How the US has saved Adani

The controversial Indian multibillionaire, Gautam Adani, has managed to secure a big boost of confidence by attracting over half a billion dollars for the Adani conglomerate backed Colombo seaport project in Sri Lanka.

This American deal with Adani seems compelled by growing great power competition across South Asia. The US government intends to use its International Development Finance Corporation to counter the Chinese Belt and Road Initiative in the Indo-Pacific, and its investment in Sri Lanka is part of that plan.

China has been forging closer ties with Sri Lanka for several years now. It backed the Sri Lankan government’s crushing defeat of the Tamil Tigers, and then strengthened ties with the victorious Rajapaksa regime, which also allowed China to build a strategic deep seaport in Hambantota.

Sri Lanka’s inability to pay back China for this port soon compelled the Sri Lankan government to ink a 99-year lease in 2017, giving China direct control of the port, which in turn raised alarm bells in neighboring India and in the US.

The US-backed Adani port project is thus meant to counterbalance the Chinese investment in Sri Lanka. To pursue this geostrategic objective, however, the US is now going to work with one of the most controversial businessmen in India, Gautam Adani. Adani, in turn, has very close ties with Narendra Modi, who is also a very polarising figure in his own right.

The American deal with Adani comes in the wake of a serious international scandal involving Adani. At the beginning of this year, Hindenburg Research, a reputable investigative investment research firm had accused the Adani group of major fraud, spanning over a period of decades.

This past October, The Financial Times also reviewed customs record to note how the Adani group, which is India’s largest coal importer, was allegedly using offshore middlemen based in Taiwan, Singapore and Dubai, to import coal at highly inflated prices, which at times were estimated to be more than double the prevailing market rate.

Such allegations did catch the attention of media outlets around the world given that Adani is one of the richest men in the world. These exposes also had a major adverse impact not only on Adani’s reputation but also on that of his companies. Adani’s personal wealth was reported to have nearly halved from $120 billion to $61 billion in a matter of a few months. Potentially these corruption revelations should have led to even more severe consequences for Adani. The Modi government could also have been implicated in this fiasco given its close alignment with Adani, which includes generous contributions to Modi’s electoral campaigns.

However, the US business deal with Adani will now help provide reassurances to the international financial sector and other private investors to continue engaging with Adani, despite the fraud allegations against him.

The Adani group has already been able to get major refinancing deals from large international banks. It has also begun to see the market price of its companies’ shares rebound. According to the latest estimates, the stocks of Adani’s varied companies have now regained $46 billion in value. Adani is now expanding his business empire within India as well by taking over India’s largest cement-maker and he is posed to make massive investments in green energy as well.

Like Modi, who is known as a ‘Teflon man’ for his political resilience despite having fueled and leveraged the politics of hated, Adani seems to have also become India’s Teflon business tycoon. Like Modi, Adani has emerged unscathed from a potentially devastating storm of alleged wrongdoings. And both these men have the US to thank for helping them not only survive but thrive, due to America’s own vested interests.

Published in The Express Tribune, January 5^th, 2024.

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