US Justice Dept moves to dismiss alleged criminal fraud charges against Gautam, Sagar Adani: Report

WASHINGTON: The United States Department of Justice has moved to permanently dismiss all alleged criminal fraud charges against billionaire Gautam Adani and his nephew, Sagar Adani, reported Reuters.

The US Securities and Exchange Commission (SEC) had earlier alleged that Gautam Adani, Sagar Adani and others orchestrated an alleged USD 250 million-plus bribery scheme between 2020 and 2024 to secure solar energy contracts in India. On April 8, the US District Court for the Eastern District of New York had accepted a plea filed by the counsels for Gautam and Sagar Adani for a pre-motion conference to dismiss the case.

The decision to drop the high-profile case comes after the Adani Group has reportedly pledged to invest USD 10 billion into the United States. Federal prosecutors filed the request in the court, effectively ending the years-long prosecution.

In the court filing, federal prosecutors asked the judge to permanently dismiss the charges. Quoting proscecutors the Wall Street Journal reported, “The Department of Justice has reviewed this case and has decided, in its prosecutorial discretion, not to devote further resources to these criminal charges against individual defendants”. However, at the time of filing of this report there was no formal statement on the dropping of charges by the Adani Group.

Earlier, the US SEC had settled the civil lawsuit against Adani Group Chairman Gautam Adani, subject to court approval. According to media reports, Court documents show that Gautam Adani agreed to pay civil penalties of $6 million, while his nephew Sagar Adani, agreed to pay $12 million. The proposed settlement doesn’t include an admission of guilt, said news reports.

In their plea before the US District Court for the Eastern District of New York the counsels for Gautam and Sagar Adani had filed for a pre-motion conference to dismiss the case.

The counsels for Gautam and Sagar Adani informed that they intended to seek to dismiss the US SEC’s complaint. In the letter, the Defendants briefly set out their grounds for dismissal of SEC’s complaint, including that the court concerned lacks personal jurisdiction over the Defendants and the claims against them, the SEC’s claims are impermissibly extraterritorial, the alleged misstatements by the Defendants are too vague and general for any reasonable investor to rely upon as a guarantee of any concrete fact or outcome, making them in-actionable, and the Defendants’ lack of involvement in the transaction bars the SEC’s claims against them.

According to the counsels, in September 2021, AGEL conducted a USD 750 million bond offering pursuant to SEC Rule 144A and SEC Regulation S, which are registration exemptions for private resales to qualified institutional buyers (QIBs) and non-US sales. AGEL sold these bonds outside the US through an agreement to non-US underwriters, who then resold the Notes to QIBs. A fraction of those resales is alleged to have been made to “investors in the United States”. AGEL was not a party to these transactions, the lawyers said in the letter to the court.

The defendants said that the Court lacks personal jurisdiction over defendants and the claims against them should be dismissed under Rule 12(b)(2). The claims according to the lawyers “involve Indian Defendants, an Indian issuer, securities not registered with the SEC and not traded on U.S. exchanges, and underlying conduct alleged to have occurred exclusively in India.”The counsels said, the SEC has not alleged underwriters who purchased the bonds from AGEL were US institutions as they were not, or that the Subscription Agreement underlying the purchases was governed by US law as it wasn’t.

During this process, Gautam Adani was represented by Counsel Robert J Giuffra Jr. who is part of Sullivan & Cromwell LLP. (ANI)