TotalEnergies halts business with Adani
Indian billionaire Gautam Adani speaks during an inauguration ceremony after the Adani Group completed the purchase of Haifa Port earlier in January 2023, in Haifa port, Israel January 31, 2023. PHOTO: REUTERS/FILE
French oil major TotalEnergies was not informed of a US investigation into possible bribery and corruption at Adani Green Energy Limited, it said on Monday, adding it will stop financial contributions to its Adani Group investments following last week's indictment.
Total holds a 20% stake in Adani Green Energy and has a seat on the Indian company's board of directors.
"Until such time as the accusations against the Adani group individuals and their consequences have been clarified, TotalEnergies will not make any new financial contribution as part of its investments in the Adani group of companies," the company said in a statement.
"TotalEnergies was not made aware of the existence of an investigation into the alleged corruption scheme," the company added.
US prosecutors on Thursday charged eight people – including Indian tycoon Gautam Adani, his nephew Sagar Adani and the former CEO of Adani Green Energy – with promising and then making improper payments to Indian officials between July 2021 and 2024 for business advantages.
The French firm purchased its stake in Adani Green Energy in January 2021 – after the Indian company won what was then the world's largest solar order, and just months before the payments to officials were alleged to have begun.
Total also owns a 37.4% stake in Adani Total Gas Limited, as well as a 50% stake in three renewable joint ventures with Adani Green Energy.
Two of those joint ventures were entered into after the FBI served search warrants on Sagar Adani and seized evidence related to Adani Green Energy.
TotalEnergies has described India as a key market for developing both its natural gas and renewable energy businesses. Searing heatwaves and an uptick in economic activity have resulted in India's electricity generation growing at an average of about 8% annually following the pandemic year of 2020/21, outpacing power demand growth in every major global economy.
The French firm has repeatedly characterised its relationship with the Adani Group as a "strategic alliance" - 25% of Total's operational renewables portfolio comes from its stakes in Adani wind and solar assets.
Analysts at Bernstein Research estimate TotalEnergies' financial exposure to Adani firms at between $4-5 billion, or around 3% of capital employed.
TotalEnergies shares were down 0.42% at 1145 GMT on Monday.
The event is the first major fallout from US authorities' decision to charge Gautam Adani and seven other people with agreeing to pay around $265 million in bribes to Indian government officials.
While TotalEnergies' plans for future investment in Adani Group firms were not known, the announcement of a pause adds to the criticism the $143-billion Indian conglomerate is facing about disclosure standards, which may lead to closer scrutiny by other investors.
The US prosecutors' bribery charges related to alleged payments to obtain contracts that could yield $2 billion of profit over 20 years. The charges also included making misleading statements to the public despite being made aware of the US investigation in 2023.
The Adani Group has said the accusations as well as those levelled by the US Securities and Exchange Commission in a parallel civil case are baseless and that it will seek "all possible legal recourse".
Adani did not immediately respond to a request for comment on TotalEnergies' statement.
Shares of Adani Green Energy plunged more than 11% on Monday after the TotalEnergies statement before recovering to close 7.9% lower, while Adani Total Gas, in which the French company owns a 37.4% stake, ended down 1.4%.
India's parliament was suspended on Monday after disruption by lawmakers demanding a discussion on the allegations while the crisis continued to hurt the group founded by Adani, 62, one of the world's richest people.
On Sunday, a US development agency said it was reviewing the impact of the bribery allegations on its agreement to lend more than $550 million to a Sri Lankan port development backed by the Adani group.
The agency said that no funds have yet been disbursed under the loan commitment.
The Adani group's projects and businesses span the globe and some of them have come under the spotlight since the indictment in the US
Last week, Kenyan President William Ruto cancelled a procurement process that had been expected to award control of the country's main airport to Adani.
In Bangladesh, a panel examining power generation contracts, including one with Adani Power, urged the interim government to hire a global legal firm to ensure a thorough and transparent investigation into previous deals.