New Delhi: US-based short-seller Hindenburg Research has once again set its sights on India, this time taking aim at Securities and Exchange Board of India (SEBI) chairperson Madhabi Puri Buch and her husband, Dhaval Buch, for allegedly holding secret stakes in several offshore funds linked to the Adani Group.
Hindenburg, in a report released Saturday evening, said these offshore funds, based in Bermuda and Mauritius, were part of a complex network of such funds that enabled the Adani Group to indulge in undisclosed related-party transactions.
The new evidence against Buch, the short-seller alleged, showed why the market regulator has not been able to find concrete evidence against the Adani Group, and why the group itself has been so confident that it will not be found guilty.
The Buchs issued a statement soon after the Hindenburg report went public, saying that the allegations were “baseless” and “devoid of any truth”, adding that they would be issuing a detailed statement “in due course”.
Meanwhile, the Congress party, too, issued a statement, saying the government “must act immediately to eliminate all conflicts of interest in the SEBI investigation of Adani”, adding that the “seeming complicity of the highest officials of the land” could only be resolved by setting up a joint parliamentary committee to investigate the full scope of the “Adani MegaScam”.
This is the latest development in the ongoing battle between Hindenburg Research and SEBI after the back-and-forth between the two bodies that followed SEBI’s show-cause notice to the short-seller in late June this year.
Also read: Hindenburg vs SEBI battle erupts again, this time with several new revelations
What the Hindenburg report alleges
“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,” Hindenburg said in the report released Saturday.
“What we hadn’t 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 alleged.
According to the report, Madhabi Buch and her husband “first appear to have opened their account” with IPE Plus Fund 1 — one of these “obscure offshore” funds — on 5 June 2015 in Singapore, according to whistleblower documents Hindenburg has accessed.
The report noted that Madhabi Buch was appointed a full-time member at SEBI in 2017.
“On March 22nd, 2017, just weeks ahead of that politically sensitive appointment, Madhabi’s husband, Dhaval Buch, wrote to Mauritius fund administrator Trident Trust, according to documents we received from a whistleblower,” Hindenburg said. “The email was regarding his and his wife’s investment in the Global Dynamic Opportunities Fund (‘GDOF’).”
“In the letter, Dhaval 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,” the report alleged.
However, on 25 February 2018, during Buch’s tenure as a full-time member of SEBI, the whistleblower documents allegedly revealed that she personally wrote to India Infoline using her private Gmail account, conducting business in her husband’s name, to redeem the units in the fund.
“In brief, 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 syphoning scandal,” the report alleged in its conclusion.
Buchs allege ‘character assassination’
Madhabi Puri Buch and her husband, in their statement, asserted that their lives and finances were “an open book”.
“All disclosures as required have already been furnished to SEBI over the years,” they said. “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 would be issuing a detailed statement in due course,” they added.
They further said that it was unfortunate that Hindenburg, against which SEBI had taken enforcement action and issued a show-cause notice, “has chosen to attempt character assassination in response to the same”.
(Edited by Sanya Mathur)
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