In January 2023, US-based short seller Hindenburg Research fired a salvo at the Adani Group, alleging Gautam Adani, chairman of the airports to energy conglomerate, was pulling the “largest con in corporate history”.
Almost a year-and-a-half later, the research firm has now fired another salvo, this time alleging Madhabi Puri Buch, the chairperson of Securities and Exchange Board of India (SEBI), had stakes in "obscure offshore entities" used in the Adani money siphoning scandal.
Hindenburg says its report against the Adani Group in 2023 had "exposed a web of offshore, primarily Mauritius-based shell entities used for suspected billions of dollars of undisclosed related party transactions, undisclosed investment and stock manipulation."
Despite the evidence, along with over 40 independent media investigations corroborating and expanding on its original work, SEBI had taken no public action against the Adani Group, it said.
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Hindenburg has now alleged that Buch and her husband had stakes in the same offshore funds used in the Adani money siphoning scandal.
"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.
Vinod Adani is the elder brother of Adani Group chairman Gautam Adani. Hindenburg had alleged that Vinod Adani through several close associates, managed a "vast labyrinth of offshore shell entities," and they had collectively moved billions of dollars into Adani publicly listed and private entities, often without required disclosure of the related party nature of the deals.
“We suspect SEBI’s unwillingness to take meaningful action against suspect offshore shareholders in the Adani Group may stem from Chairperson Madhabi Buch’s complicity in using the exact same funds used by Vinod Adani, brother of Gautam Adani," Hindenburg alleged in its latest report released late on Saturday.
Citing records, Hindenburg further pointed that Buch had held a 99 per cent stake in a consulting firm called Agora Advisory, in which her husband Dhaval was a partner.
"At the end of financial year 2022, Agora Advisory generated Rs 19.8 million (U.S. $261,000) revenue from consulting, per its annual report. This was 4.4 times Madhabi Buch’s previous disclosed salary as a whole-time member at SEBI," alleged Hindenburg.
The firm's allegations don't just end at Adani. It alleges that during Dhaval Buch's time as senior advisor at Blackstone, while Madhabi Buch was a SEBI official, Blackstone sponsored Mindspace and Nexus Select Trust, the second and fourth REIT [Real Estate Investment Trust] received approval from the market regulator to go public.
It further alleged that during Dhaval Buch's time as advisor to Blackstone, SEBI had proposed, approved and facilitated major REIT regulation changes.
"Since Madhabi Buch became Chairperson in March 2022, SEBI has proposed and implemented a raft of REIT legislation, of significant benefit to Blackstone as one of the largest REIT sponsors in India, whom her husband works for," alleges Hindenburg.
Madhabi Buch has had a remarkable career in the financial services industry, that has taken her from ICICI Bank to ICICI Securities, Greater Pacific Capital, New Development Bank [where she was consultant] and SEBI. She has also been on the board of directors of several companies in the past.
She was whole-time member of SEBI between 2017-2021 and became the first woman to head the markets regulator in March 2022.
Hindenburg's latest allegation are directly targeting Buch.
"Conflict or Capture? Either way, we do not think SEBI can be trusted as an objective arbiter in the Adani matter," said Hindenburg.
How Madhabi Buch responds to the allegations will be keenly watched now.
In January this year, the Supreme Court had refused to form a Special Investigation Team to probe the allegations against the Adani Group and said there was no ground to doubt SEBI's probe in the matter.
With Hindenburg's latest allegations targeting the SEBI chief directly, the whole Adani versus Hindenburg episode is set to take a new turn.
