.jpg)
Written By :- Trishit Bhattacharjee (Editor)
One and a half years after claiming that billionaire Gautam Adani was running the "largest con in corporate history," Hindenburg Research made yet another major accusation regarding the Adani issue on August 11th, 2024, asserting that Madhabi Puri Buch, the chairperson of SEBI, had investments in offshore funds connected to the company. The most dependable parties in the stock market, the watchdogs who ensure that everything is done through the proper channels, are suddenly caught in the greatest conflict of interest, which produces a huge outcry in the market and business world.
In January 2023, Hindenburg published its first report, which criticized the Adani Group for engaging in questionable practices and charged the company with manipulating the value of its shares by utilizing unreported offshore cash. A considerable decline of about $100 Billion in Adani's market capitalization resulted from the report's ripple effects on the Indian stock market. Considering the seriousness of the accusations, SEBI's response was viewed as tame, casting doubt on the regulator's dedication to openness and justice.
In the report that was posted on its website, Hindenburg stated, "The current SEBI Chairperson and her husband, Dhaval Buch, had hidden stakes in the same obscure offshore Bermuda and Mauritius funds, found in the same complex nested structure, used by Vinod Adani." According to the investigation, the pair invested in two distinct funds, one of which was headquartered in the tax haven Mauritius and the other in Bermuda. It is alleged that the Adani Group has derived financial gains from investments made by funds such as the Global Dynamic Opportunity Fund (GDOF) and IP Plus Fund in the Indian stock market. The study even asserted that Adani's confidence in carrying on without the possibility of significant regulatory interference could be “explained through Adani’s relationship with SEBI Chairperson Madhabi Buch.” The Buchs responded to these accusations by stating they had invested in these funds when their long-time family friend Anil Ahuja asked them who the CIO of IP Plus Fund in Singapore was. However, this response proved fatal for them because it was discovered that Mr. Ahuja was a director of Adani Enterprises at that time.
Another conflict of interest revealed in the report concerned Madhabi Buch's ownership of a 100% stake in an offshore Singaporean consulting firm called Agora Partners, which was quietly transferred to her husband on March 16, 2022, just two weeks after she was appointed SEBI's chair. The firm claimed around $261,000 in revenue from the consulting in the 2022 yearly filings, almost 4.4 times her disclosed pay at SEBI. According to Hindenburg, they have reason to believe that the clients under Agora may not be subject to SEBI regulations. As such, they are questioning Agora whether she is OK with her firm being open and honest about the list of clients it has consulted. In response, Madhabi Buch released a statement claiming that she had dormant the business after joining SEBI full-time in 2017. However, Hindenburg released further startling information, stating that 99% of the shares in Agora Advisory Limited (India) as of March 31, 2024, are allegedly owned by Madhabi Buch, not her husband, and that the business has not been idle—it has been operating and generating income.
Hindenburg’s assertions about Dhaval Buch’s affiliation with the international investment giant Blackstone still add another level of complication. Despite having no financial markets or real estate expertise, Dhaval Buch was selected as a Senior Advisor to Blackstone in 2019. During industry conferences, SEBI chairperson Madhabi Buch has touted REITs as her "favourite products for the future" and urged investors to look "positively" upon the asset class. While making those statements, she omitted to mention that Blackstone, who her husband advises, stands to gain some more clients for themselves. They thus claimed that she was openly endorsing and promoting her husband's business and making the Indian market the greatest match for it. She responded by stating that her husband had been appointed senior advisor before she assumed the chair and that, due to SEBI regulations, she was not free to make any decisions regarding Blackstone. She also stated that, in the previous two years, over 300 circulars about ease of doing business had been issued but Hindenburg was solely focussing on circulars related to REITs. However, the potential of her backing the fund cannot be ruled out entirely because of recent actions taken by SEBI that favoured the fund and since Blackstone owns REITs like Nexus Select Trust and Mindspace, which were introduced last year.
A comprehensive and open probe is becoming more and more necessary as these accusations gain traction to guarantee that India's financial markets remain impartial and unaffected by outside forces. By no means is the Adani drama over; instead, it seems to be the start of a more extensive discussion over the responsibility of those in charge of preserving the integrity of the nation's economic structure. Whether or not these claims are verified remains to be seen. Still, the concerns expressed in the Hindenburg report will continue to reverberate through India's financial corridors for time to come.
Comments