In a stunning allegation, US-based short seller Hindenburg Research claims that SEBI chairperson Madhabi Puri Buch had a stake in obscure offshore entities used in the Adani money siphoning scandal. Ms Buch, however, 'strongly' denied the 'baseless' allegations and insinuations made in the (Hindenburg) report. Adani group also rejected the allegations terming it as 'recycling of discredited claims', which "have already been investigated and dismissed by the Supreme Court".

Quoting whistleblower documents, Hindenburg says, "We had previously noted Adani's total confidence in continuing to operate without the risk of serious regulatory intervention, suggesting that this may be explained through Adani's relationship with SEBI chairperson, Madhabi Buch. Whistleblower documents show that Ms Buch, the current chairperson of SEBI, and her husband had stakes in both obscure offshore funds used in the Adani money siphoning scandal."
 

NEW FROM US:

Whistleblower Documents Reveal SEBI's Chairperson Had Stake In Obscure Offshore Entities Used In Adani Money Siphoning Scandalhttps://t.co/3ULOLxxhkU

— Hindenburg Research (@HindenburgRes) August 10, 2024

Quoting media reports about Adani group chief Gautam Adani's meeting with the SEBI chief, Hindenburg says, "What we had not realised: 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."

It alleges Ms Buch and her husband first appear to have opened their account with IPE Plus Fund 1 on 5 June 2015 in Singapore, per whistleblower documents.

"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 US$10mn (million)," Hindenburg says.  

In a statement, Ms Buch, the SEBI chief, says, "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 is 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. We 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 will be issuing a detailed statement in due course."

"It is unfortunate that Hindenburg Research, against whom SEBI has taken an enforcement action and issued a show cause notice (SCN), has chosen to attempt character assassination in response to the same," she added.

In a statement, a spokesperson of Adani group says, "The latest allegations by Hindenburg are malicious, mischievous and manipulative selections of publicly available information to arrive at pre-determined conclusions for personal profiteering with wanton disregard for facts and the law. We completely reject these allegations against the Adani Group which are a recycling of discredited claims that have been thoroughly investigated, proven to be baseless and already dismissed by the Supreme Court in January 2024."

In April 2017, Ms Buch was appointed whole time director of SEBI. Hindenburg says, "On 22 March 2017, just weeks ahead of that politically sensitive appointment, Ms Buch's husband, 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, Mr 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."

"In a later account statement dated 26 February 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. The total value of Buch's stake was worth US$872,762.25 at the time," the report says.

In brief, Hindenburg alleges that "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."

"Conflict or capture? Either 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," Hindenburg concludes.

Adani group further says its overseas holding structure is fully transparent, with all relevant details disclosed regularly in numerous public documents. "Furthermore, Anil Ahuja was a nominee director of 3i investment fund in Adani Power (2007-2008) and, later, a director of Adani Enterprises until 2017. The Adani group has absolutely no commercial relationship with the individuals or matters mentioned in this (latest Hindenburg report) calculated deliberate effort to malign our standing."

Last month, the US-based short seller made public the SCN it received from SEBI, calling the SCN "an attempt to silence and intimidate those who expose corruption and fraud perpetrated by the most powerful individuals in India." On 24 January 2023, the short-seller accused the Adani group of engaging in long-term stock manipulation and accounting fraud through a network of offshore entities.

"The incentives are clear: The gains from fraudulent activities outweigh the small risks of a potential' slap on the wrist' fine from regulators. And based on the hundreds of tips and leads we received following the Adani report, Adani is by no means the only lurking and ongoing issue SEBI has failed to address. The message sent to investors in India is equally loud: You have no real protection from fraud. Corporate governance in India is a myth for businessmen that can buy influence," it added. (Read: Hindenburg Makes SEBI Show-cause Notice Public. Calls It an Attempt To Silence and Intimidate Those Who Expose Corruption)

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