Kenya cancels two major deals with Adani Group

Last Updated on November 24, 2024 5:26 am

Kenya’s President William Ruto has cancelled two major deals with controversial Indian tycoon Gautam Adani. The decision comes after US prosecutors charged Adani with fraud.

A day earlier, India’s second richest man Gautam Adani was charged with planning to bribe $250 million and secretly collect the money in the United States. However, the Adani Group has denied the allegations made by US prosecutors as baseless.

President Ruto said in his speech, “If there is concrete evidence or credible information about corruption, I will not hesitate to take strong action.” His speech drew a standing ovation from the people present in parliament.

The Adani Group planned to invest $1.85 billion in Kenya’s main airport. The agreement was that they would operate it for 30 years. In addition, there was a $736 million contract with the Ministry of Energy to build a power line.

The airport project also included plans to build a new runway and an improved passenger terminal at Jomo Kenyatta International Airport. However, the deals were not well received by Kenyans. Many feared corruption. Airport workers went on strike in September over the airport deal, fearing that many workers would lose their jobs.

Energy Cabinet Secretary Opio Wandayi told a parliamentary committee on Thursday that there was no corruption or bribery in the power line construction project.

President William Ruto has vowed to take action against corruption, especially in light of the repeated allegations against his administration.

He also said his government would now start looking for new partners for the airport and power projects.

That is why the Adani Group is in this situation

In January last year, Adani lost about $25 billion of his personal wealth in a single week. At that time, the share prices of various companies owned by Gautam Adani collapsed after a controversial report by New York-based firm Hindenburg Research was published.

Investment research firm Hindenburg Research last year accused Adani’s business entities of committing the biggest fraud in corporate history.

The New York-based company specializes in ‘short-selling’. This method involves taking a financial position in a company’s shares to gain a profit when their value falls.

The Hindenburg Research report questioned the Adani Group’s ownership of various companies in tax havens such as Mauritius and the Caribbean.

The report also claimed that various companies in the Adani Group had significant debt – which had weakened the financial foundation of the entire group.

The report also alleged that these offshore companies were used to fix the price of shares traded in India in their favor. The Adani Group has strongly protested the report. At the same time, they have denied the allegations against them.

Adani Group says that the report and its unsupported information have had a detrimental impact on the share price of Adani Group companies. Hindenburg Research itself has admitted that they stand to benefit from the fall in Adani shares.

Adani has threatened to take legal action against Hindenburg Research. Soon after, Hindenburg responded by saying that they are ready to fight the matter in court.