Two whistleblower reports filed against Azure Power Global in May and September 2022 triggered a two-year US investigation, which culminated in the indictment of Gautam Adani and seven others in a $250 million bribery scheme.

The allegations, which involve improper payments to Indian government officials, have rattled markets and raised serious questions about corporate governance at the Indian conglomerate.

Azure Power, a New York Stock Exchange (NYSE)-listed company pending delisting in November 2023, is directly linked to the allegations. While Azure mainly operated through its Indian subsidiary, its activities intersected with the Adani Group. Both companies are accused of colluding to pressure Indian government officials to approve lucrative solar power contracts.

The bribe allegedly involved Azure Power owing Adani Green as its share of kickbacks: Rs 55 million for 650 MW Power Purchase Agreements (PPA) and Rs 583 crore for 2.3 GW PPA. The scheme, worth around $265 million (Rs 2,029 crore) included a bribe of Rs 1,750 crore to Andhra Pradesh officials.

Instead of direct payments, Azure has reportedly repaid its share by transferring the 2.3 GW PPAs to Adani Green and continuing to develop the 650 MW PPAs. These refunds are allegedly disguised as “development fees” or project transfers to mask the transactions.

Azure Power first disclosed the whistleblower complaints in January 2023, despite receiving them in May and September 2022, and an internal investigation revealed issues such as weak internal controls, misrepresentation of project data and material weaknesses in financial reporting, which led to the decapitalization of Rs. 24.3 crore in fixed assets and an estimated potential liability of Rs 1.6 crore; the company also failed to file required SEC documents, resulting in its delisting from the NYSE in November 2023, while continuing to cooperate with US authorities.

Adani Group’s connection to the scandal became more apparent during its $750 million Adani Green Energy 2021 corporate bond issue.

US authorities allege that Gautam Adani and his nephew, Sagar Adani, misled US investors by falsely claiming that no bribes had been paid. “The defendants orchestrated an elaborate scheme to bribe Indian government officials and lied about it while raising capital from US and international investors,” said Breon Peace, US Attorney for the Eastern District of New York.

The indictment also accuses executives from both companies of obstructing investigations by deleting electronic evidence and withholding information from US authorities. The Adani Group denied the allegations, calling them “baseless”. A spokesperson said: “The Adani group has always maintained the highest standards of governance, transparency and compliance. All possible legal action will be sought.”