Cyril Cabanes faces US SEC charges: Foreign Corrupt Practices Act explained

Cyril Cabanese is charged alongside Gautam Adani and Sagar Adani, in connection to a bribery scheme that misled US investors in a September 2021 bond offering that raised $175 million

The United States Securities and Exchange Commission (SEC) has charged former board member of Azure Power Cyril Cabanes, for his alleged role in facilitating the bribery while serving in both the US and abroad. These actions violated the Foreign Corrupt Practices Act (FCPA), which forbids bribing foreign officials for business advantages.

 

Cabanese is charged alongside Gautam Adani, and his nephew Sagar Adani, in connection to a bribery allegation that misled US investors in a September 2021 bond offering that raised $175 million.  Adani Group has denied the accusations, stating that they intend to seek all legal recourse on the matter. 

 

 

Who is Cyril Cabanese?

Former board member of Azure Power Cyril Cabanese is among the main accused in the SEC’s indictment against the alleged bribery scheme. Not much is known about Cabanese, other that his professional background which includes nearly two decades of experience in acquisitions, financing, and fundraising, particularly in the energy and infrastructure sectors.

 

Cabanese previously served as vice-president and head of infrastructure transactions for Canadian pension fund Asia-Pacific at Caisse de dépôt et placement du Québec (CDPQ).  

 

Before his involvement with Azure Power, Cabanes had significant roles at Marubeni Corp and Deutsche Bank. According to his LinkedIn profile, he is currently the CEO at MorGen Energy.

 

What are the charges against Cyril Cabanese?

Gautam and Sagar Adani have been accused of orchestrating a bribery scheme to influence Indian government officials and secure favourable energy purchase agreements for their companies, Adani Green and Azure Power. Ohe offering materials allegedly misrepresented the company’s anti-corruption efforts, falsely portraying strong anti-bribery measures while senior management was involved in bribery.

 

Meanwhile, Cyril Cabanes, a former board member of Azure Power, has been charged under the FCPA for his role in facilitating these bribes. The SEC alleges that Cabanes helped authorise the bribes, which took place both in the US and abroad, violating US anti-corruption laws aimed at preventing the bribery of foreign officials. 

 

The SEC is seeking permanent injunctions, civil penalties, and bars from holding corporate leadership positions for all three accused.

 

What is the Foreign Corrupt Practices Act (FCPA)?

The US Foreign Corrupt Practices Act (FCPA) was enacted in 1977. The legislation prohibits US companies and their foreign subsidiaries from bribing foreign government officials to gain business advantages. The FCPA has two main provisions:

1. Anti-bribery: It is illegal to offer, pay, or promise anything of value to foreign officials to influence their decisions in business operations.
2. Accounting: The legislation requires companies to maintain accurate records and implement internal systems to prevent bribery and corruption.

 

The FCPA applies to all US citizens and companies, as well as foreign entities listed on US stock exchanges. 

Is Azure Power listed in the US stock exchange?

Yes and no. 

Azure Power Global Limited is an independent renewable power producer based in India. The company had listed its equity shares on the New York Stock Exchange (NYSE) on October 12, 2016.

 

The company, however, was delisted from the NYSE on November 13, 2023.  The decision was made by the NYSE Committee after Azure Power failed to file its necessary annual reports within the required time frame. The SEC indictment is based on a time when Azure Power was still listed with the US stock exchanges. 

 

Does India have a FCPA?

In India, the closest equivalent to the FCPA would be the Prevention of Corruption Act, 1988 (PCA). This Act criminalises bribery in both public and private sectors. 

The Indian Penal Code (IPC) also addresses bribery and corruption under specific sections. 

India is also a signatory to the United Nations Convention against Corruption (UNCAC), which mandates signatories to criminalise the bribery of foreign public officials, similar to the US Foreign Corrupt Practices Act (FCPA).

 

What is the difference between US FCPA and India’s PCA?

The main difference between the FCPA and India’s PCA is that the FCPA is specifically targeted at preventing corruption involving foreign officials, while the PCA focuses on domestic corruption. 

 

Does India have a provision for corruption by foreign firms?

Yes, India does have provisions that can apply to foreign companies operating in the country, in the context of corruption and bribery.

 

Under the Prevention of Corruption Act, 1988 (PCA), foreign companies are held accountable for their actions if they engage in corrupt practices within India. Foreign companies doing business in India could face penalties if their employees or agents offer bribes to Indian government officials.

 

The SEC’s investigation is ongoing, with assistance from the US Attorney’s Office and the US Federal Bureau of Investigation. The litigation will be led by SEC trial counsel in New York.