Sri Lanka has often seen cases of significant corruption in the country being exposed in other jurisdictions, according to Nishan De Mel, Executive Director of Verité Research, a Colombo-based think tank. He referred to the allegations of bribery in Sri Lankan Airlines’s purchase of aircraft from Airbus, which surfaced in a United Kingdom-based investigation a few years ago, and to the Pandora Papers that threw up names of local politicians and businessmen. “It is very important for Sri Lanka to redouble its efforts against corruption, to ensure that we are protected from corrupt deals,” he told The Hindu.

After news on the alleged bribery scheme of the Adani Group surfaced on Thursday, many citizens and activists in Sri Lanka took to social media and called for greater scrutiny of the Group’s power project on the island. President Anura Kumara Dissanayake, who won the Presidency this September, and his National People’s Power [NPP] alliance, which secured a historic, two-thirds majority in the November 14 general election, have pledged to root out corruption. Days before his election win, Mr. Dissanayake vowed to cancel the “corrupt Adani deal” if his government came to power. Subsequently, Foreign Minister and Cabinet spokesperson of the interim administration said the government would “review” the project after the Parliamentary polls.  The International Monetary Fund, too, in its ongoing programme with Sri Lanka, has underscored the need to arrest “corruption vulnerabilities”.

Controversial deal

Adani Green Energy is investing $442 million in a wind power project in Mannar and Pooneryn in northern Sri Lanka. From the time the former Gotabaya Rajapaksa government roped in the firm in 2022, the project has remained controversial. The main political opposition accused the conglomerate of “backdoor entry”, in the absence of an open call for tenders. The same year, a top Ceylon Electricity Board (CEB) official told a Parliamentary panel that the project was given to the Adani Group after Indian Prime Minister Narendra Modi “pressured” President Gotabaya Rajapaksa. The official subsequently resigned, after withdrawing his original statement.

Regardless, the Ranil Wickremesinghe administration went ahead with the project, amid questions from corruption watchdogs. When the Adani Group came under the global spotlight in early 2023, and its stocks plummeted in the wake of U.S. short seller Hindenburg accusing it of pulling the “largest con in corporate history”, then Foreign Minister of Sri Lanka Ali Sabry said the Wickremesinghe administration was “very, very confident” of the future of the project, which it saw as a “government-to-government” deal with India.

Earlier this year, environmentalists and Mannar residents moved Sri Lanka’s Supreme Court, challenging the project on grounds of potential environmental impact and “lack of transparency”. The case was taken up by a five-member Bench and the next hearing is scheduled on March 18 and 19, 2025, according to sources familiar with the proceedings.

Also read: Adani wind power project sparks concern in Sri Lanka’s Mannar district

‘Review the project’

The U.S. indictment of the firm now “bolsters” the NPP’s argument for reviewing the project in Sri Lanka, noted Shihar Aneez, a consultant editor with Colombo-based news portal Economynext. “Right from the beginning there has been ambiguity over whether the Adani project is a government-to-government deal with India, or a private sector investment. We saw heated debates in the last Parliament,” the financial journalist said.

The credibility of Adani projects has come into question not just in the U.S., but also in the region, he noted, pointing to the Bangladesh High Court recently ordering a high-level probe to re-examine the country’s power purchase agreement with the Group. Going forward, the Dissanayake government must revisit the project with an open tender process, Mr. Aneez said, adding, “If Adani Green wins the bid through that process, then they are welcome… The Sri Lankan government has greater bargaining power now.”

The renewable energy project is one of two projects that the Adani Group is executing in Sri Lanka. Its other major investment is the Adani Ports-led container terminal project in Colombo. In November 2023, the U.S. International Development Finance Corporation (DFC) announced a $553-million investment in the project, a  $700-million joint venture among Adani Ports, Sri Lanka Ports Authority (SLPA), and Sri Lankan conglomerate John Keells Holdings.