In 1998, Gautam Adani was kidnapped by bandits for ransom, and nearly 11 years later, he was among the hostages during the terrorist attack on Mumbai’s Taj Hotel. A school dropout, Adani‘s canny ability to survive crises and his sharp business instincts have made him one of India’s wealthiest individuals. However, the 62-year-old founder of a vast ports-to-energy empire now faces one of his toughest challenges yet, with serious charges of bribery and securities fraud in two separate cases brought by U.S. authorities.
He may be the first big Indian business leader to face such charges.
US prosecutors have charged him and seven others, including his nephew Sagar, of being part of a scheme to pay USD 265 million bribes to Indian officials in exchange for favourable terms of solar energy contracts that could potentially help his group earn USD 2 billion in profits.
Adani’s listed firms saw $26 billion being wiped out on Thursday – the biggest single-day loss of market value (twice the size of what the group saw during the attack by US short-seller Hindenburg Research last year).
The charges, which his group has denied and called baseless, can potentially put his global ambitions on hold, starting with his travel. A threat of being questioned may mean he may choose not to travel to the US and a few other Western destinations.
More than his personal status, at stake, is the reputation of an empire the first-generation entrepreneur built over three and a half decades.
Early Life
Gautam Adani was born into a Jain family in Ahmedabad, Gujarat, as the seventh of eight children to Shantilal Adani, a textile merchant, and Shanta Adani.
After dropping out of school, he moved to Mumbai at 16 and briefly worked as a diamond sorter in the gem trade. In 1981, he returned to Gujarat to assist his older brother, Mahasukhbhai, in managing a small PVC film factory the family had acquired in Ahmedabad.
In 1988, Adani founded a commodities trading business, Adani Exports, which went public in 1994. The company is now known as Adani Enterprises.
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Kidnapped for ransom
By the mid-1990s, his business successes started attracting attention, including the unwelcome kind. On January 1, 1998, Adani and his associate Shantilal Patel were abducted at gunpoint after they left Karnavati Club in Ahmedabad in a car.
They were held allegedly by gangsters Fazlu Rehman and Bhogilal Darji alias Mama (who were later acquitted for lack of evidence) for a reported USD 1.5-2 million ransom. Both were let off a day later, but it is not known if the ransom was paid.
When Adani ‘saw death’ during Mumbai terror attack
On November 26, 2008, Gautam Adani was dining at Mumbai’s renowned Taj Hotel with Dubai Ports CEO Mohammed Sharaf. As he was about to leave after settling the bill, a few associates invited him for another round of meetings over coffee. It was during this time that terrorists launched their attack, killing 160 people.
Adani, who was escorted to the hotel kitchen and then to the basement along with other guests, later shared that had he gone directly to the exit after paying the bill, he would have likely been caught in the attack.
Adani spent the night in the basement and then in a hall before being rescued by commandos the next morning. After landing at the Ahmedabad airport in his private aircraft on November 27, Adani said, “I saw death at a distance of just 15 feet”.
Business Empire
Starting as a commodities trader in 1988, Adani started operating a port at Mundra on the Gujarat coast a decade later. He grew the business to become India’s largest port operator.
There was no looking back after that. He rapidly expanded his business empire into power generation, mining, edible oil, gas distribution and renewable energy. This came alongside the meteoric rise of Narendra Modi as the chief minister of Gujarat. Adani’s business interests expanded into airports, cement and more recently media.
Adani has repeatedly denied getting any favourable treatment from Modi when he was the chief minister or now as the Prime Minister.
He used Adani Enterprises as an incubator of new businesses before spinning them off into separate listed companies. The stocks of his seven listed companies surged — some cases up to 1,500 per cent in the last three years amid aggressive expansion.
He overtook Mukesh Ambani of Reliance as India’s richest and even briefly became the world’s wealthiest person after Tesla CEO Elon Musk. He is now ranked 25th richest, with a net worth of about USD 57.6 billion, less than half of what it was in 2022.
In little over a decade, his group has become India’s largest private sector power producer and will be the world’s largest renewable company by 2030. It is the largest airport operator in India.
It is India’s largest integrated energy player, spanning electricity generation, transmission and distribution, LNG and LPG terminals, city gas and piped gas distribution. His group has become the country’s second-largest cement manufacturer and the highest-valued FMCG company following the IPO of Adani Wilmar.
It is diversifying rapidly into other sectors, including clean energy, hydrogen, aircraft maintenance, manufacturing, telecom, data centres and logistics.
In recent years, the USD 220 billion conglomerate has attracted foreign investors like Total Energies of France for its renewable energy, city gas and hydrogen projects.
Controversies
In Australia, Adani group is still dealing with negative publicity for its Carmichael coal mine project in Queensland on concerns of carbon emissions and damage to the Great Barrier Reef. It won approval in 2019 after a decade-long struggle with regulators and environmentalists.
More recently, its USD 900-million container transhipment project at Vizhinjam port in Kerala faced protests from local fishermen on concerns of the coastal erosion undermining their livelihood. The four-month-long protests were called off last month.
Reputation challenge
Activist short seller Hindenburg Research, the firm which caught global attention with takedowns of electric-vehicle makers Nikola and Lordstown Motors, in a January 2023 report alleged that the Adani Group “engaged in a brazen stock manipulation and accounting fraud scheme over the course of decades”.
Hindenburg called out the conglomerate’s “substantial debt”, which includes pledging shares for loans; that Adani’s brother Vinod “manages a vast labyrinth of offshore shell entities” that move billions into group companies without required disclosure; and that its auditor “hardly seems capable of complex audit work”.
Adani rejected all allegations and threatened to sue Hindenburg for its “reckless” attempt to sabotage the mega share sale at Adani Enterprises.
But this did not stop the free-fall at group stocks, which at the lowest point saw USD 150 billion in market value being eroded. The stocks recovered most of the losses as the group focused on business operations and got marquee investors like GQG to invest.
The latest charges may prove to be his biggest challenge. Like with all legal action, the Adanis must be presumed to be innocent until proven guilty, but until then the conglomerate may continue to be under the clot.
(With PTI inputs)
