No funds disbursed to Adani Colombo port project so far, assessing situation: U.S. Agency DFC

U.S. DFC delays $553 million loan to Adani-controlled Colombo Port project amid corruption allegations and investigations.

A year after it announced it would loan the Adani-controlled project for Colombo Port more than half a billion dollars, the U.S. International Development Finance Corporation (DFC) said that it is “continuing to assess the situation” and had not so far disbursed any of the funding promised. In response to questions from The Hindu about the impact of the indictments issued by the U.S. Department of Justice (DoJ) and Securities and Exchange Commission (SEC) last week, a DFC official said that the agency is still conducting its “due diligence” on the project in order to ensure it meets its “rigorous standards”.

The DFC statement, that appears to indicate that there is a reconsideration of the Adani Ports and SEZ (APSEZ) development of the Colombo Western International Terminal that it had endorsed in November 2023, came as the Sri Lankan government said it is taking the U.S. indictments “very seriously” and that a final decision on the project after an official report prepared by the Foreign and Finance Ministries is submitted. “We are expecting the report to come in very soon, and will be taking a decision after that,” said official spokesperson Nalinda Jayatissa, addressing the weekly media briefing in Colombo after a Cabinet meeting chaired by President Anura Kumara Dissanayake.

The cloud over the prestigious Colombo port project is the latest in a series of controversies over other international infrastructure and energy projects involving the Adani group, that has been accused of violating the U.S. Foreign Corrupt Practices law by allegedly bribing Indian officials more than U.S. $250 million for power contracts. In particular, the DFC’s announcement of a loan commitment of $553 million made in November 2023, had been cited by the Adani group and its backers as a mark of the company’s governance systems.

“We welcome the association of the DFC in funding the Adani project – and we see this as a reaffirmation by the international community of our vision, our capabilities and our governance,” Karan Adani, Director and CEO, APSEZ had said in a statement last year. In a note to clients on November 21, Adani-investor Florida-based GQG Partners had also cited the DFC backing for the project, saying that it found it “very surprising that the U.S. government would approve funding and partner in projects with parties that were under DOJ investigation.”

With the DFC now clarifying that it hasn’t disbursed any funding to the Adani group, it is unclear whether the Colombo port project will go ahead as scheduled. The Hindu attempted to contact the group as well as CWIT for a comment but did not receive a response. The Ministry of External Affairs also did not respond to questions about whether U.S. authorities had sought its cooperation in its investigation or in pursuing the prosecution of the Adani group chief and other officials named in the indictment.

Apart from the report under preparation in Sri Lanka, a Bangladesh court ordered a high-level enquiry into the purchase agreement for an Adani power supply project from a plant in Jharkhand executed by the previous Sheikh Hasina government, and Kenyan President William Ruto announced he was cancelling deals signed with the Adani group for energy and airport infrastructure in the past week. In addition, France’s Total group announced that it was putting further funding in the Adani Total Gas project on hold, while the Adani Ports’ operations of the Haifa port in Israel have faced headwinds over an unconnected labour dispute.

After the indictment by a Grand Jury in a New York court on November 20, U.S. officials said arrest warrants have been issued for Adani group CEO Gautam Adani and his nephew Sagar Adani for an alleged “bribery scheme” involving the Adani Green Energy group’s solar power company’s dealings with several Indian state governments.