New Delhi. American research and investment company Hindenburg Research has accused market regulator Securities and Exchange Board of India (SEBI) chairperson Madhavi Puri Buch and her husband of having stakes in a foreign fund linked to Adani. However, the SEBI chief has termed the allegations as completely baseless.
Hindenburg said in its new report released late Saturday night that SEBI Chairperson Buch and her husband Dhabal Buch have stakes in the foreign fund that was used for alleged money laundering in the Adani Group. Meanwhile, the Congress has demanded immediate action from the Center to eliminate all conflicts of interest in the regulatory investigation of the Adani Group. The opposition party has also demanded the formation of a joint parliamentary committee to find out the alleged collusion of the country’s top officials and to fully investigate the ‘scam’.
On the other hand, the SEBI chief and her husband have jointly issued a statement rejecting the allegations of Hindenburg and calling it completely baseless. They said, “The allegations made in the report are completely baseless and unfounded. There is not an iota of truth in them. Our life and financial situation are like an open book. All the necessary disclosures have already been given to SEBI over the years. We have no hesitation in disclosing any financial documents….” Buch said, “It is unfortunate that in response to the enforcement action taken by SEBI and the show cause notice issued by Hindenburg Research, an attempt has been made to corner and defame us.” He also said that keeping in mind complete transparency, a detailed statement will be issued in due time.
“SEBI has shown a surprising lack of interest in investigating Adani’s alleged undisclosed ‘web’ of Mauritian and offshore shell entities,” Hindenburg alleged in a blogpost 18 months after its last report on Adani. “Sebi’s current chief Buch and her husband held stakes in both of the shadowy ‘offshore funds’ used in the money laundering scandal at the Adani Group,” the investment firm said, citing “whistleblower documents.” Vinod Adani, the elder brother of group chairman Gautam Adani, allegedly controlled the shadowy offshore funds in Bermuda and Mauritius. Hindenburg alleges that these funds were used to launder money and inflate the group’s share price.
Hindenburg said in its latest report, “The fund declaration signed by a head at IIFL states that the source of investment is ‘salary’ and the couple’s net worth is estimated at USD 10 million.” “The documents reveal that despite having thousands of well-reputed Indian mutual fund products, SEBI chairperson Madhavi Buch and her husband had taken stakes in a multi-layered offshore fund with low assets,” the report alleged. Hindenburg said that these assets passed through high-risk jurisdictions. It was overseen by a company allegedly linked to the scam. This is the same entity run by Adani directors and used significantly by Vinod Adani in the alleged Adani cash manipulation scam.
Such funds that invest in foreign markets are called offshore funds. These are also called foreign funds. The report also cites the order of the Supreme Court. In which it was said that SEBI remained empty-handed in the investigation of who financed the alleged foreign shareholders of Adani.
Hindenburg said, “If SEBI really wanted to find foreign fund holders, perhaps the SEBI chairperson could start by looking at herself in the mirror.” It added, “We do not find it surprising that SEBI did not want to pursue a case that went all the way to its own chief.”
Hindenburg said, “The current SEBI chairperson and her husband Dhaval Buch concealed their holdings in the same obscure offshore Bermuda and Mauritius funds that were found in the same complex structure used by Vinod Adani.” According to the report, documents obtained from a ‘whistleblower’ show that just weeks before Buch was appointed SEBI chairperson on March 22, 2017, Dhaval Buch wrote an email to Mauritius fund administrator Trident Trust. This email was about his and his wife’s investment in the Global Dynamic Opportunities Fund (GDOF).
Earlier in January, Hindenburg Research had alleged that the Adani Group had been involved in ‘blatant stock manipulation and accounting fraud’. However, the group had termed this allegation as completely baseless. It said that this was done with the malicious intent to harm its share sale. At that time, Adani Enterprises, the flagship company of the Adani Group, was preparing to bring a follow-on public offering (FPO) of Rs 20,000 crore.
The group, which is working in the port to energy sector, had said, “The report is based on nothing but selectively false and baseless information and its purpose is completely malicious. The facts on the basis of which the report has been prepared have also been rejected by the courts of India.” After the report, the shares of Adani Group had fallen, although later it managed to recover from the loss.