SEBI chairperson Madhabi Puri Buch. Photo: sebi.gov.in
Seventeen and a half months after U.S.-based short seller Hindenburg Research flagged allegations of malfeasance and stock price manipulation at the Adani group of companies, the firm on Saturday (August 10, 2024) alleged that the chairperson of Indiaโs stock market regulator, in charge of probing these issues, herself had a stake in obscure offshore entities used in โthe Adani money siphoning scandalโ.
Citing documents from a whistleblower, Hindenburg Research alleged that Securities Exchange Board of India (Sebi) chairperson Madhabi Puri Buch and her husband, Dhaval Buch, held stakes in offshore Bermuda and Mauritius funds through complex structures. Weeks ahead of her appointment as a whole time Sebi member in 2017, Mr. Dhaval Buch had written to a Mauritius fund administrator to make him the โsole person authorised to operate the accountsโ, Hindenburg alleged.
It further cited an account statement dated February 26, 2018, addressed to Ms. Madhabi Puri Buchโs private email account, that pegs the value of their stake in a fund called โGDOF Cell 90 (IPEplus Fund 1)โ under the aegis of โGlobal Dynamic Opportunities Fund Ltd.โ (GDOF), operated by IIFL Global, at over $872,000 at the time.
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Ms. Madhabi Puri Buch, the report alleged, had written to India Infoline [IIFL] from her private email account a day earlier, stating that Mr. Dhaval Buch would like to redeem 100% of the units they held in GDOF.
GDOF Cell 90, Hindenburg alleged, was the โexact safe Mauritius-registered โcellโ of the fund found several layers deep in a convoluted structure, reportedly used by Vinod Adaniโ, the brother of Gautam Adani named in its report into the Adani group.
Drawing a connection to the Supreme Courtโs finding that Sebi had โdrawn a blankโ in its investigations into who funded Adaniโs offshore shareholders, Hindenburg Research, which had recently got a show cause notice from Sebi, remarked: โWe find it unsurprising that Sebi was reluctant to follow a trail that may have led to its own chairperson.โ Till date, Sebi has taken no action against other suspect Adani shareholders operated by IIFL, it added.
Emails seeking comment sent to Sebi and Ms. Madhabi Puri Buchโs Gmail account, as cited in the Hindenburg report, remained unanswered till the time of publishing.
Going beyond these links, Hindenburg has also alleged that the Sebi chief had a 100% interest in an offshore Singaporean consulting firm registered in 2013 called Agora Partners, till March 2022, when she transferred her holding to her spouse. It also alleged that Mr. Dhaval Buch, who had been the chief procurement officer at Unilever and had never worked in real estate or capital markets before, was appointed as a senior advisor at global private equity firm Blackstone.
Blackstone has large investments in India, and sponsors several real estate investment trusts (REITS) that Ms. Madhabi Puri Buch has championed during her tenure as Sebi chief, beginning March 2022, Hindenburg argued. While she touted REITs as her โfavourite product for the futureโ and urged investors to look โpositivelyโ at them, Ms. Madhabi Puri Buch omitted to mention that Blackstone stood to gain from the asset class, the short-seller noted.
Hindenburg has also flagged an Indian firm called Agora Advisory, where Ms. Madhabi Puri Buch currently has a 99% stake and her husband is a director. โAt the end of financial year 2022, Agora Advisory generated โน19.8 million ($2,61,000) revenue from consulting, per its annual report,โ the Hindenburg report said, noting this is 4.4 times Ms. Madhabi Puri Buchโs previously disclosed salary as a whole-time member of Sebi.
Concluding that these links suggested a โconflict or captureโ, Hindenburg Research said: โEither way, we do not think Sebi can be trusted as an objective arbiter in the Adani matter. We think our findings raise questions that merit further investigation. We welcome additional transparency.โ
