Shares in GQG Partners dive as Adani chair Gautam Adani embroiled in bribery case

Shares in fund manager GQG Partners plunged on Thursday after it said it was monitoring bribery charges brought against Indian billionaire Gautam Adani in the US.

Adani Group chair Gautam Adani. Picture: AFP

Shares in fund manager GQG Partners, which holds investment mandates with major super funds including Australian Super and Cbus, plunged on Thursday after it said it was monitoring bribery charges brought against Indian billionaire Gautam Adani in the US.

Mr Adani is one of eight defendants – a group that includes French-Australian citizen Cyril Cabanes – embroiled in the elaborate scheme, accused of agreeing to pay $265m ($406.7m) in bribes to Indian officials for lucrative solar energy supply contracts.

Mr Adani, chairman of Indian conglomerate Adani Group, is one of the world’s richest people. In Australia, his group owns Queensland’s Carmichael coal mine through subsidiary Bravus, as well as the North Queensland Export Terminal near Bowen, and the Rugby Run solar farm near Moranbah.

US-based, ASX-listed GQG bought $US1.87bn worth of shares in several Adani group companies last year in the wake of short-seller Hindenburg Research’s claims Adani had participated in large-scale fraud and stock manipulation – accusations the company denied but that sparked a stock rout.

On Thursday GQG, which manages investments worth $US159.4bn on behalf of super funds, sovereign wealth funds and other institutions, issued a statement saying it was reviewing its investments in Adani Group following Thursday’s indictment.

“We are monitoring the charges brought today by the US Attorney’s Office for the Eastern District of New York and the US Securities and Exchange Commission against Gautam Adani and certain other Adani Group executives and companies,” the company said. “Our team is reviewing the emerging details and determining what, if any, actions for our portfolios are appropriate.

“We note that, consistent with our portfolio construction guidelines, GQG portfolios make diversified investments and in aggregate in excess of 90 per cent of our clients’ assets are invested in issuers unrelated to the Adani Group.” The announcement sent GQG’s shares plunging 19.3 per cent, to close at an eight-month low of $2.13.

Queensland Natural Resources and Mines Minister Dale Last said the state government was investigating the issue. “Following recent reports overseas, I have sought briefings, including from Bravus, to ascertain whether any operations or jobs could be affected in Queensland,” he said.

“The resources sector is critical to the Queensland economy and it is the government’s expectation all parties within the industry strictly obey the law.”

US prosecutors have accused Mr Adani and other defendants, including nephew Sagar Adani who heads up the group’s renewable energy businesses, of agreeing to pay $US265m in bribes to Indian government officials between 2020 and 2024 as they sought to raise more than $3bn in funds from US investors.

The contracts to develop India’s largest solar power plant were projected to generate more than $US2bn in profits.

Prosecutors allege that Mr Adani and two executives conspired to misrepresent the company’s anti-bribery and corruption practices to US investors and financial institutions as they negotiated the financing arrangements. They have been charged with securities fraud for their roles in the scheme.

According to court records, a judge has issued arrest warrants for Gautam and Sagar Adani, and prosecutors plan to hand those warrants to foreign law enforcement.

Mr Cabanes is a former executive at Canadian pension fund Caisse de dépôt et placement du Québec, and a former director of Indian energy company Azure Power, which was set to benefit from the scheme, according to court documents.

The dual French-Australian citizen is accused of obstructing the grand jury, FBI and US Securities and Exchange Commission investigations into the bribery scheme, and has been charged with conspiracy to obstruct justice. In a parallel civil lawsuit, the SEC has charged Mr Cabanes with Foreign Corrupt Practices Act (FCPA) violations, accusing him of facilitating the authorisation of bribes while in the US and abroad.

Additional reporting: Damon Kitney