary tale of corporate excess and opacity.
When asked if the White House was concerned that Gautam Adani’s indictment in a US federal court would damage ties between Washington and New Delhi, especially in light of legal proceedings in the Pannun murder plot, press secretary Karine Jean-Pierre said yesterday that the US-India relationship “stands on an extremely strong foundation anchored in ties between our people and cooperation across a full range of global issues”. She added: “What we believe and we’re confident about is that we’ll continue to navigate this issue, as we have with other issues that may have come up, as you just stated.”
Adani Group companies are likely to have trouble obtaining overseas financing now that the bribery case has been set rolling in the US judiciary, but the ripples from the case could touch more than just this one conglomerate, predicts The Economist:
“Prosecuting the case is likely to take time. Whatever happens next, though, it could have a lasting impact on more than just the Adani Group. Businesses around the world may tread more carefully before they turn to America’s financial markets for investment.”
Blomberg believes the charges against Adani are “threatening to deepen the record exodus of global funds from the nation’s equities.”
Meanwhile, Adani’s businesses continue to leave people uneasy in India and elsewhere. “The Adani group’s purchase of land near the bauxite-rich Gandhamardan hills in Balangir and Bargarh districts of western Odisha has triggered a controversy with local tribals, activists and the Opposition suspecting the company may be planning a mining operation,” reports Subhashish Mohanty.
And in Kenya, a Senator has accused the Adani group of corruption in the now scrapped Nairobi airport deal.
Across the Palk Strait, the indictment has generated calls from Sri Lankan activists and citizens for more scrutiny to be applied to Adani Green Energy’s wind power project in the country’s north, Meera Srinivasan reports; she cites a financial journalist as noting that the charges “bolster” the Dissanayake government’s promise to review the controversial wind power project after general elections in the country.
The indictment also shows that not only did the Adani Group not tell Indian stock exchange officials that Gautam Adani’s nephew, Sagar Adani, was raided by the FBI in March last year and that it was facing a US federal investigation, it went a step further and denied that they happened, Sucheta Dalal points out in an interview to Karan Thapar.
Cartoonists are indeed having a field day. Satish Acharya brilliantly captures the moment accurately and so well.
The Canadian government has distanced itself from a Globe and Mail report earlier this week which claimed that “Canada’s security agencies suspect Modi knew of plot to kill Sikh activist” Hardeep Singh Nijjar. The Privy Council Office in Ottawa issued a terse statement yesterday:
“On October 14th, because of a significant and ongoing threat to public safety, the RCMP and officials took the extraordinary step of making public accusations of serious criminal activity in Canada perpetrated by agents of the Government of India.
The Government of Canada has not stated, nor is it aware of evidence, linking Prime Minister Modi, Minister Jaishankar, or NSA Doval to the serious criminal activity within Canada.
Any suggestion to the contrary is both speculative and inaccurate.”Missing from the ‘clean chit’—to use a favourite Indian expression—is the name of Amit Shah, whom the Canadian deputy foreign minister ‘outed’ in testimony to a parliamentary committee earlier this month.
At COP29 in Bakur, developing countries are angry. They had asked for at least $1 trillion for climate finance but the latest draft on the New Collective Quantified Goal (NCQG) says developed countries will mobilise only $250 billion per year by 2035.
Former Manipur governor Anusuiya Uikey, who held office between February 2023 and July this year, said she was approached as governor by many civil society organisations to request Prime Minister Modi to visit the state. “I kept sending those requests to the PMO and I even asked these civil society members to send their request directly to the PMO to remind them. People of the state want him to visit but I don’t know why he hasn’t,” she said in an interview to Shanker Arnimesh.
Modi may not have gone to Manipur or met any Manipuris other than Chief Minister Biren Singh a couple of times in the past year but he spent the past five days visiting three countries and holding “31 meetings with world leaders and heads of organisations,” one of his bureaucrats breathlessly tweeted.
The Jammu Development Authority demolished close to a dozen shops built by Kashmiri Pandits in the city on land they were settled in by the Jammu and Kashmir government around 30 years ago – the shop owners allege the JDA did not serve them prior notice, but the authority denies this, reports Arun Sharma. The JDA claimed those affected were served notices in January and agreed to vacate the premises by February, but that the demolitions could not take place due to the model code of conduct being in force. Videos appearing to show aggrieved Pandit shopkeepers has triggered a political row.
A Nebraska businessman has said in court that Byju Raveendran tried to encourage him not to testify about alleged suspicious practices the education entrepreneur engaged in while trying to regain control over his company from a court-appointed trustee – William R Hailer alleged that Raveendran offered him a plane ticket to Dubai worth nearly $10,700 a couple of days before he was set to testify as well as a $500,000 job in the city contingent on his beginning work immediately. Steven Church reports.
Hearing the CBI’s challenge against a Jammu court’s order that separatist leader Yasin Malik be produced physically for the trial in the 1989 killing of four air force personnel as well as the kidnapping of Rubaiya Sayeed, the Supreme Court yesterday suggested that a temporary court be set up in Tihar jail. “How will cross-examination be done online? There is hardly any connectivity in Jammu … In our country, a fair trial was given even to Ajmal Kasab and legal assistance was given to him in the high court,” the court said as per PTI.
Chest doctors yesterday criticised the National Medical Council’s decision to remove respiratory medicine departments from training for MBBS students, especially in light of the country’s air quality and tuberculosis problems, reports Simi Sukanya Dutta. The Indian Chest Society’s vice president said at a press conference: “While the NMC says this has been done to reduce burden on MBBS students, this is a ridiculous argument when the country needs more primary physicians to deal with rising respiratory diseases.” India faces the grim irony of battling some of the world’s worst pollution, especially in its capital, while reportedly proposing to remove respiratory medicine from undergraduate medical guidelines. This contradiction paints a stark picture of misplaced priorities under the current administration. Instead of addressing the health crisis caused by toxic air, such moves risk undermining preparedness for respiratory ailments.
Indian rupee hits fresh low
The Indian rupee fell to an all-time low of 84.50 against the US dollar on Thursday marking a 0.1% drop during the session and a 1.5% decline for the year. The currency’s slide was driven by sustained foreign fund outflows from Indian markets and escalating geopolitical risks, particularly the ongoing Russia-Ukraine conflict, which heightened global risk aversion. The rupee weakened by 8 paise despite the Reserve Bank of India (RBI) rebutting the International Monetary Fund’s (IMF) classification of India’s exchange rate policy as a “stabilised arrangement” for the period of December 2022 to October 2023. The RBI called the IMF’s assessment “ad hoc, subjective, an overreach” and “tantamount to labelling,” according to a Times of India report.
Is Jasprit Bumrah the GOAT?
Two terrific bowling performances from both teams saw a rollercoaster first day of the Border-Gavaskar Trophy, with the Perth Test match set on a knife’s edge after a procession of wickets from both teams saw the bowling attacks set a 72-year Australian record. A record-breaking total of 17 wickets fell on the first day at the Optus Stadium, the most on the first day of any Test match in Australia since 1952. Jasprit Bumrah and Josh Hazlewood led the charge for India and Australia, taking four wickets each. Bumrah’s fiery spell removed key players Usman Khawaja and Steve Smith in consecutive balls, while Hazlewood dismissed Devdutt Padikkal and Virat Kohli. India struck back after being bowled out, leaving Australia reeling at stumps with 7 wickets down.
Chocolate makers look to India
Chocolate makers are increasingly turning to India as crop failures in West Africa drive up cocoa prices globally. Volatile weather in top cocoa-producing regions like Côte d'Ivoire and Ghana has caused prices to surge over the past year. Although India produces just 1% of the world’s cocoa, domestic demand is growing at 15% annually, according to the BBC. Indian farmers are adopting cross-bred hybrid varieties that are drought-tolerant, disease-resistant, and deliver significantly higher yields. “The global average production is 0.25 kilograms per year per tree,” one researcher noted, “In Kerala, we get 2.5 kilograms per year per tree.”
The Long Cable
Loss of reputation the real damage, for Adani and for India
MK Venu
The Adanis will have to contend with a serious reputation loss globally following their indictment by a US district court and the Securities and Exchange Commission (SEC) on charges of bribery and committing fraud on US investors.
The BJP's narrative of some foreign hand impeding India's progress will not stand a moment's scrutiny in the global markets where corporates and other financial players respect the integrity of the US SEC.
In fact, the BJP and its ecosystem will do well not to harp on the fiction that US courts and market institutions are in some way trying to undermine India's progress. The same mistake is being repeated as had happened after the Hindenburg episode – conflating the Adani group with India. There is really no need to wrap the Adanis with the Indian flag. It simply won't wash.
A more sensible strategy would be for the Adanis to fight the case legally, as they have said in their official statement. There is a chance that in the course of the legal battle, the Adanis may be able to reach a settlement within the legal framework that prevails in the US.
Meanwhile the US court’s indictment of the Adanis is likely to affect their ability to raise finances from the global markets for sometime to come, at least until the case reaches some stage of conclusion. Debt funding is critical for large infrastructure projects. Typically, the debt component is about three fourths of total project cost. The CNBC TV 18 channel reported the current outstanding debt of the Adani group at about Rs 2,47,000 crore. Much of this debt is from foreign sources.
After the Hindenburg episode, the Adani group had disclosed that nearly 70% of their total debt was raised from abroad. This ratio may have altered over the past year but the group still relies predominantly on foreign debt to drive its expansion. This factor – reliance on foreign debt – has become the most vulnerable underbelly of the Adani group after the US court indictment. Indeed, the first fallout after the indictment was that the group had to cancel its plan to raise $600 million of debt from the US market.
Adani's vulnerability gets exacerbated as many of the group's ambitious projects are abroad and most of them are linked to PM Modi's foreign policy objectives. An important component of the India Middle East Infrastructure corridor to Europe, Haifa port in Israel, is being developed by the Adanis.
Geopolitically, the India-Middle East-Europe corridor, announced by Modi and Biden during the G-20 meet in New Delhi, is being projected as a rival to China's Belt Road Initiative. The Adanis might have been planning more investments in this corridor for building rail/sea links towards Europe. The finances for this would have naturally come from European and US markets.
But now, with the US court indictment there is no knowing how western markets would respond to the Adani group’s debt financing requirements. Most experts say it will be next to impossible for the Adanis to raise big money from western markets until the case is settled. The reputation loss, in terms of market perception, will persist even after the case is settled.
The Adani group is at the centre of Modi's solar mission and India's renewable energy target of 500 gigawatts by 2030. Its most ambitious project of developing 30,000 megawatts of solar-cum-wind energy in Khavda, Gujarat, spread over a desert area almost as big as Delhi, will require over $65 billion by one estimate. Modi is said to be very keen this project comes up in quick time. Where will the money come from if western financial markets are virtually ruled out?
When the Hindenburg episode hit the headlines, some big investors in the US were still willing to bet big on the Adanis. A highly reputed global fund, GQG, run by an Indian American Rajiv Jain, bought $2 billion worth of beaten down Adani stocks after the Hindenburg report. Subsequently, GQG has been buying more stakes in several Adani companies. By May 2024, the value of Adani stocks in GQG’s portfolio had gone up 150% , to $10 billion. GQG has emerged as the single biggest foreign investor in the Adani group over the past year.
However, after the US court indictment, even GQG has said it will reevaluate its investments in the Adani group. This is not good news for Adanis.
The problem with current trends in the global economy is that investment and financing activities are more geopolitically driven than ever. And large global infrastructure projects especially come with geopolitical tags. Kenya abruptly cancelling Adani's proposed infrastructure projects is a case in point.
The Adanis had announced an ambitious plan of investing $10 billion in US energy following Trump’s victory. But these plans too are likely to be jeopardised, for now at least.
Interestingly, so far the Adani group was participating in global infra projects which were seen as a counter to China, whether in Sri Lanka, Myanmar, the Middle East or Africa.
However, quite ironically, today the financing options for his global ambitions are getting narrower in the West but they may possibly open up in China even as relations between India and China are undergoing a thaw of sorts. In a way, the nature of financing that the Adani group requires for its global infrastructure ambitions, linked undoubtedly to Modi's foreign policy objectives, can possibly be met only by geopolitical considerations. The reputation loss caused to the group will come in the way of making pure commercial deals based on market principles and investor confidence.
Reportedly
Talk about clutching at straws here! Former foreign secretary Kanwal Sibal has sought to make light of the US charges against Gautam Adani by decrying “extraterritoriality” and citing the relatively small sum his companies had raised from US investors compared to the overall size of his impugned solar power business in India.
Indian diplomats who deal with the realities of globalisation involving transnational capital flows really need to be more conversant with applicable jurisdictions. Even if they are not, Indian companies which are used to cronyism at home should not assume they can do whatever they want when they operate in foreign locales. They want to raise money there but don't want to play by rules which are clearly spelt out. The fact is that if a US company lies to or cheats Indian investors and if it misleads Indian regulators, it is liable to be prosecuted under Indian law no matter how little the sum raised in India and how large its US ventures are. This is not extraterritoriality.
Deep dive
The Leaflet spoke with Anurag M. Katarki (founder of the Chambers of the Anurag Katarki) and Krati Savita Gautam (senior associate at the Chambers of Anurag Katarki) to discuss a few key legal aspects of the case against Gautam Adani and simplify the law for those who want to understand the subject better. Truly an excellent primer.
Prime number: Down to $657.89 bn
India’s foreign exchange reserves plunged by a staggering $17.76 billion, dropping to $657.89 billion, exposing the fragility of the nation’s economic position. With external pressures mounting and a weakening rupee, India’s reserves are not the cushion they once seemed, signalling a worrying trend for an economy struggling to maintain stability amid global uncertainties. Opeds you don’t want to miss
The Financial Times sees the Adani indictment as a test of credibility for India’s safeguards. “The allegations, after all, go to the heart of how economic power in India is concentrated in politically-connected, family-run conglomerates — and investor concerns over “crony” capitalism.
Never before in Indian history has the relationship between a prime minister and a businessman dominated the political discourse in the way Prime Minister Narendra Modi and Gautam Adani have been linked over the past many years, writes Sanjay Kumar Jha on the ‘Modani nexus’.
India’s recent reversal towards conglomerate capitalism and concentration of capital raises serious questions about how serious the government is about making India an equal access investment destination. Rohit Chandra on why Adani indictment is bad for India’s economy.
The US Justice Department’s bribery charges against Adani have sent his stocks tumbling but the implications for US-India relations stretch much further, write Kai Schultz, Bhuma Shrivastava, and Anto Antony.
Ajoy Ashirwad Mahaprashasta takes stock of the election code violations by BJP leaders during the recent campaigns in Maharashtra and Jharkhand – especially their communal speeches and videos – and says the Election Commission “needs to show us its institutional spine rather than resort to its copybook of sending notices and seeking explanations.”
Modi’s good rapport with other leaders does not have to be advertised despite contemporary diplomacy’s demands, writes Vivek Katju. “This does not mean that personal ties of leaders cannot smoothen diplomatic processes, but their contribution can never be more than that, especially when the vital interests of a state are involved.”
Ahilan Kadirgamar writes on the amazing outcome of the recent Sri Lanka parliamentary elections and the challenges the country faces.
Lt Gen Panag is angered by a recent discussion on an ANI podcast where panelists expressed what he felt were exaggerated fears about an MOU the Indian Air Force has signed with Uber. “Self-styled experts on social media must not be allowed to ridicule the armed forces and hold their time-tested information security structure to ransom,” he writes.
When the centre can’t hold, things fall apart, writes K V Madhusudhanan. “Delhi refuses to feel the heat when the Northeast burns. This apathy is not new; it has been shown by successive central dispensations. A visit from the prime minister can be a very significant gesture.”
Wasbir Hussain sees the refusal of stakeholders in Manipur to talk to each other as a sign that the crisis in the state is likely to get worse.
The Indian media is acting like a Hindutva ally in its coverage of the violence in Canada. Nissim Mannathukkaren on how news channels unquestioningly reinforced the government’s line while reducing the Indian diaspora to ‘Khalistanis’ vs Hindus.
For democracy’s defenders, Trump’s re-election ought to serve as a catalyst for a deeper reckoning to work toward a more responsive and accountable democracy, says Yamini Aiyar.
Listen up
Calling it “a toxic media platform”, Britain’s leading daily Guardian last week announced it would stop posting content on the Elon Musk-owned social media platform X from its official accounts. Its decision has drawn flak from several quarters, including the American businessman himself who retaliated strongly by referring to the UK news outlet as “irrelevant” and “a laboriously vile propaganda machine”. On The Hindu Parley podcast, Priscilla Jebaraj discusses all things social media, content slop and why the social dilemma continues to be one of the most problematic pieces of media in democratic societies across the world.
Watch out
For those interested in matters related to spying, Paul McGarr, academic and author has a new book on how intelligence agencies operated in India in the 1940s, 50s, 60s, 70s and later. Spying in South Asia chronicles this secret Cold War and among the fascinating tales it recounts is the controversy triggered by Seymour Hersh’s allegation in 1972 that Morarji Desai was a CIA agent. Mrs Gandhi used to talk a lot about the 'foreign hand'. She had a point, McGarr points out. There was a time when India was called the ‘Berlin of the East’, because it was the only place where spies from different countries could meet each other easily, says McGarr in a riveting conversation with Sidharth Bhatia.
Over and out
Created in 1767 for Robert Clive, the Bengal Presidency’s maiden governor, this red and gold French-style sofa spent the last 60 years in a Wales museum but is now part of an entirely different setting.
Steven Morris reports that it is now at the centre of a living room recreation representing a 1970s-80s British South Asian home. Nasia Sarwar-Skuse, the artist behind the recreation, said it was part of an effort to “decolonise” Welsh national museums and that “having the sofa there [in the living room] feels empowering, an act of reclamation. It is like turning the gaze on the coloniser.” “I think it’s joyful, really. I can’t help wondering what Clive would think.”
Outlook Traveller has profiled the five literary festivals across India that are worth attending. Apart from the pioneer, Jaipur, the others are Kalinga, Bangalore, Kerala and the new Wayanad Literature Festival, brainchild of the former Caravan editor Vinod Jose.
That’s it for today. We’ll be back with you on Monday. If The India Cable was forwarded to you by a friend, book your own copy by SUBSCRIBING HERE.