In a startling revelation, Hindenburg Research has accused Madhabi Buch, the current Chairperson of the Securities and Exchange Board of India (SEBI), of having undisclosed stakes in offshore entities allegedly used in the Adani Group's money laundering and stock manipulation scandal. These allegations come 18 months after Hindenburg's initial report, which claimed that the Adani Group was operating "the largest con in corporate history".
SEBI's Inaction on Adani Allegations
Despite the detailed evidence provided in Hindenburg's 106-page report and over 40 independent media investigations, SEBI has not taken any significant action against the Adani Group. The regulator's lack of response has raised concerns, especially as the Indian Supreme Court noted SEBI's failure to identify the holders of Adani's offshore funds.The Indian Supreme Court has criticized SEBI for "drawing a blank" in its investigations into the Adani Group's offshore shareholders. Despite identifying suspicious funds like EM Resurgent Fund and Emerging India Focus Funds, both linked to India Infoline (now 360 One), SEBI has not taken any action against these entities.
Hindenburg noted “the trading patterns [of these funds] suggest that the stock parking entities and the suspicious offshore entities may have artificially inflated the volume and/or price of some Adani listed companies.”
In June 2024, SEBI issued a 'show cause' notice to Hindenburg Research, not disputing the factual content of their report but criticizing the disclosure around their short position. Hindenburg responded by questioning SEBI's to pursue independent meaningful investigations into the Adani Group, particularly its complex network of offshore entities.
The Offshore Web: Vinod Adani's Financial Maneuvers
The report highlights the role of Vinod Adani, brother of Gautam Adani, in allegedly moving funds from India through over-invoicing of power equipment. These funds were then funneled into offshore entities like the "IPE Plus Fund," a Mauritius-based structure controlled by an Adani director, Anil Ahuja{The Founder and Chief Investment Officer (CIO)}. This fund was part of a larger, multi-layered offshore financial web that included the Global Dynamic Opportunities Fund (GDOF) in Bermuda, another known tax haven. AdaniWatch reported that “by March 2017, ATIL, a Vinod Adani company, had a total balance of $40.38 million with GDOF”.
SEBI Chairperson's Alleged Conflict of Interest
Whistleblower documents obtained by Hindenburg reveal that Madhabi Buch and her husband, Dhaval Buch, had stakes in the same offshore funds implicated in the Adani scandal. The couple's investment in these entities dates back to 2015, with a significant amount of funds managed through the IPE Plus Fund. The documents indicate that the Buchs opened their account with IPE Plus Fund 1 in Singapore in 2015, with their net worth estimated at $10 million. Notably, just weeks before Madhabi Buch's appointment as a Whole-Time Member of SEBI in 2017, her husband transferred control of their offshore assets to himself, raising questions about potential conflicts of interest.
During her tenure at SEBI, Buch also maintained a 100% interest in Agora Partners, a Singapore-based consulting firm, which she quietly transferred to her husband shortly after becoming SEBI Chairperson in 2022. This consulting firm, exempt from disclosing its financial statements, further complicates the transparency around Buch's financial interests.
SEBI's Stance on REITs and Blackstone's Involvement
Another layer of potential conflict arises from the relationship between SEBI and Blackstone, one of the largest private equity firms in India. Dhaval Buch, who has no prior experience in real estate or capital markets, was appointed as a Senior Advisor to Blackstone in 2019. During his tenure, SEBI introduced several regulatory changes that benefited Blackstone, including the approval of multiple Real Estate Investment Trusts (REITs).
Madhabi Buch has publicly endorsed REITs as a promising financial product for India, yet she did not disclose her husband's advisory role with Blackstone, a key player in the REIT market. This has led to further scrutiny of SEBI's impartiality under her leadership.
Conclusion: A Call for Greater Transparency
Hindenburg Research's findings suggest a significant conflict of interest within SEBI's leadership, potentially undermining the regulator's ability to act as an objective authority in the Adani investigation. The connections between SEBI's Chairperson and the offshore entities linked to the Adani scandal raise serious concerns about the integrity of financial oversight in India.
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As the investigation into the Adani Group continues, these revelations underscore the need for greater transparency and accountability within India's regulatory bodies. The public and investors alike are now questioning whether SEBI can be trusted to uphold the principles of fairness and justice in the financial markets.
This News Article is based, analysed and summarised on latest Hindenburg's Research report.
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