India’s Adani Group announced on Wednesday that it has lost about $55 billion in market capitalization following fraud charges brought by US prosecutors last week against its founder and senior executives.
An indictment filed in New York on November 20 accuses billionaire industrialist Gautam Adani and several associates of knowingly defrauding global investors as part of a massive bribery operation.
It said they “developed a scheme to offer, authorize, make and promise to pay bribes to Indian government officials”.
The firm, which denied the allegations, said in a statement on Wednesday: “Since the US DoJ (Department of Justice) indictment, the group has lost approximately $55 billion in market capitalization across its 11 listed companies. “
Gautam Adani, 62, is suspected of participating in a $250 million bribery scheme to secure lucrative government contracts.
Adani Group issued a strong denial, calling the allegations “baseless”, but it triggered a heavy selloff of Adani stock in Mumbai last week, amid several trading disruptions.
Shares in Adani Enterprises rose 1.8 percent on Wednesday, but the group’s key firm has lost more than 20 percent of its market capitalization since the indictment.
Adani officials have been “only charged” with securities fraud, conspiracy to commit wire fraud and securities fraud, a statement on Wednesday said. It denies all the allegations.
He said it was “wrong” to say that Gautam Adani or his nephew Sagar Adani had been accused of bribery or corruption.
Adani is a close ally of Hindu nationalist Prime Minister Narendra Modi and was at one time the world’s second-richest man, and critics have long accused him of abusing their ties.
‘Significant Effects’
The group said the action resulted in “significant impacts”, including “international project cancellations, financial market impacts and sudden scrutiny from strategic partners, investors and the public”.
That includes Kenya, where President William Ruto said the Adani group would no longer be involved in plans to expand the East African country’s electricity network and its main airport.
Adani Group was to invest $1.85 billion in Jomo Kenyatta Airport and $736 million in state utility KETRACO.
Sri Lanka has launched investigations into the group’s local investments, including a $442 million wind power deal and an Adani-led deep-sea port terminal in Colombo, estimated to cost $700 million. is more than
With a business empire spanning coal, airports, cement and media, the Adani group has faced previous allegations of corporate fraud and suffered a similar stock meltdown last year.
The group saw $150 billion wiped off its market value in 2023 after a report by short-seller Hindenburg Research accused it of “obscene” corporate fraud.
Adani denied Hindenburg’s allegations and called its report a “deliberate attempt” to tarnish its image for the benefit of short sellers.
Adani Group’s rapid expansion into venture capital businesses has raised alarm bells in the past, with Fitch subsidiary and market researcher Credit Sites warning in 2022 that it was “profoundly overleveraged”.
Adani, who was born into a middle-class family in Ahmedabad, Gujarat state, left school at 16 and moved to Mumbai to find work in the financial capital’s lucrative jewelery trade.
After a brief stint in his brother’s plastics business, he started the flagship family group in 1988 by venturing into the export trade.