Adani Woes Deepen: Kenya Cancels $2.1 Billion Deals Amidst Fraud Charges

Kenyan President William Ruto announced on Thursday that the country is cancelling all expansion and energy deals with Indian conglomerate Adani Group. This decision comes after the US issued bribery and fraud indictments against Gautam Adani recently, one of Asia's wealthiest businessmen.

During his State of the Nation address, President Ruto confirmed that the deals in question—one to modernize their Jomo Kenyatta International Airport (JKIA) in Nairobi and another for power transmission lines—would no longer proceed. He cited “new information provided by Kenyan investigative agencies and partner nations”, without directly naming the United States. The cancellation follows recent legal challenges and allegations against the Adani Group, notably in the United States, where U.S. prosecutors indicted Adani for allegedly orchestrating a massive bribery scheme tied to a solar energy project in India.

The airport modernization project, valued at nearly $2 billion, was set to see the Adani Group build a second runway and expand the passenger terminal at Kenya’s main international airport. In return, the Indian conglomerate would have controlled the airport for 30 years. This controversial deal drew a significant backlash from both the public and government lawmakers, including strikes by airport workers who feared the project would lead to job cuts and deteriorating working conditions.

The announcement also included cancellation of a $736 million public-private partnership for the construction of power transmission lines, awarded to an Adani Group subsidiary just last month. This project was under the Ministry of Energy and Petroleum and was expected to further expand the Adani Group’s footprint in Kenya’s energy sector.

“We immediately commence process of onboarding of alternative partners because these are important projects,” said the president. His statements were met with thunderous rounds of applause from the house.

Despite the backlash, Kenyan officials and President Ruto had previously defended the deal. However, the situation changed after the U.S. Department of Justice filed charges this week against Adani and other defendants accusing them of securities fraud and wire fraud related to a $265 million bribery scheme involving Indian government officials. These developments were reportedly shared with Kenyan authorities and led to the cancellation of the agreements.

Energy Minister Opiyo Wandayi, who had earlier defended the deal, reiterated on Thursday that there had been no bribery or corruption involved in its signing. However, the Kenyan government’s cancellation came swiftly following the indictment of Adani and its impact on the Adani Group’s global image.

The JKIA deal has been in murky waters in September as well when a Kenyan court had temporarily blocked following a lawsuit filed by critics who claimed, “it lacked transparency and did not provide value for Kenyan taxpayers”.

Additionally, the Adani Group’s past dealings had come under scrutiny after a report by Hindenburg Research in early 2023 raised concerns about improper governance practices at the conglomerate.

In response to the U.S. legal actions, the Adani Group denied the bribery allegations and said it would pursue all legal recourse available. The company stated it would take action to clear its name and protect its business interests globally. The group’s lawyers emphasized that the charges did not relate to the operations of Adani Group companies outside India.