Hours after U.S. officials indicted Gautam Adani, one of India’s most successful businesspeople, on fraud and conspiracy charges, Kenya’s president publicly backed away from lucrative infrastructure deals with Adani’s companies to overhaul Nairobi’s international airport and the country’s electricity grid.
Days later, TotalEnergies, a European energy giant, said it would stop investing in Adani projects.
Now, Bangladesh and Sri Lanka, where India competes with China for influence, are rethinking their alliances with Adani.
For the past decade, the Adani Group has been the face of India-led development around the world. In India, it owns ports, power plants, mines, airports and even a TV station. The conglomerate is one of the country’s most valuable enterprises. Its ability to build, finance and operate highly visible infrastructure projects has made Adani an icon of corporate India as Prime Minister Narendra Modi seeks to expand its place on the global stage.
In the process, Adani became one of the richest people in the world. His brand spread — as few Indian companies have ever managed — to encompass deals in Southeast Asia, Australia, Africa and the Middle East.
That is all now at risk of unraveling.
On Nov. 20, federal prosecutors in New York’s Eastern District accused Adani of conspiracy to commit bribery and defraud investors, part of a sweeping indictment that took aim at several of his close lieutenants and family members. The prosecutors said Adani and his associates offered $265 million to Indian officials to secure solar project contracts, then lied about the bribery scheme to Wall Street.
The Adani Group said the charges were “baseless” and that it would defend itself legally.
The shock waves from the indictment are still bouncing between India’s stock markets, foreign investors and the governments of countries that do business with the Adani Group. The group’s relations with international partners are under increasing strain.
Modi himself has kept quiet about Adani’s ordeals. But last week, spokespeople for India’s ruling party, the Bharatiya Janata Party, lashed out, making it clear they regarded the U.S. action against Adani as an attack on India itself. The U.S. State Department and the American deep state, they said, were conspiring with their political opponents in “an attempt to destabilize India.”
The U.S. Embassy in New Delhi called the accusation “disappointing.”
The extraordinary attack on the United States, a key geopolitical partner of India, revealed how deeply India’s ruling party sees its interests conjoined with Adani’s.
Bhaskar Chakravorti, the dean of global business at the Fletcher School at Tufts University, said Adani “has provided a lot of soft support” to Modi’s government.
The two had been allies since their careers took off in the state of Gujarat 25 years ago. And Adani’s track record of big deals and public works projects, Chakravorti said, has helped India finally be “part of a global infrastructure development community.” It is a role that Modi has championed for India since he took office 10 years ago.
On Nov. 21 this year, just hours after the U.S. indictment bombshell dropped, Kenyan President William Ruto faced parliament in Nairobi for his annual State of the Nation address.
Ruto was already in hot water. His administration is confronting massive discontent over rising taxes and food prices, as well as abductions and killings. The president and his allies had also been stuck having to defend the two Adani Group projects — a deal to improve Kenya’s electricity grid and a proposal to modernize the country’s biggest airport, which critics decried as corrupt and wasteful.
The news from New York gave Ruto a reason to reverse course.
“Based on new information provided by our investigative agencies and partner nations,” Ruto said, he was instructing Kenyan officials to “immediately commence the process of onboarding alternative partners” for the projects, which together totaled more than $2.5 billion.
Saving face, the Adani Group later said there had not been a binding agreement with Kenya to work on Nairobi’s airport, which would have been the larger part of the investment. The company also defended its position by arguing that not only were the criminal charges baseless, but they would not disrupt its operations.
A few days later, on Nov. 30, Adani made a show of strength during an appearance at an awards event. “Every attack makes us stronger,” he said. “And every obstacle becomes a steppingstone for a more resilient Adani Group.”
But the chaos in Kenya was just the beginning. Some of India’s state governments, those not controlled by Modi’s party, have threatened to review or cancel big contracts with Adani. Opposition members in parliament — demanding an inquiry into the U.S. allegations against the company, which they constantly equate with Modi’s government — have forced its adjournment through most of the past three weeks.
Foreign sources of funding could soon freeze, too, if they haven’t already.
On Nov. 25, TotalEnergies, a Paris-based behemoth with a 20% stake in Adani Green Energy, said it would pause investing in new Adani projects. One of Adani’s biggest investors, GQG Partners, based in Miami, was downgraded by analysts at UBS and lost 13% of its market value overnight.
As questions grow about the conglomerate’s ability to continue to raise money, more foreign governments have been questioning Adani projects.
In Sri Lanka, where Adani is redeveloping the Port of Colombo and building wind power plants, a new government was already reviewing some projects.
After the indictment, an American foreign development agency, which had committed a half-billion dollars to the port project last year, said it had not disbursed any money yet because it was still doing due diligence. On Wednesday, Adani responded by going it alone — writing in a company filing that it would drop the U.S. funding and find a way to pay for the project on its own.
Even before Bangladesh tossed out an India-friendly autocrat in August, its interim government was in a payment dispute with Adani over electricity that it contracted to buy from plants in India. Its energy minister told Reuters on Dec. 1 that Bangladesh wants Adani to drastically reduce its rates, unless the high court cancels the deal altogether. He added that the U.S. indictment has no bearing on the legal review.
During the decade that Modi has been in power, the Adani Group has become a critical infrastructure player farther afield in Africa, the Middle East and Southeast Asia. When Modi ascended to power, Adani was branching into Indonesia and Australia, mostly mining and trading coal. Now, it has operations or plans reported in at least eight other countries, including Vietnam, Kazakhstan and Tanzania. A week after Donald Trump won reelection, Adani said his companies would invest $10 billion in projects in the United States.
The Adani Group frequently denies there is any blurring between its interests and India’s. But the perception abroad is consistent. Chakravorti said Modi and Adani’s “close personal relationship” has facilitated a lot of introductions to other governments.
One such deal, Chakravorti said, was in Israel, where an Adani conglomerate, in collaboration with a local partner, bought the port in Haifa for $1.18 billion. Israel’s ambassador to India was among the first to say that the indictment would not cause any problems in their relationship.
Problems are developing elsewhere.
In Kenya, political analysts say Ruto’s about-face only weakened him further. Nairobi’s airport still needs a second runway and still has no one to build it. A high court judge has ordered the government to provide evidence that it had canceled all agreements with the group.
Abraham Rugo, executive director of Bajeti Hub, a Kenyan nonprofit focusing on accountability in public budgets, said there needed to be greater transparency about what had been negotiated and agreed for the infrastructure deals.
“The bottom line,” he said, “is there has to be an assurance of the safeguarding of public interest in all similar future agreements.”
The New York Times News Service
