New Delhi: The row over US Securities and Exchange Commission’s move to get a notice issued through a federal court in the Eastern District of New York against the Indian billionaire, Gautam Adani and his relatives, may not ebb away soon with opposition Congress party making efforts to convert this into a big issue in the ongoing winter session of the Parliament.
Despite recent setbacks in state elections, the Congress party continues to emphasize the Adani issue, suggesting it is symptomatic of broader systemic corruption. The party’s argument focuses on alleged ties between Adani and Prime Minister Modi, seeking to illustrate a shift from merit-based capitalism to crony capitalism. However, their narrative remains largely speculative, lacking concrete evidence of governmental favouritism.
Adani case-No act of zero tolerance
The SEC’s actions cannot be isolated from U.S. geopolitical strategies meant for South Asia. This move appears to be a politically motivated one, aligning with internal U.S. dynamics, particularly between outgoing President Joe Biden and President-elect Donald Trump. The timing of the investigation—following Adani’s commitment to invest $10 billion in the U.S. and his public endorsement of Trump—suggests a possible political undercurrent rather than a genuine commitment to anti-corruption.
This is almost clear if we see the chronology of events unfolded in this month. The alleged evidence in the Adani case was collected sometime during March 2023. If the Biden administration were to rag Prime Minister Narendra Modi during the Parliament elections, the Biden administration would have made the evidence public in January or February 2024 months just before the Indian Parliament polls. They did not do so. The SEC move came only after Gautam Adani congratulated Donald Trump. In this context, the SEC move does not appear to be a benign one.
Gautam Adani (Picture credit: Getty Images)
Historically, the US has a record of inconsistency in adhering to ethical standards while dealing with corruption and bribery issues. After the disintegration of USSR, the US and its allies swiftly moved to normalise relations with a few dictators and autocrats in Africa in a bid to bring them under the Western influence. The African leaders who used to get brickbats from the US and Co on every other international forum, became democratic leaders after the USSR collapse. Many academics of corruption studies argue that the West, setting its eyes on resources in Africa, turned blind eye on the fraudulent practices and overnight legitimised their regime.
In the context of US-India relations too, the US agencies were found wanting in upholding ethical conduct in the cases of ‘Crime against Humanity’. The 1984 episode of US pressurising India to ensure the safe exit of Warren Anderson, the then CEO of Union Carbide was a case in point. In the middle of a night, Anderson left India and did not return to face the trial in the Bhopal Gast Tragedy though his culpability was palpable beyond doubt. Similarly, the US not agreeing to hand over David Headly an American citizen accused of getting involved in the 2008 Mumbai terror attack, is another case that underscores America’s inconsistency.
Does India investigate bribery charges?
The observation of former attorney general Mukul Rohatgi on Adani case has brought the issue in perspective. He has not shied away to add a caveat that he had represented the company in the past. Yet his assessment appears to be fair. Mr Rohatgi’s caution against hasty probes based on unsubstantiated allegations underscores the complexities of addressing international accusations. While India’s regulatory bodies, including the Reserve Bank of India (RBI) and the Securities and Exchange Board of India (SEBI), have maintained a watchful stance, they must balance vigilance with protecting the interests of Indian corporations on the global stage. An overzealous response could set a dangerous precedent, exposing Indian firms to future external pressures.
US SEC notice to Gautam Adani. (Photo credit: depositphotos/ Reuters)
Listing in the US market a big mistake?
When Tech Mahindra took over Satyam, the first thing that they did was to delist the company from the US market. This was a smart move. Many others, who had listed their companies in the US market, delisted from the US bourse on the pretext of sale of low volume of shares in the US equity market. As pointed out by Brahma Chellany, the Adani Group’s exposure to US credit was less than 10 percent of its overall borrowing. In hindsight, it was not a wise decision perhaps, for the company to set its foot on the US share market.
Politics over Adani issue
Unlike the West, the tendency of the developing countries, particularly India is that ruling dispensations tend to come under criticism of corruption charges no matter which party is in power. The party in opposition are tempted to project the incidence of ‘systemic corruption’ as scams involving head of the state. Interestingly, the systemic corruption never helped the opposition to turn the tide in their favour.
In this context, it will be interesting to see how Prime Minister, Narendra Modi handles this issue politically to ward off the unsavoury criticism from the opposition here and the embarrassment on foreign soil. The external affairs ministry has already declined to get involved in the Adani issue maintaining that it is a case between individuals, a company and the SEC of the US.
On the contrary, Mr Modi has been trying to drive home a point that the opposition are in league with external forces to weaken the country. He, however, has not named anyone yet. Interestingly, Mr Modi is not the first one to speak like this. In the 1970s, late Prime Minister Indira Gandhi used to suspect foreign interference, particularly the CIA, in the internal affairs of India and she would make open statements to this effect in many of her public meetings: interference to the extent that she saw western hands behind the railway strikes and many unrests led by opposition leaders.
Notably, in a conversation with journalist, Sidharth Bhatia, academic Paul McGarr from King’s College London has substantiated Gandhi’s concerns as plausible, indicating that U.S. might have interfered in India’s internal matters. Today, the BJP, which was part of opposition then, is accusing the Congress party of aligning with Western non-state actors to weaken India. Ironically, it is Mrs Gandhi’s grandson, Rahul Gandhi has come under criticism. This suggests a continuation of these historical tensions.
The Congress party’s argument on Adani issue falls flat on two counts and therefore raises doubts over its intent. If the Congress party is genuinely intended in rooting out corruption, it has an opportunity: launch an internal investigation and come out with details before the public to disclose who in the previous Congress government in Chattisgarh and the current dispensation of Tamil Nadu, took bribe from Adani group. Then, the Centre would be forced to order a comprehensive probe. Or state governments can file FIRs and investigate the bribery episodes. They are not keen to do so.
Two, its strategy smacks of duplicity. The opposition party appears to be fine with Western companies coming to India and getting contracts in any sector here, but it has serious problems with Adani Group going across the continents and winning business bids. The history has it that Western governments never hesitated to rush to protect the interests of their companies whenever they got into trouble on foreign soil: episode of the exit of Warren Anderson the then CEO of Union Carbide is a case in point. If Modi government rushes to help Adani group or for that matter any Indian company operating across the globe, it can’t not be construed as crony capitalism.
Pic: Adani Group
Adani case- End of global ambition of Indian capitalism?
While Congress party is trying to paint a gloomy picture of India by highlighting the SEC charges against Adani, it’s not accurate. Have we forgotten the Satyam case? After the Satyam case, almost every other commentator had written obituaries on Indian IT companies saying that the West would distrust Indian IT companies and the fledgeling IT industry would not grow any more in India. But history has proved the naysayers wrong. Indian IT companies not only bounced back, rather made a major turnaround in showing the world what Indian neo-capitalism could do.
Perhaps, it isn’t wrong to invoke the Indian cricket history to inspire the Indian corporates. Whenever India toured Australia, the Aussies used to sledge more intensely during test matches and ODIs. After India started winning long format games in Down Under, the intensity of sledging appears to have come down. The Indian players’ strategy to fight sledging was simple: focus on ICC rules, follow on-ground etiquette and enjoy the flair of the game.
Similarly, when Indian companies start innings on the foreign soil, it is quite possible that Chinese and Western business interests turn hostile, and one can expect body-line bowling from competitors from other countries. It is a matter of time that our companies make their presence felt on foreign soil if Indian capitalism, rooted in ethical business practices, judiciously follow international trade rules.
