SEBI Chairperson denied allegations by Hindenburg as baseless and asserted that her and her husband's finances are an open book.
Published Aug 11, 2024 | 10:25 AM ⚊ Updated Aug 11, 2024 | 10:25 AM
Gautam Adani. (Adanigroup website)
The Congress on Saturday, 10 August, demanded the Union government act immediately to eliminate all conflicts of interest in the Securities and Exchange Board of India (SEBI) investigation of the Adani Group.
The reaction came in the wake of the US short-seller Hindenburg Research, levelling allegations against SEBI Chairperson Madhabi Buch,
The Opposition party also said the “seeming complicity of the highest officials of the land” can only be resolved by setting up a Joint Parliamentary Committee JPC) to investigate the full scope of the “scam”.
On Saturday, Hindenburg Research launched a fresh broadside against the SEBI chairperson, alleging she and her husband had stakes in obscure offshore funds used in the Adani money siphoning scandal.
Meanwhile, Buch and her husband denied allegations levelled against them by Hindenburg as baseless and asserted that their finances are an open book.
In a blog post, Hindenburg said 18 months after 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 prices.
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”.
“In brief, despite the existence of thousands of mainstream, reputable onshore Indian mutual fund products, an industry she now is responsible for regulating, documents show SEBI Chairperson Madhabi Buch and her husband had stakes in a multi-layered offshore fund structure with miniscule assets, traversing known high-risk jurisdictions, overseen by a company with reported ties to the Wirecard scandal, in the same entity run by an Adani director and significantly used by Vinod Adani in the alleged Adani cash siphoning scandal,” it alleged.
It went on to cite the Supreme Court order where it was recorded that Sebi had “drawn a blank” in its investigations into who funded Adani’s offshore shareholders.
“If SEBI really wanted to find the offshore fund holders, perhaps the SEBI chairperson could have started by looking in the mirror,” it said. “We find it unsurprising that SEBI was reluctant to follow a trail that may have led to its own chairperson.”
No immediate comments were available from the SEBI, whose X account was also found ‘locked’ with posts inaccessible to all non-followers.
In a statement on the development, Congress general secretary in-charge communications Jairam Ramesh said that the SEBI’s “strange reluctance to investigate the Adani mega scam” has been long noted, not least by the Supreme Court’s Expert Committee.
The Committee, he said, had noted that SEBI in 2018 diluted and in 2019, entirely deleted the reporting requirements relating to the ultimate beneficial (i.e. actual) ownership of foreign funds.
“This had tied its hands to the extent that ‘the securities market regulator suspects wrongdoing, but also finds compliance with various stipulations in attendant regulations… It is this dichotomy that has led to SEBI drawing a blank worldwide’,” Ramesh said quoting the Expert Committee.
The politician added, “Under public pressure, after the Adani horse had bolted, SEBI’s board reintroduced stricter reporting rules on 28 June 2023. It told the Expert Committee on 25 August 2023 that it was investigating 13 suspicious transactions. Yet the investigations never bore fruit.”
He said that the Hindenburg Research’s Saturday revelations show that Buch and her husband invested in the same Bermuda and Mauritius-based offshore funds in which “Vinod Adani and his close associates Chang Chung-Ling and Nasser Ali Shahban Ahli invested funds earned from the over-invoicing of power equipment.”
“These funds are believed also to have been used to amass large stakes in Adani Group companies in violation of SEBI regulations. It is shocking that Buch would have a financial stake in these same funds,” Ramesh said.
The Congress leader said that the revelation raised fresh questions about Gautam Adani’s two 2022 meetings in quick succession with Buch, shortly after she became the stock market regulator’s chairperson.
Here is the statement by Shri @Jairam_Ramesh, MP, General Secretary (Communications), AICC,
on the latest Hindenburg Research revelations. pic.twitter.com/FMpFIuvYgu— Congress (@INCIndia) August 10, 2024
“The government must act immediately to eliminate all conflicts of interest in the SEBI investigation of Adani. The fact is that the seeming complicity of the highest officials of the land can only be resolved by setting up a JPC (joint parliamentary committee) to investigate the full scope of the Adani mega scam,” the former Union minister said in his statement.
Earlier, tagging the Hindenburg post on the allegations on X, Ramesh said, “Quis Custodiet Ipsos Custodes (who will guard the guards themselves).”
In another post on X, Ramesh suspected the reason behind the adjourning of the Parliament two days ahead of the scheduled date.
“Parliament was notified to sit till the evening of August 12th. Suddenly it got adjourned sine die on the afternoon of Aug 9th itself. Now we know why,” he wrote.
Parliament was notified to sit till the evening of Aug 12th. Suddenly it got adjourned sine die on the afternoon of Aug 9th itself. Now we know why. https://t.co/wVvsG4jove
— Jairam Ramesh (@Jairam_Ramesh) August 10, 2024
In a statement, Madhabi Puri Buch and Dhaval Buch also said it is unfortunate that Hindenburg Research against whom Sebi has taken an Enforcement action and issued a show cause notice has chosen to attempt character assassination in response to the same.
Responding to the allegation, Buchs said in their statement, “In the context of allegations made in the Hindenburg Report dated 10 August, 2024 against us, we would like to state that we strongly deny the baseless allegations and insinuations made in the report.”
“The same are devoid of any truth. Our life and finances are an open book. All disclosures as required have already been furnished to SEBI over the years,” the statement said.
Buchs further said they have no hesitation in disclosing any and all financial documents, including those that relate to the period when we were strictly private citizens, to any and every authority that may seek them.
“Further, in the interest of complete transparency, we would be issuing a detailed statement in due course,” they added.
In January last year, 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 market regulator 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.
Last year SEBI told a Supreme Court-appointed panel that it was investigating 13 opaque offshore entities that held between 14 percent and 20 percent 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 alleged.
(With PTI inputs)
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