French oil major TotalEnergies has halted investments in the Adani Group after the Indian ports-to-power conglomerate was engulfed in a crisis over an alleged multimillion-dollar bribery scheme.
The move, announced Monday, is the first major fallout from United States authorities’ decision to charge Adani’s billionaire chairman and founder Gautam Adani – one of the world’s richest people – and seven other people with agreeing to pay approximately $265m in bribes to Indian government officials.
TotalEnergies, whose financial exposure to Adani firms is estimated at between $4bn and $5bn by analysts at Bernstein Research, said it had not been made aware of the investigation into the alleged corruption scheme.
While TotalEnergies’s plans for future investment in Adani Group firms were unknown, the announcement of a pause adds to the criticism the $143bn Indian conglomerate is facing about disclosure standards, which may lead to closer scrutiny by other investors.
“Until such time when the accusations against the Adani group individuals and their consequences have been clarified, TotalEnergies will not make any new financial contribution as part of its investments in the Adani group of companies,” the French company said.
TotalEnergies, which has a 20 percent stake and a seat on the board of the company at the centre of the case, Adani Green Energy Ltd, said it rejects corruption in any form.
The US prosecutors’ bribery charges related to alleged payments to obtain contracts that could yield $2bn of profit over 20 years. The charges also included making misleading statements to the public despite being made aware of the US investigation in 2023.
The Adani Group has said the accusations as well as those levelled by the US Securities and Exchange Commission in a parallel civil case are baseless and that it will seek “all possible legal recourse”.
Adani did not immediately respond to a request for comment on TotalEnergies’s statement.
Most of the alleged bribes – $228m – were paid to a government official to get the southern Indian state of Andhra Pradesh’s state electricity distribution companies to agree to purchase power, stated the US indictment. Adani has said the allegations are baseless.
Andhra Pradesh’s government was “digging into all the internal files” from the previous administration, under which the alleged misconduct took place, the state’s finance minister, Payyavula Keshav, told Reuters on Monday.
“We will also examine what can be done next, like, is there a possibility to cancel the contract?… The state government is looking into this issue closely,” Keshav said.
The previous Andhra Pradesh governing party, the YSR Congress Party, last week denied any wrongdoing.
The US indictment document said that following the payment of alleged bribes to Indian officials, Andhra Pradesh’s electricity distribution companies entered into a power supply agreement to buy “approximately seven gigawatts of solar power – by far the largest amount of any Indian state or region”.
Shares of Adani Green Energy plunged by more than 11 percent on Monday after the TotalEnergies statement before recovering to close 7.9 percent lower, while Adani Total Gas, in which the French company owns a 37.4 percent stake, ended being down 1.4 percent.
India’s parliament was suspended on Monday after disruption from lawmakers demanding a discussion on the allegations.
The Adani Group’s projects and businesses span the globe and some have come under the spotlight since the US indictment.
On Sunday, a US development agency said it was reviewing the impact of the bribery allegations on its agreement to lend more than $550m to a Sri Lankan port development backed by the Adani Group.
The agency said that no funds had yet been disbursed under the loan commitment.
Last week, Kenyan President William Ruto cancelled a procurement process that had been expected to award control of the country’s main airport to Adani.
In Bangladesh, a panel examining power generation contracts, including one with Adani Power, urged the interim government to hire a global legal firm to ensure a thorough and transparent investigation into previous deals.
In India, opposition parties, who have consistently targeted Adani for what they say is his proximity to Prime Minister Narendra Modi, disrupted both houses of parliament seeking a discussion on the Adani allegations.
“The first step the government should take is to have a detailed discussion on the Adani saga which has the potential of tarnishing India’s image at the global stage,” Mallikarjun Kharge, president of the main opposition Congress party, posted on X.
Indian opposition parties have in the past accused Modi’s government of protecting Gautam Adani and his businesses, charges both deny.
Modi’s opponents say he has longstanding ties with Adani, going back nearly two decades to when Modi was chief minister of the western state of Gujarat, from where Adani also comes.
Source: Al Jazeera
BDST: 1427 HRS, NOV 26, 2024
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