India's Crony Capitalism: Modi's Pal Adani's Wealth Grows at the Expense of Ordinary Bangladeshis and Indians

[Riaz Haq]

Prime Minister Shaikh Hasina has agreed to buy expensive electricity from India in spite of a power glut in Bangladesh, according to a report in the Washington Post. The newspaper quotes B.D. Rahmatullah, a former director general of Bangladesh’s power regulator, as saying, "Hasina cannot afford to anger India, even if the deal appears unfavorable." “She knows what is bad and what is good,” he said. “But she knows, ‘If I satisfy (Gautam) Adani, Modi will be happy.’ Bangladesh now is not even a state of India. It is below that.”  The Washington Post report says: "Facing a looming power glut, Bangladesh in 2021 canceled 10 out of 18 planned coal power projects. Mohammad Hossain, a senior power official, told reporters that there was “concern globally” about coal and that renewables were cheaper". 

Gautam Adani (L) and Narendra Modi

India Ranks  High on Crony Capitalism Index. Source: Economist

Hasina recently visited New Delhi to seek political and economic assistance from the Indian Prime Minister Narendra Modi. This summit was preceded by Bangladesh Foreign Minister Abdul Momen's trip to India where he said,  "I've requested Modi government to do whatever is necessary to sustain Sheikh Hasina's government".  Upon her return from India, Sheikh Hasina told the news media in Dhaka, "They (India) have shown much sincerity and I have not returned empty handed". It has long been an open secret that Indian intelligence agency RAW helped install Shaikh Hasina as Prime Minister of Bangladesh, and her Awami League party rely on New Delhi's support to stay in power. Bangladesh Foreign Minister Abdul Momen has described India-Bangladesh as one between husband and wife. In an interview with Indian newspaper 'Ajkal,' he said, "Relation between the both countries is very cordial. It's much like the relationship between husband and wife. Though some differences often arise, these are resolved quickly."  Both Bangladeshi and Indian officials have reportedly said that Sheikh Hasina "has built a house of cards". 

Shaikh Hasina (L) with Narendra Modi

The Washington Post reports that the Modi government has changed laws to help Adani’s coal-related businesses and save him at least $1 billion. After a senior Indian official opposed supplying coal at a discount to Adani and other business tycoons, he was removed from his job by the Modi administration, according to the paper.  Modi has continued to support Adani's business with discounted coal even after telling the United Nations he would tax coal and ramp up renewable energy. India is the world's third largest carbon emitter. 

World's Top 5 Carbon Emitters. Source: Our World in Data

While the coal prices have declined to the level before the start of the Ukraine War, Adani’s power would still cost Bangladesh 33% more per kilowatt-hour than the publicly disclosed cost of running Bangladesh’s domestic coal-fired plant, according to  Tim Buckley, a Sydney-based energy finance analyst. 

India's Crony Capitalism: Adani Enterprises Stock Up 56,000% on Modi's Watch

Gautam Adani has become India's richest and the world's second richest person (after Elon Musk) since the election of Prime Minister Narendra Modi in 2014. Financial Times calls Adani "Modi's Rockefeller".  Adani's rise owes itself to India's crony capitalism, according to  France's Le Monde. Here's an excerpt of a Le Monde story on Adani: 

"Adani has not invented some revolutionary technology or disruptive business model. His meteoric success cannot be attributed to innovation. In each sphere of activity among his conglomerates – airports, ports, mining, aerospace, defense industry – the Indian state plays a significant role, whether in allocating licenses or signing contracts. He is known as a close friend of Indian Prime Minister Narendra Modi, who also hails from Gujarat, a state in western India".  

Adani has lent his personal airplanes to Modi for BJP's election campaigns. Adani has also recently taken over NDTV, the only Indian major TV channel known for its independence from the BJP government. This takeover has forced Prannoy and Radhika Roythe, the  channel's founding couple, to step down. It has also forced out Ravish Kumar, a harsh critic of the Modi regime who hosted a number of popular shows like Hum Log, Ravish ki Report, Des Ki Baat, and Prime Time.

Income Inequality Map. Source: World Inequality Report 2022

India is one of the most unequal countries in the world, according to the World Inequality Report 2022. There is rising poverty and hunger. Nearly 230 million middle class Indians have slipped below the poverty line, constituting a 15 to 20% increase in poverty. India ranks 94th among 107 nations ranked by World Hunger Index in 2020. Other South Asians have fared better: Pakistan (88), Nepal (73), Bangladesh (75), Sri Lanka (64) and Myanmar (78) – and only Afghanistan has fared worse at 99th place. Meanwhile, the wealth of Indian billionaires jumped by 35% during the pandemic. 

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[Riaz Haq]

Whistleblower Documents Reveal SEBI’s Chairperson Had Stake In Obscure Offshore Entities Used In Adani Money Siphoning Scandal – Hindenburg Research

https://hindenburgresearch.com/sebi-chairperson/

As detailed in our original Adani report, documents from the Directorate of Revenue Intelligence (DRI) alleged that Adani “grossly” overvalued the import valuation of key power equipment, using offshore shell entities to siphon and launder money from the Indian public. [1]

A subsequent investigation by non-profit project Adani Watch in December 2023 showed how a web of offshore entities, controlled by Gautam Adani’s brother, Vinod Adani, were recipients of funds from the alleged over-invoicing of power equipment.

In one complex structure, a Vinod Adani controlled company had invested in “Global Dynamic Opportunities Fund” (“GDOF”) in Bermuda, a British overseas territory and tax haven, which then invested in IPE Plus Fund 1, a fund registered in Mauritius, another tax haven.


A separate investigation by the Financial Times showed that the parent fund of GDOF – the Bermuda-based Global Opportunities Fund (“GOF”) – was used by two Adani associates “to amass and trade large positions in shares of the Adani Group”.

These nested funds are managed by Indian Infoline (“IIFL”), now called 360 One per private fund data and IIFL’s marketing material. [1, 2]

IIFL, is a publicly listed wealth management firm in India which has a long history in setting up convoluted fund structures and with previous ties to the Wirecard scandal, Germany’s largest ever fraud case.[2] IIFL Wealth was alleged to have committed fraud in a takeover deal involving Wirecard, using a Mauritius fund structure, per a lawsuit in UK courts.

————

What we hadn’t realized: the current SEBI Chairperson and her husband, Dhaval Buch, had hidden stakes in the exact same obscure offshore Bermuda and Mauritius funds, found in the same complex nested structure, used by Vinod Adani.[3]

Madhabi Buch and her husband Dhaval Buch first appear to have opened their account with IPE Plus Fund 1 on June 5th, 2015 in Singapore, per whistleblower documents.

A declaration of funds, signed by a principal at IIFL states that the source of the investment is “salary” and the couple´s net worth is estimated at $10 million.

[Riaz Haq]

Gautam Adani indicted in the US for bribery
Billionaire accused of multimillion-dollar scheme to bribe Indian government officials for lucrative contracts

https://www.ft.com/content/cab2e834-e5fa-4dd0-b757-76c243ac2eeb?ema...



Indian billionaire Gautam Adani has been charged by federal prosecutors in New York over an alleged years-long scheme to bribe Indian officials in exchange for billions of dollars’ worth of solar power contracts and concealing such payments from US banks and investors.

The tycoon, who has been a supporter of Prime Minister Narendra Modi, was indicted in Brooklyn on charges including securities fraud and conspiracy alongside seven other business executives, including his nephew Sagar Adani.

The indictments threaten to reignite a public relations crisis for Adani Group, the conglomerate he chairs, which has spent much of last year trying to move past the damaging claims of accounting fraud and stock market manipulation made by US short seller Hindenburg Research.

Breon Peace, the US attorney for the Eastern District of New York, said that “defendants orchestrated an elaborate scheme to bribe Indian government officials to secure contracts worth billions of dollars” and “lied about the bribery scheme as they sought to raise capital from US and international investors”.

In a parallel civil lawsuit, the Securities and Exchange Commission said the alleged bribes were paid in order to “secure [the Indian government’s] commitment to purchase energy at above-market rates that would benefit Adani Green and Azure Power”.

Adani Green raised $175mn from US investors while the scheme was ongoing, US regulators said, while Azure Power was trading on the New York Stock Exchange.

Gautam Adani and Sagar Adani allegedly “induced US investors to buy Adani Green bonds through an offering process that misrepresented not only that Adani Green had a robust anti-bribery compliance programme but also that the company’s senior management had not and would not pay or promise to pay bribes”, said Sanjay Wadhwa, acting director at the SEC’s enforcement division. 

An Adani spokesman did not immediately respond to a request for comment.

[Riaz Haq]

Shares in India’s Adani Group plunge 20% after US bribery, fraud indictments

https://apnews.com/article/adani-india-bribery-tycoon-modi-cd1ee53e...

One of Asia’s richest men, Indian tycoon Gautam Adani, is again in the spotlight. His companies’ stocks plunged up to 20% in value Thursday after he was indicted by U.S. prosecutors on charges that he duped investors in a massive solar energy project in India by concealing that it was being facilitated by bribes.

In an indictment unsealed in New York, Adani, 62, was charged with securities fraud and conspiracy to commit securities and wire fraud. Seven other executives connected to Adani’s business empire also face charges. The indictment alleges a scheme to pay about $265 million in bribes to government officials in India.

The full impact of the case on Adani’s businesses is not yet known. Kenya’s president on Thursday canceled the tycoon’s multimillion dollar deals for airport modernization and energy projects.

The Adani group, meanwhile, decided not to proceed with a proposed U.S. dollar-denominated bond offering. Adani Renewables announced the decision in letters to the Bombay Stock Exchange and the National Stock Exchange of India.

U.S. prosecutors said they brought the charges to protect investors. Deputy Assistant Attorney General Lisa Miller said in statement that the Department of Justice “will continue to aggressively prosecute corrupt, deceptive, and obstructive conduct that violates U.S. law, no matter where in the world it occurs.”

None of the people charged in the U.S. have been arrested, prosecutors said.

Who is Gautam Adani?
Adani is the son of a middle-class family in Ahmedabad in western India’s Gujarat state. He quit college to become a diamond trader in Mumbai, India’s financial capital. In the 1980s, he started importing plastics before establishing Adani Enterprises, which traded in everything from shoes to buckets and remains his flagship company.

India opened up its economy in the 1990s and a new middle class emerged as tens of millions of people escaped poverty, prompting Adani to bet on infrastructure and coal.

Adani’s first big project, the Mundra port in Gujarat, opened in 1998 and is now India’s largest. Adani Ports and Special Economic Zone Ltd. is India’s biggest private port operator. Within a decade, Adani became India’s largest developer and operator of coal mines. According to Adani Power’s website, it has expanded to Australia and Indonesia and has ambitions to become one of the world’s largest mining groups.

India’s second-largest conglomerate operates airports in major cities, builds roads, generates electricity, manufactures defense equipment, develops agricultural drones, sells cooking oil and runs a media outlet.

[Riaz Haq]

'Bribe notes' with per megawatt rates: filings detail Sagar Adani's role in Indian scandal | Reuters

https://www.reuters.com/world/india/bribe-notes-with-per-megawatt-r...


U.S. indicts
Adani
Group executives for alleged $265 million bribery scheme
Sagar
Adani
's 'bribe notes' on phone detail payments to Indian officials, filings say
Adani
Group says allegations are baseless
Nov 21 (Reuters) - A U.S. indictment of top executives of India's Adani Group has put a spotlight on Sagar Adani, a millennial scion of the company who kept track of hundreds of millions of dollars of alleged bribes to Indian officials on his mobile phone, court filings show.
U.S. prosecutors called the notes on Adani’s phone “bribe notes."
In those notes, Sagar Adani, nephew of the Indian conglomerate's billionaire founder Gautam Adani, noted the amount of the bribe he offered, which government official had been offered the money and how much solar power the official's region would buy in return. He even identified a per megawatt bribe rate to secure the power contracts, the court filings show.
In discussing how the bribery scheme was moving along in 2020, Sagar Adani remarked in a WhatsApp message: “Yup…but the optics are very difficult to cover.”
Those optics became impossible to cover on Wednesday when Sagar Adani, his uncle Gautam, one of the world's richest men, and six others were indicted for fraud by U.S. prosecutors over their alleged roles in a $265 million scheme to bribe Indian officials to secure power-supply deals expected to yield $2 billion in profit over 20 years. The U.S. Securities and Exchange Commission also filed a parallel civil case.

--------------------

Billions at stake, a web of lies, and a $265 million bribery scheme. This is the story of how Gautam Adani and his executives allegedly defrauded investors and corrupted Indian officials in a desperate bid for a massive solar energy project.

https://youtu.be/pKLhfsBY_UE?si=d8kIRW6AYMjWc8zp

[Riaz Haq]

HOW DID U.S. FEDERAL AGENTS INVESTIGATE, SEIZE EVIDENCE?

In March 2023, FBI special agents approached Sagar Adani with details of the grand jury's ongoing investigation into the group and other entities. They took custody of electronic devices in Sagar's possession and served him with a search warrant and grand jury subpoena.

The search warrant identified offences, individuals and entities under investigation by the U.S. for violations of the Foreign Corrupt Practices Act, securities fraud, and wire fraud.

https://finance.yahoo.com/news/explainer-us-findings-related-gautam...

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U.S. prosecutors charged Gautam Adani, his nephew Sagar Adani who is director at Adani Green, and six others with alleged bribery and fraud related to renewable energy projects in India that benefitted the tycoon's company and India's Azure Power, which was listed on the NYSE until late 2023.

In 2020, the unsealed indictment from Wednesday shows, executives of Adani Green and Azure "knowingly and wilfully conspired" and agreed to "corruptly" offer, authorise and pay bribes to government officials in India to "obtain or retain business advantages".

Adani and his executives have also been accused of making false and misleading statements to investors and lenders in the United States regarding the company's anti-bribery commitments and practices while raising money from them.

Between 2021 and 2024, Adani raised more than $3 billion in loans and bonds, including from investors in the United States.

"Gautam and Sagar Adani were engaged in the bribery scheme during a September 2021 note offering by Adani Green that raised $750 million, including approximately $175 million from U.S. investors. The Adani Green offering materials included statements about its anti-corruption and anti-bribery efforts that were materially false or misleading," the U.S. Securities and Exchange Commission said.

The Adanis earlier this year made misleading statements to the public, the Indian stock exchange and investors despite being made aware of the U.S. investigation in 2023, the prosecutors alleged.

HOW WERE BRIBES TRACKED, PAID?

Sagar Adani, executive director of Adani Green and nephew of Gautam Adani, used his mobile phone to track details of the bribes offered to Indian officials, U.S. authorities alleged.

In a meeting between some Adani and Azure executives in 2022, Gautam Adani detailed aspects of the bribery scheme including steps he personally took to offer money to government officials, the U.S. authorities said.

Executives from Azure also prepared an analysis using Excel and PowerPoint to summarise the different ways in which it could repay Adani Green for the bribes it had paid to benefit both companies. For one of the projects of 2.3 gigawatts of power, the bribe was calculated at around $30,000 per megawatt.

One way discussed was to describe the payment internally at Azure as a "development fee", but it instead used another option of getting Azure to transfer one of its projects to Adani in lieu of part of the payment, U.S. authorities alleged.

Azure in a statement said former officers of the company referenced in the U.S. indictment were no longer associated with the company, and the company continued to cooperate with U.S. authorities.

[Riaz Haq]

India’s Challenge in Post-Hasina Bangladesh

By Sumit Ganguly


https://foreignpolicy.com/2024/12/16/bangladesh-india-relations-has...


After a five-decade hiatus, a Pakistani cargo ship docked in the port city of Chittagong, Bangladesh, last month. The ship’s arrival signaled a significant shift in Bangladesh’s dealings with Pakistan, from which it seceded in 1971. Dhaka has also boosted its acquisition of arms and ammunition from Islamabad and dispensed with its practice of a full customs inspection of Pakistani imports.

These developments have come in rapid succession since Bangladesh’s interim government took over a few months ago. Leader Mohammed Yunus, a Nobel-winning economist, was the consensus candidate after Bangladeshi Prime Minister Sheikh Hasina stepped down under pressure in August. During her last two terms in office, she worked closely with India’s government. (Hasina has received asylum in New Delhi, and Dhaka recently asked Interpol to issue a red notice for her arrest.)

[Riaz Haq]

India's exports to Bangladesh dip amid 'volatile' situation - The Economic Times


https://m.economictimes.com/news/economy/foreign-trade/indias-expor...


The political turmoil in Bangladesh has slowed down exports of gem and jewellery, imitation jewellery, engineering goods and oilmeals from India. The raw cotton, cotton yarn and textiles exporters are facing delays in payments, eve ..

Read more at:
https://economictimes.indiatimes.com/news/economy/foreign-trade/ind...

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Exports to Bangladesh slip 28% in Aug; Crisil flags risk to export-oriented units
Trade data showed that cotton exports, which is India’s primary export commodity to Bangladesh, slipped nearly 10 per cent to 1 billion in August this year compared to 1.11 billion August 2023

https://indianexpress.com/article/business/economy/exports-to-bangl...

Exports to Bangladesh slip 28% in Aug; Crisil flags risk to export-oriented units
indianexpress.com

https://indianexpress.com/article/business/economy/exports-to-bangl...
India’s exports to Bangladesh slipped 28 per cent to $681 million last month compared to $943 million in August last year as protest and violence exacerbated the forex crisis that the neighbouring country is facing, official data released by the Commerce and Industry Ministry showed.


Meanwhile, rating agency Crisil said that the recent developments in Bangladesh haven’t had a significant impact on India’s trade but going forward a prolonged disruption can affect the revenue profiles and working capital cycles of some export-oriented units for which Bangladesh is either a demand centre or a production hub.