US fraud costs roil Adani’s empire | USAEMALL.com

One major prison sentence to start: Former Wall Street trader Bill Hwang has been sentenced to 18 years in prison, capping an extraordinary fall from grace for the Archegos founder who was earlier this year found guilty of orchestrating a massive market deception that cost big banks billions of dollars.

And a scoop: Unilever has shelved plans to run a sales process for its €15bn ice cream division to private equity groups and will instead focus on a push to spin off the unit in an independent listing.

In today’s newsletter:

• Gautam Adani gets indicted

• Boutique banking’s newest billionaire 

• Poonawalla family splashes out in Mayfair

New York prosecutors take on Gautam Adani

Indian billionaire Gautam Adani has had a challenging two years. In this short timeframe, he went from being Asia’s richest man to defending the business practices at his sprawling business empire.

Problems started when short seller Hindenburg Research published a damaging report in January 2023, which alleged accounting fraud and stock market manipulation. Adani Group, which Adani chairs, vigorously denied the allegations and scrambled to shore up confidence with investors and banks.

But on Wednesday, those months-long efforts came crashing down. Adani and seven other business executives were charged by federal prosecutors in New York over an alleged years-long scheme to bribe Indian officials, in exchange for favourable terms on contracts, projected to bring in more than $2bn in profit.

The allegations are vast. Prosecutors said the tycoon made the payments in exchange for billions of dollars’ worth of solar power contracts — and that those payments were concealed from US banks and investors.

The kickbacks in question aren’t small either. Executives allegedly paid more than $250mn in bribes between 2020 and 2024 to Indian government officials as part of the scheme.

It was already well-known that Adani had close ties to the Indian government, as well as him being a vocal supporter of Prime Minister Narendra Modi.

Seven other executives were also charged, including managers at Adani energy subsidiaries and former employees of Canadian pension fund CDPQ. This was also a family affair: Gautam’s nephew, Sagar Adani, was among the defendants.

Adani was already in a public relations crisis.

Hindenburg’s report had an immediate and devastating impact. A month after it came out, Adani Group had suffered a $145bn market sell-off. Adani himself suffered a personal blow, losing the title of Asia’s richest man to Indian industrialist Mukesh Ambani.

Yet the charges from the Eastern District of New York are just one of the legal quagmires Adani will have to face.

There’s a parallel civil lawsuit from the Securities and Exchange Commission, which said the scheme included having the Indian government commit to buying energy at above-market rates; that benefited Adani Green and Azure Power.

Paul Taubman is Wall Street’s new billion-dollar man

In October 2014, Stephen Schwarzman reminded Blackstone investors that he had some experience in spin-offs.

Years earlier, an asset management group had been separated from the private equity firm and control had been ceded to an up-and-coming bond trader. That man was Larry Fink and the new firm became known as BlackRock.

Schwarzman has once again struck gold, sending a Blackstone unit out into the world to find its fortune: this time that firm is PJT Partners, which was formed a decade ago as the cast-off of the former Blackstone deal advisory group.

And its most crucial element would be its chief executive: the former Morgan Stanley rainmaker, Paul Taubman. After a huge increase in its share price since the depths of April 2020, PJT has hit a market capitalisation of $7bn.

DD’s Sujeet Indap and James Fontanella-Khan have crunched the numbers in securities filings and have scooped that Taubman’s stake is now worth more than $1bn. Schwarzman, who got his PJT shares in the spin-off and is still the second-largest shareholder, holds shares worth more than $900mn.

PJT at the moment is a big player in some of the fiercest boardroom battles. It has a role advising Boeing, Pfizer and the debt restructuring underpinning a Dish and DirectTV tie-up. The combination of Blackstone’s strength in restructuring and private funds, along with Taubman’s Rolodex, has proved formidable.

Taubman, for his part, takes home a small sliver of what he’s really worth. His salary is a mere $1mn, and his remaining pay comes simply in long-term stock grants that only vest if PJT shares go up.

Taubman bet on himself. And the wager has so far paid off magnificently, both for him and his champion, Schwarzman.

Non-dom fears are no match for Mayfair

To Dom or not to Dom, that is the question . . . at least if you’re a billionaire with property interests in London.

Britain’s colonial era “non-dom” rules have allowed the wealthy to shelter their overseas income and gains from UK tax, while still living — and spending — in London (or indeed their country estates).

But this convenient arrangement will end next year, under changes announced by the new Labour government. Wealthy “non-doms” with one foot in the UK must now choose whether to pony up more tax, or sharply limit their time in the country to avoid taxable status.

Their predicament has prompted a great deal of hand wringing — not least in the real estate sector — about London’s luxury economy and attractiveness to overseas investors.

Enter Adar and Natasha Poonawalla — whose family company, the Serum Institute of India, manufactured millions of doses of the Oxford/AstraZeneca vaccine and who have invested tens of millions in research and production in the UK.

They own the second most expensive home in London, bought last year for £138mn.

Adar told the FT earlier this year that the tax changes risked deterring investment, and would “make people stay away” from the UK. But he also mentioned that his wife, Natasha, would probably put up with the loss of the tax benefits.

However, in the same month as that interview, it appears as if she doubled down on the UK in a more tangible way. A company controlled by Natasha bought a £42mn block on Grosvenor Square — formerly the Indonesian embassy — as a redevelopment opportunity.

The deal is a corrective to the worst fears about the impact of the non-dom changes to London’s super prime market.

British politics has at least since Brexit (and arguably since the Reformation) thrown up plenty of reasons for the global wealthy to stay away. But DD wouldn’t count London out any time soon.

Job moves

• White & Case has hired Richard Browne as a partner focusing on M&A in London. He joins from A&O Shearman. 

• Cleary Gottlieb has hired Lesley Janzen as a partner with the capital markets team in New York. She previously worked for Milbank.

• Willkie Farr has promoted 19 lawyers to partners. Their focuses include practices from corporate services to litigation.

Smart reads

Oil ‘wildcatters’ Shale barons like North Dakota governor Doug Burgum and oil magnate Harold Hamm are thrilled about Republican plans to reshape the energy sector, the FT writes. Climate activists, not so much.

RFK’s virality The rise of Robert F Kennedy Jr to the helm of health policy in the US was fuelled by scepticism over scientists and vaccines born in the depths of the Covid-19 pandemic, The Wall Street Journal reports.

Google antitrust For years, Google instructed employees to delete messages and avoid certain words in an attempt to avoid antitrust violations, The New York Times reports.

News round-up

US set to seek Google divestitures in search monopoly case (FT)

Bridgewater’s Bob Prince buys $12mn home in wealthy Hong Kong enclave (FT)

Comcast to spin off cable TV networks and drive streaming growth (FT)

Robert Kennedy considers upheaval to US Medicare doctors’ billing system (FT) 

SpaceX abandons attempt to catch Starship booster as Donald Trump watches (FT)

Nvidia revenue nearly doubles as AI chip demand remains strong (FT)

MicroStrategy takes fundraising to $7bn for push into bitcoin (FT)

Target chief defends strategy as shares plummet over weak outlook (FT)