SEBI Chairwoman Under Fire: Hindenburg Report Alleges Conflicts of Interest in Adani Probe
New Delhi, India – A bombshell report released by Hindenburg Research has cast a dark cloud over the Securities and Exchange Board of India (SEBI) chairperson, Madhabi Puri Buch, accusing her of potential conflicts of interest during the investigation of the Adani Group. The report, which follows a previous exposé alleging financial irregularities by the Adani conglomerate, points to a series of questionable investments made by Buch and her husband in offshore entities allegedly used by Adani to siphon funds.
The report alleges that Buch and her husband, Dhaval Buch, held stakes in two offshore funds – IP Plus Fund and Global Dynamic Opportunities Fund – both established by India Infoline (IIFL). Hindenburg claims that these entities were used by Adani to funnel funds and that Buch and her husband’s investment in these funds created a clear conflict of interest when she was appointed as SEBI’s whole-time member in April 2017 and later as chairperson in February 2018.
"The report shows that Madhabi Buch was invested in funds overseen by an entity that had ties to the VRE card scandal," revealed the report.
Adding fuel to the fire, the report claims that Buch maintained a 100% ownership in Agora Partners, a Singaporean consulting firm, during her tenure at SEBI, further highlighting a potential conflict of interest.
Furthermore, Hindenburg alleges that Buch held a 99% stake in Agora Advisory India, an Indian consulting business, which generated nearly 2 crores in revenue from its advisory services in the fiscal year 2022. This income, the report claims, was four times higher than Buch’s salary as SEBI’s whole-time member.
"These three allegations essentially raise a question about whether Buch’s interest in these offshore funds obstructed the investigation against Adani," the report asserts.
The Hindenburg report has sent shockwaves through India’s financial landscape, raising serious questions about the independence and integrity of SEBI’s investigation into the Adani Group. The report’s allegations, if proven, could have severe consequences for Buch and damage the reputation of the regulatory body. SEBI is currently under intense scrutiny, with many demanding a thorough investigation into the accusations levelled against Buch.
With the spotlight firmly on Buch and SEBI, it remains to be seen how this latest revelation will impact the already contentious investigation into the Adani Group.
Sebi Chairwoman Under Scrutiny: Hindenburg Research Alleges Conflicts of Interest in Offshore Funds Tied to Adani Group
The ongoing saga of the Adani Group and its alleged financial irregularities has taken a dramatic turn, with a new research report from Hindenburg Research casting a shadow on the credibility of the Securities and Exchange Board of India (SEBI) and its chairperson, Madhabi Puri Buch. Hindenburg alleges that Ms. Buch and her husband, Dhaval Buch, had stakes in obscure offshore entities that were allegedly used by the Adani Group to siphon funds and reinvest them in the Indian markets. This revelation has sparked a debate about potential conflicts of interest and raises serious questions about the effectiveness of SEBI’s regulatory oversight.
Key Takeaways:
- Offshore Connections: Hindenburg’s report claims that Ms. Buch and her husband held stakes in two offshore funds, IP Plus Fund and Global Dynamic Opportunities Fund, both of which were established by India Infoline (IIFL).
- Timing and Authority: The report highlights that Ms. Buch became a whole-time member of SEBI in April 2017, but her husband had already opened an account at IP Plus Fund in June 2015. Furthermore, Mr. Buch requested full control over the Global Dynamic Opportunities Fund before his wife’s appointment as SEBI chairwoman, raising concerns about potential conflict of interest.
- Agora Partners Controversy: The report also alleges that Ms. Buch maintained a 100% interest in a Singaporean consulting firm, Agora Partners, during her tenure as SEBI whole-time member. This raises questions about her commitment to the principle of impartiality while holding a significant stake in an offshore entity.
- Agora Advisory India: Hindenburg accuses Ms. Buch of owning 99% of Agora Advisory India, an Indian consulting business. They claim that the firm generated around ₹2 crore from its advisory business in FY22, a figure significantly higher than Ms. Buch’s previous year’s SEBI salary. These alleged connections to both Agora Partners and Agora Advisory India raise further concerns over conflicts of interest.
The Allegations: A Closer Look
Hindenburg’s report outlines three major allegations against Ms. Buch:
1. Investment in Offshore Funds Linked to Adani
Hindenburg claims that whistleblower documents reveal Ms. Buch and her husband invested in IP Plus Fund and Global Dynamic Opportunities Fund. The report highlights several troubling aspects of these investments:
- Timing: The Buch’s investment in IP Plus Fund took place in 2015, well before Ms. Buch’s appointment to SEBI. This raises questions about the couple’s knowledge of the funds’ potential involvement with questionable activities.
- IIFL Connection: Both IP Plus Fund and Global Dynamic Opportunities Fund were established by IIFL, a company that was previously involved in a major credit card fraud scandal, known as the VRE Card Scandal.
- Authority and Control: Before his wife became SEBI chairwoman, Mr. Buch sought full control of the Global Dynamic Opportunities Fund, suggesting a desire to distance himself from any potential investigations by SEBI that might arise from his wife’s position.
- Redemption Request: Following her appointment as SEBI whole-time member, Ms. Buch requested redemption of all units in the Global Dynamic Opportunities Fund. This action appears to be inconsistent with her alleged knowledge of the fund’s activities, as Hindenburg claims it was used by Adani to siphon funds.
Hindenburg raises several important questions regarding Ms. Buch’s investment in these offshore funds:
- Why did the Buch couple invest in multi-layered offshore funds with limited assets when reputable onshore funds were available?
- Why did they choose to invest in funds managed by IIFL, a company with a controversial past?
- Why did they invest in funds allegedly used by Adani Group to siphon funds?
These questions remain unanswered and require further investigation.
2. Conflict of Interest in Singaporean Entity: Agora Partners
The report alleges that Ms. Buch held a 100% interest in Agora Partners, a Singaporean consulting firm, during her time as SEBI whole-time member. This revelation raises concerns about a potential conflict of interest. Hindenburg points out that, while serving in a regulatory role, Ms. Buch was also simultaneously a shareholder in a private company that could potentially have dealings with companies under SEBI’s supervision.
Hindenburg question the timing of Ms. Buch transferring her shares in Agora Partners to her husband:
- Why did Ms. Buch transfer her shares in Agora Partners to her husband only after assuming the role of SEBI chairperson?
- Was this a genuine attempt to mitigate potential conflicts of interest, or was it a maneuver to avoid accountability?
These actions raise doubts about Ms. Buch’s commitment to ethical conduct and transparency while holding a powerful regulatory post.
3. Conflict of Interest in Indian Consulting Firm: Agora Advisory India
Hindenburg claims that Ms. Buch owned a 99% stake in Agora Advisory India, an Indian consulting firm. The report highlights concerns related to the substantial income generated by Agora Advisory India, particularly in comparison to Ms. Buch’s SEBI salary. This disparity raises concerns about potential financial benefits derived from her position at SEBI.
Hindenburg highlights the following concerning aspects of Agora Advisory India:
- Revenue Disparity: Agora Advisory India reported revenue of roughly ₹2 crore in FY22, which is significantly higher than Ms. Buch’s annual salary.
- Financial Dependence: This leads to questions about the potential financial dependence of Agora Advisory India on Ms. Buch’s position at SEBI.
- Potential for Influence: Could Ms. Buch’s involvement with Agora Advisory India create a situation where she might be influenced by potential business opportunities or clients of the firm?
These allegations, coupled with the other accusations, paint a picture of concerning conflicts of interest that demand thorough investigation.
Implications and Further Investigation
Hindenburg Research’s allegations are serious and require an independent and thorough investigation. They highlight the need for greater transparency and accountability within regulatory bodies like SEBI.
- Impact on SEBI Credibility These allegations, if proven, could severely damage SEBI’s credibility and erode public trust in the regulator.
- Ethical Concerns: The report raises fundamental questions about the ethics of individuals holding positions of power in regulatory bodies, particularly in relation to their own private business interests.
- Transparency and Accountability: The need for enhanced transparency and accountability mechanisms within SEBI becomes even more pressing in light of these accusations.
Hindenburg’s report raises crucial questions about the effectiveness of SEBI’s regulatory oversight and the ethical conduct of its leadership. It is now up to independent investigators to examine these allegations with the utmost scrutiny and provide a definitive picture of the truth. The integrity of India’s financial markets depends on it.
