US hits Gautam Adani with bribery charges

Good morning from the Financial Times. Today is Friday, November 22nd, and this is your FT News Briefing. There's been a shake-up in Donald Trump's search for his top law enforcement officer, and Godom Adani's corporate empire is in disarray. Plus, my colleague Chris Giles has a hot take on tariffs and inflation.

When academics have looked across the whole piece, they don't see a big price effect. In fact, they see barely any price effect at all. I'm Kasha Bersellian, and here's the news you need to start your day.

Matt Gates withdrew his name from consideration for U.S. Attorney General yesterday. The former Florida Congressman said it had become, quote, unfairly distracting. U.S. President-elect Donald Trump shocked Congress when he picked Gates to lead the Department of Justice. Besides not having much legal experience, he's also been the subject of a congressional investigation. That was over alleged sexual misconduct and drug use.

But just hours after Gates dropped out, Trump announced his new pick for the role. Former Florida Attorney General Pam Bondi.

Indian billionaire Gautam Adani has had a rough two years. First, he was accused by a short seller of fraud and market manipulation, something Adani completely denies. But then on Wednesday, US prosecutors in New York charged him in an alleged years-long bribery scheme. The FT's Joe Miller has been following the list of allegations, and he joins me now. Hey, Joe. Hi.

So let's start with Wednesday's indictment. What exactly is Adani accused of?

So, Adani has charged alongside seven others of being involved in a sprawling multi-year bribery scheme in which they allegedly conspired to pay more than $250 million in bribes to various Indian officials and states across India in order to get favorable terms on solar power contracts for some of Adani's companies.

enormous contracts, actually some of the biggest solar power contracts in the world, projected to bring in more than $2 billion in profit in total. And why are U.S. authorities bringing charges against Adani?

The reason it's being brought in the US both as a criminal complaint and a civil complaint from the Securities and Exchange Commission is because US prosecutors allege that at the time this bribery was going on, the Adani companies or some of their subsidiaries were raising money from US investors and in US markets, therefore, they claim it's the US jurisdiction to go after Adani on this matter.

Adani says that the allegations are baseless and denies them and says it will use all possible legal recourse to fight them. And you mentioned this a little bit, but why is this a big deal? I mean, just how influential is the Adani group?

The Adjani group is one of the biggest conglomerates in the world and one of the biggest businesses in India. Go to Madhani himself is perceived as being very, very close to Prime Minister Narendra Modi. The group is heavily invested in infrastructure. It started off in ports and now has energy and data and all sorts of other subsidiaries.

and is a key part of Modi's plan to turn India into a developed country by the time it reaches its 100th anniversary in 2047. And so any allegations of wrongdoing at the company and any hit to its share price, like we've seen on Thursday in India, is usually consequential.

Yeah, and like I mentioned, this actually isn't the first time that the Adani group has been in some hot water. Can you give us a little bit of background on that?

Sure, and it's really only actually recovered from the last hit to its reputation, which happened in early 2023. You may remember there's a US-based shortseller called Hindenburg Research. They alleged that Adani had been pumping up its share prices and involved in accounting irregularities, all of which Adani's strenuously denied. But nonetheless, it knocked tens of millions of dollars off the Adani company's value.

and the company spent quite a long time, many, many months trying to shore up trust with investors, only for this criminal indictment to hit this week. So what happens next for Godom Adani and his backers?

That's an open question, really. India does have an extradition treaty with the US, so technically speaking, the US could ask for Adani to be extradited to the US. Observers have concluded that that is highly unlikely under Narendra Modi's regime. But nonetheless, you can expect that request to be made. There's one other wrinkle, of course, which is that Donald Trump is coming into office in January.

And as is traditional, the Department of Justice upper ranks are replaced with people loyal to the new administration. And Go to Mandani has been a backer of Trump too. So it's certainly possible that the new Department of Justice with new leadership could take a different view to pursuing this. Joe Miller is a U.S. legal correspondent for the FT. Thanks, Joe. Thank you very much.

The International Criminal Court has issued an arrest warrant for Benjamin Netanyahu. The allegations include crimes against humanity and war crimes. It's the first time that the court has issued a warrant for a Western-backed leader, and it means that any member state of the ICC would have to arrest Netanyahu if he entered their territory. That's 124 countries and includes most of Europe.

The move by the ICC is a dramatic escalation and highlights just how isolated Israel has become over its war in Gaza. Netanyahu's office called the decision anti-Semitic and rejected the accusations.

There's this consensus out there that Donald Trump's plans to increase tariffs will spike inflation. The idea is that US importers would have to pay more for foreign goods, and they would then pass those costs on to consumers through higher prices. But it turns out that argument isn't so clear cut. Here to explain is the FT's economics editor, Chris Giles. Hey, Chris. Hi, Cashier. So walk me through this pushback. First of all, where's it even coming from?

Well, first of all, it comes from the president elect himself. Donald Trump says it's not Americans who have to pay for tariffs. It ends up being the exporting country because they have to lower their prices so Americans don't pay more.

And there's also some pushback from some economists. So, Oren Cass has been very public. He's the chief economist of American Compass. And he says that when you look at what actually happened last time round, you have to cherry pick the little bit to see the Trump tariffs from the 2016 to 2020 period in the data. But there's been a lot of debate about what this says about whether tariffs actually cause prices to go up.

Yeah, well, let's unpack that data just a little bit more. Did we actually see price increases under Trump's first round of tariffs?

Well, there were some specific tariffs, like on washing machines. And we did definitively see washing machine appliance prices in the US rise compared with other goods. But in lots of other areas, when academics have looked across the whole piece, they don't see a big price effect. In fact, they see barely any price effect at all for consumers.

The importers, however, have paid everything, so it is definitely paid in the US, but it's quite hard to identify a particular price effect. What's most likely going on is that at the time the tariffs are quite specific,

and big retailers and wholesalers almost certainly spread out the pain, so items that didn't have tariffs on them, so prices rose overall. They probably shifted some of the burden onto their employees, so maybe wages fell a little bit or didn't rise as fast as they otherwise would, and probably took a little bit of the pain through profits, but nearly all of the pain stayed in the US, it wasn't shifted abroad.

All right, so while prices maybe didn't rise for US consumers, the costs from the tariffs were still mostly felt in the US. So, like you said, those were pretty targeted, and now Trump is talking about expanding them. Does that maybe change how inflationary tariffs might be?

I think it should change how inflationary we see these tariffs are because what I was just describing about how importers could spread out the pain in different ways, that will become harder to do because if it's a blanket tariff, you just probably have to raise your prices across the board for imported goods. But one thing I think we should all remember in this is that the US is a very large economy.

And it's also internationally an extremely closed economy. So imports of goods are only one relatively small amount of US consumer spending. Lots and lots of goods bought in the US are made in the US and imports are actually less of an issue than they are for other countries. So I guess how should we be thinking about Trump's promise to increase tariffs across the board when it comes to the US?

When it comes to the US, I think you shouldn't start thinking that this is a good idea or is good economics. The US will pay for the tariffs. Exactly how the US pays is much less clear, whether it all ends up in price or ends up being lower wage increases. That's a much more difficult question. And I'm sure academics will be pouring over the data in the years to come. Chris Giles is the FT's economics editor. Thanks, Chris. Thanks, Kasha.

Finally, there's something you're going to want to listen to this weekend. It's the latest episode from our US Politics podcast, Swamp Notes. And tomorrow, we're talking to Anthony Scaramucci. He was Donald Trump's short-lived communications director. Emphasis on the short. But he's taking it in stride.

Elon Musk, unfortunately, I got him lasting. I'm going to say that he lasts 30 Scaramuchis, which is 330 days. Each Scaramuchis measured by an 11-day unit of time.

So yeah, listen to the full episode on Saturday, right here in your FT News Briefing feed. And that's it from us this week. The FT News Briefing is produced by Neve Rowe, Fiona Simon, Sonia Hudson, Mark Filipino, and me, Kaushar Bursalian. Our engineer is Joseph Salcedo. We had help this week from San Gio Vinko, Breen Turner, David De Silva, Michael Lello, Peter Barber, and Gavin Kalman. Our executive producer is Topher Foreheads. Cheryl Bromley is the FT's global head of audio, and our theme song is by Metaphor Music.

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