Adani Group Faces Massive Market Rout After U.S. Fraud Accusations

India’s Adani Group has reported a staggering $55 billion loss in market capitalization across its 11 publicly traded companies following fraud allegations against its founder, Gautam Adani, and other officials. The allegations stem from a U.S. Department of Justice (DoJ) indictment filed on November 20, accusing the conglomerate of orchestrating a massive bribery scheme to secure government contracts.

The indictment alleges that Adani, a 62-year-old billionaire industrialist, and his subordinates “devised a scheme to offer, authorise, make, and promise to make bribe payments to Indian government officials.” These accusations, which Adani Group has vehemently denied, have led to a sharp decline in the group’s stock values.

In a statement issued Wednesday, Adani Group maintained its innocence, labeling the allegations “baseless.” The firm also clarified that neither Gautam Adani nor his nephew, Sagar Adani, had been charged with bribery or corruption. “Since the intimation of the U.S. DoJ indictment, the group has suffered a loss of near $55 billion in its market capitalisation across its 11 listed companies,” the statement read.

While Adani Enterprises stocks saw a minor recovery of 1.8% on Wednesday, the company has lost over 20% of its market capitalization since the indictment was disclosed. The group acknowledged that its officials are facing charges of securities fraud, wire fraud conspiracy, and securities fraud but reiterated its denial of all allegations.

Gautam Adani, once the world’s second-richest person, is accused of playing a pivotal role in a $250 million bribery scheme aimed at securing lucrative contracts. This marks the latest controversy for the billionaire, who has faced persistent accusations of benefitting from his close ties to Prime Minister Narendra Modi, a claim Adani has consistently refuted.

Adani Group’s troubles extend beyond financial markets. The indictment has triggered “significant repercussions,” according to the company. These include project cancellations, investor scrutiny, and a tarnished public image. Among the projects affected is a $1.85 billion investment in Kenya’s Jomo Kenyatta International Airport and a $736 million deal with the state-owned electricity utility KETRACO. Kenyan President William Ruto has since announced that Adani Group will no longer be involved in these projects.

Similarly, Sri Lanka has launched an investigation into Adani Group’s local ventures. These include a $442 million wind power project and a deep-sea port terminal in Colombo, estimated to cost over $700 million.

Adani Group has faced such challenges before. In 2023, it lost $150 billion in market value following allegations by U.S.-based short-seller Hindenburg Research, which accused the conglomerate of “brazen” corporate fraud. At the time, Adani called the allegations a “deliberate attempt” to tarnish its reputation and benefit short-sellers.

Founded in 1988 by Gautam Adani, who left school at 16 and started his career in Mumbai’s gem trade, the group has grown into a sprawling empire with interests in coal, airports, cement, and media. However, its rapid expansion into capital-intensive sectors has drawn criticism. In 2022, market researcher CreditSights, a Fitch subsidiary, warned that the conglomerate was “deeply over-leveraged.”

Despite these warnings, the Adani Group has continued its aggressive growth strategy, weathering previous fraud allegations and stock market upheavals. However, the latest accusations and subsequent market fallout underscore the significant challenges facing one of India’s largest conglomerates.

Critics argue that Adani’s close relationship with Prime Minister Modi has allowed the company to thrive despite allegations of corporate misconduct. The group’s influence and rapid expansion have made it a target of intense scrutiny, both domestically and internationally.

The indictment and its aftermath serve as a stark reminder of the vulnerabilities of even the most prominent business empires. With mounting legal and financial pressures, the Adani Group’s future remains uncertain, as it seeks to rebuild investor confidence and navigate the fallout from these allegations.