In this file photo, SEBI Chairperson Madhabi Puri Buch speaks during CII’s 17th Corporate Governance Summit, in Mumbai.
| Photo Credit: PTI

U.S.-based short-seller Hindenburg Research is attacking capital markets regulator SEBI’s credibility and attempting a character assassination of its chief, Madhabi Puri Buch and her husband Dhaval said on Sunday (August 11, 2024).

In a detailed statement issued this evening, the Buchs clarified on the raft of allegations made by Hindenburg in a report on Saturday (August 10, 2024).

“They have chosen to attack the credibility of Sebi and attempt character assassination of the Sebi chairperson,” the statement said.

Hindenburg had alleged that it suspects SEBI’s unwillingness to act against Adani Group may be because Ms. Madhabi had stakes in offshore funds linked to the conglomerate. The Buchs had immediately termed the allegations “baseless” in an early morning statement.

While Ms. Madhabi serves as the chairperson of SEBI, her husband is a senior advisor with Blackstone.

In the fresh statement, the Buchs said their investment in a fund promoted by IIFL Wealth Management was as Singapore-based private citizens, and made two years before Ms. Madhabi joined SEBI as a whole-time member in 2017.

According to the statement, Buchs decided to invest in the two funds on advice of Mr. Dhaval’s childhood friend, Anil Ahuja.

Mr. Ahuja is the person who the Hindenburg report has identified as the founder and Chief Investment Officer of Mauritius-based IPE Plus Fund and who the Adani Group also in its statement said was a nominee of 3i Investment Fund in Adani power (2007-2008) and served as a director of Adani Enterprises for three terms spanning nine years ended June 2017.

Citing Mr. Ahuja’s statement, the Buchs said that at no point did the fund invest in any bond, equity, or derivative of any Adani Group company.

On the Hindenburg report’s concerns surrounding Mr. Dhaval’s association with Blackstone, the Buch couple said the appointment was on account of his deep expertise in supply chain management and predates Ms. Madhabi’s elevation of becoming the SEBI chairperson.

“At no time has Dhaval been associated with the real estate side of Blackstone,” they added.

They also clarified that immediately on Mr. Dhaval’s appointment, the Blackstone Group was added to Ms. Madhabi’s “recusal list” maintained with SEBI.

Making it clear that all the regulations in SEBI are approved by its board and not by the chairperson, the statement said insinuations of a handful of the decisions concerning the Real Estate Investments Trusts industry are favours to specific party are “malicious and motivated”.

They said in the last two years, SEBI has issued over 300 circulars across the entire market ecosystem and these include ease of doing business initiatives.

On Ms. Madhabi’s two consulting firms, the couple said the entities became “dormant” on her appointment at SEBI and added that her shareholding in them was also disclosed to SEBI.

However, it also added that on Mr. Dhaval’s retirement from Unilever, he started a consultancy practice through the same companies and worked for prominent clients in India.

Linking the earnings in the consultancy companies to Ms. Madhabi’s current government salary is “malicious”, the statement said.

In the report, Hindenburg alleges that Ms. Madhabi “currently” has a 99% ownership in Indian consulting business called Agora Advisory where her husband is a director.

“When the shareholding of the Singapore entity moved to Dhaval, this was once again disclosed, not just to Sebi, but also to the Singapore authorities and the Indian tax authorities,” it said adding that SEBI has strong institutional mechanisms on disclosure and recusal norms.

The statement reminded all that Hindenburg has been served a show cause notice for violations in India, and called it “unfortunate” that instead of replying to it, the entity has chosen to attack SEBI’s credibility and is an attempt of character assassination of its chief, the statement by Buchs said.

SEBI chairperson Madhabi Puri Buch. Photo: sebi.gov.in

U.S. short-seller Hindenburg Research launched a fresh broadside against market regulator Sebi chairperson Madhabi Puri Buch, alleging she and her husband had stakes in obscure offshore funds used in the ‘Adani money siphoning scandal’.

In a blogpost, Hindenburg said 18 months since its damning report on Adani, “SEBI has shown a surprising lack of interest in Adani’s alleged undisclosed web of Mauritius and offshore shell entities.” Citing “whistleblower documents”, it said, “Madhabi Buch, the current chairperson of SEBI, and her husband had stakes in both obscure offshore funds used in the Adani money siphoning scandal.” Obscure offshore Bermuda and Mauritius funds, allegedly controlled by Vinod Adani — elder brother of group chairman Gautam Adani — are alleged to have been used to round-trip funds and inflate stock price.

Hindenburg said, “A declaration of funds, signed by a principal at IIFL states that the source of the investment is ‘salary’ and the couple’s net worth is estimated at $10 million..

No immediate comments were available from Sebi.

In January 2023, Hindenburg Research, which in the past has shorted, or bet against, companies like electric truck maker Nikola Corp and Twitter (now X), accused Adani Group of pulling “the largest con in corporate history” by using a web of companies in tax havens to inflate its revenue and manipulate stock prices, even as debt piled up.

Though the conglomerate vehemently denied all allegations, the damning report sent the group’s shares into a free fall, wiping out over $150 billion in market value of the 10 listed entities at their lowest point.

Most of the 10 listed companies have since recouped the losses.

After the Hindenburg report, the Supreme Court asked Sebi to complete its investigation and set up a separate expert panel to look into regulatory lapses. The panel did not give any adverse report on Adani and the apex court too stated that no other probe other than the one being done by Sebi was required.

Sebi (Securities and Exchange Board of India), which had been investigating the Adani group even before Hindenburg report, told a Supreme Court-appointed panel in 2023 that it was investigating 13 opaque offshore entities that held between 14% and 20% across five publicly traded stocks of the conglomerate. It hasn’t stated if the two incomplete probes have since been completed.

“The current SEBI Chairperson and her husband, Dhaval Buch, had hidden stakes in the exact same obscure offshore Bermuda and Mauritius funds, found in the same complex nested structure, used by Vinod Adani,” Hindenburg said.

It said, on March 22, 2017, just weeks ahead of his wife being appointed SEBI chairperson, Dhaval Buch wrote to Mauritius fund administrator Trident Trust, according to documents we received from a whistleblower. The email was regarding his and his wife’s investment in the Global Dynamic Opportunities Fund (GDOF).

“In the letter, Dhaval Buch requested to ‘be the sole person authorised to operate the Accounts’, seemingly moving the assets out of his wife’s name ahead of the politically sensitive appointment,” it alleged.

“In a later account statement dated February 26th, 2018, addressed to Madhabi Buch’s private email, the full details of the structure are revealed: “GDOF Cell 90 (IPEplus Fund 1)“. Again, this is the exact same Mauritius-registered “cell” of the fund, found several layers deep in a convoluted structure, reportedly used by Vinod Adani,” it alleged.