Mint Explainer: Adani bribery accusations and legal action in the US

What are the charges?

Gautam Adani, chairman of the Adani group and Adani Green Energy, and seven executives have been indicted by the US Department of Justice (DOJ) on five charges:

1.Bribe: He allegedly paid around $250 million to Indian officials between 2020 and 2024 to secure solar power contracts.

2.securities fraud: Inflating stock values ​​and misleading investors by hiding these bribery activities.

3.electronic fraud: Use of interstate communications to carry out fraudulent schemes.

4.Violations under the US Foreign Corrupt Practices Act (FCPA): Offering bribes to foreign officials to gain business advantages.

5.accounting fraud: Failure to disclose illegal payments and submitting false financial reports.

What is the Foreign Corrupt Practices Act (FCPA)?

The FCPA, which came into force in the 1970s, aims to prevent bribery and fraud in international business relations. It prohibits U.S. companies, citizens and certain foreign entities from offering bribes to foreign officials to gain business advantages. It also requires maintaining accurate financial records and implementing internal controls.

The FCPA, enforced by the DOJ and the U.S. Securities and Exchange Commission, has two main provisions:

Fighting bribery: Offering or promising anything of value to foreign officials for business interests is prohibited.

Accounting provisions: Requires accurate financial reporting to prevent concealment of illicit payments.

Also read | Adani bribery case: whistleblowers, WhatsApp messages and ‘incentives’

What are the penalties for anti-bribery violations under the FCPA?

• For individuals: A fine of up to $250,000 or imprisonment of up to five years, or both, per violation.

• For companies: Fines of up to $2 million per violation or twice the benefit obtained or intended by corruption and repayment of illegally obtained profits.

Convicted companies may also face business restrictions or loss of government contracts.

What is the next process?

Legal proceedings following the indictment include:

hearing

• The defendants will be brought before a judge and formally charged.

• Defendants enter a plea: guilty, not guilty, or no contest.

Pre-trial proceedings begin

• Both the prosecution and the defense may make motions (for example, to dismiss the charges, exclude evidence, or change the venue of the trial).

• The court will decide on these requests.

Discovery

• Both prosecution and defense exchange evidence, including witness statements and documents.

plea bargain

• The defense and prosecution may negotiate a plea agreement to reduce charges or sentences.

Hearing

• The prosecution presents evidence that proves guilt beyond a reasonable doubt.

• The defense objects to the evidence.

• The jury (or the judge in a court trial) deliberates and reaches a verdict.

judgment

• If found guilty, punishment will be determined at the sentencing hearing.

• Possible penalties include fines, imprisonment, or probation.

Objections

• Defendants may appeal to the U.S. Court of Appeals.

• The court may overturn the conviction, reduce the sentence, or order a new trial.

US Supreme Court

• If the Court of Appeals upholds the conviction, Adani and others could appeal to the U.S. Supreme Court.

• However, the US Supreme Court has no obligation to hear such cases. It often handles cases that may be of national importance, harmonize conflicting decisions in federal circuit courts, and/or have precedential value.

Also read | Adani could see broader impact from US failure

What is the US-India extradition process?

The India-US Extradition Treaty, signed in 1997, facilitates the transfer of persons facing serious criminal charges between the two countries. It covers crimes that require at least one year in prison, such as bribery and fraud, but does not cover political crimes.

The agreement is based on the principle of double guilt; that is, the alleged crime must be recognized in both countries and the case must be registered in both jurisdictions for the agreement to be valid.

Past FCPA-enforced cases

Adani group has joined the list of high-profile entities charged under the FCPA. Notable cases include:

• Goldman Sachs (2020): $1.6 billion settlement for $1 billion in bribes to officials in Malaysia and the UAE.

• Ericsson (2019): $1 billion fine for bribery in Africa and Asia.

• Siemens AG (2008): $800 million compensation for corruption in many countries.

• Glencore (2022): $700 million in damages for bribery in Nigeria and Venezuela.

• Teva Pharmaceuticals (2016): $519 million for bribery in Russia, Ukraine and Mexico.

Also read | Adani’s indictment shook both stocks and bonds