Peas in a Pod

The Indian multinational conglomerate Adani Group recently announced an $88.5 billion investment in renewable energy, cement, and logistics projects in the western Indian state of Rajasthan.

Karan Adani, who serves as managing director of Adani Ports and Special Economic Zone, discussed the plan at an event attended by Indian Prime Minister Narendra Modi and Gautam Adani, Karan’s father and the chairman of Adani Group, reported Bloomberg.

These plans could make the Adani Group the biggest producer of cement in India, the world’s most populous country. They are only one example, furthermore, of the Adani Group’s projects. The company is also building a new airport in Mumbai, the world’s largest solar and wind generating plant on the Pakistani border, a new shipping port in Kerala, and other infrastructure.

Modi’s presence at the event was important because, a few weeks before, American prosecutors in New York had charged Gautam Adani and other company officials on multiple counts of fraud, including bribing Indian officials, lying to investors about their actions, and wire and securities fraud. Adani and his associates are accused of spending around $265 million on the scheme.

The accused have called the allegations “baseless.”

“The more bold your dreams, the more the world will scrutinize you,” Adani said recently at an awards ceremony in northern India covered by the Associated Press. “In today’s world, negativity spreads faster than facts. And as we work through the legal process, I want to reconfirm our absolute commitment to world-class regulatory compliance.”

But, however valid or not that the claims may be, they are having a big impact on India because of the scale of the conglomerate, “which is so intertwined with government priorities that it is almost synonymous with Prime Minister Narendra Modi’s India,” the Economist wrote.

As a result, the fallout has been swift and furious, powering the opposition in parliament, for example, to revive allegations that Modi has favored Adani and blocked investigations that might unveil bribery schemes like the one that American prosecutors have depicted, Reuters added.

The case also raises new questions about judicial and regulatory independence under Modi and his Bharatiya Janata Party, and could slow an infrastructure program as well as other initiatives in the pipeline.

It’s not clear if the Americans can get to Adani. Under the US Foreign Corrupt Practices Act, the US claims jurisdiction over anyone who uses the US financial systems or targets American investors. But the US must file a request with India asking for Modi to extradite the chairman, explained Al Jazeera. That request has not yet been issued.

Still, Modi might concur with people like financier Mark Mobius that the US has overstepped its bounds, the Times of India reported. Mobius admitted, however, that he needed to see the American prosecutors’ evidence to know whether they had a case against Adani.

Yet already, the case has impacted financing from abroad as well as deals and investment: For example, Kenya’s President William Ruto cancelled two deals with Adani companies, including one to operate an airport. TotalEnergies of France halted new investments with the company until the charges are cleared.

“For international investors, (the charges) raise new questions about the probity and integrity of Indian regulators and business leaders, while casting doubts on the nation’s preferred narrative of an ascending economy that offers a safe alternative to a corrupt and capricious China,” the Financial Times wrote, adding that the case “puts the reputation of India Inc on trial.”

The biggest fallout might be the warming US-India relationship, analysts said. Already under strain because of an indictment of an Indian government employee in a murder-for-hire scheme targeting a Sikh separatist leader in New York, now there are questions about whether Modi would protect Adani, or if he even has a choice because of how enshrined the company is in Indian economic and political affairs, as the Wall Street Journal noted.

“In theory, Modi could decide to distance himself from Mr. Adani, who has embarrassed the prime minister internationally,” the WSJ wrote. “But it would be difficult for Mr. Modi to cut Mr. Adani loose even if he wanted to.”