Hindenburg alleges SEBI chairperson’s links to Adani Group’s offshore funds, Buchs deny claims

The Capital News 

In a fresh wave of allegations, Hindenburg Research has accused Securities and Exchange Board of India (SEBI) Chairperson Madhabi Buch and her husband, Dhaval Buch, of holding undisclosed stakes in offshore entities linked to stock price manipulation and money laundering by the Adani Group. The claims, which were brought to light through whistleblower documents, have been strongly denied by the Buchs in a statement to the press. These allegations emerge 18 months after Hindenburg Research initially accused the Adani Group of perpetrating “the largest con in corporate history.” The American short-seller had asserted in January 2023 that the Adani Group was on precarious financial footing, heavily burdened by substantial debt accumulated through the pledging of overvalued shares.

The group was also accused of engaging in accounting fraud and money laundering via offshore tax havens. Madhabi Buch, who has been at the helm of SEBI since March 2022, was previously part of an investigation led by the regulator into these allegations. However, SEBI’s probe had reportedly yielded little, with the regulator informing a Supreme Court-appointed panel that any further investigation could be a “journey without a destination.” The fresh allegations by Hindenburg Research suggest that SEBI’s perceived reluctance to take decisive action against questionable offshore shareholders within the Adani Group may be due to Chairperson Buch’s alleged involvement in similar offshore funds. Hindenburg stated, “If SEBI really wanted to find the offshore fund holders, perhaps the SEBI chairperson could have started by looking in the mirror.” The short-seller’s report points to documents from the Directorate of Revenue Intelligence, which allegedly detail how the Adani Group grossly overvalued the import of key power equipment, using offshore shell entities to siphon and launder money from the Indian public.

A December 2023 investigation by Adani Watch, a non-profit, further highlighted how a web of offshore entities controlled by Vinod Adani, Gautam Adani’s brother, received funds from this alleged over-invoicing. Hindenburg Research’s latest claims indicate that Madhabi and Dhaval Buch had stakes in the same obscure offshore Bermuda and Mauritius funds linked to Vinod Adani. According to whistleblower documents, the Buchs first invested in the IPE Plus Fund 1 on June 5, 2015, in Singapore, with the source of investment listed as “salary” and their net worth estimated at $10 million. Furthermore, the report alleges that weeks before Madhabi Buch joined SEBI as a full-time member in March 2017, Dhaval Buch requested to be the sole person authorised to operate the accounts associated with these funds, seemingly to move the assets out of his wife’s name ahead of her politically sensitive appointment.

In February 2018, Madhabi Buch reportedly sought to redeem the units her husband held in the Global Dynamic Opportunities Fund. Hindenburg also highlighted a potential conflict of interest involving Madhabi Buch and Blackstone, a private equity group where Dhaval Buch was appointed as an advisor in July 2019. The short-seller claimed that after Madhabi Buch became SEBI Chairperson, the regulator proposed or implemented several regulations related to Real Estate Investment Trusts (REITs), which significantly benefitted Blackstone, a major promoter of REITs in India. Responding to these allegations, Madhabi and Dhaval Buch have categorically denied any wrongdoing, stating, “We strongly deny the baseless allegations and insinuations made in the report…

All disclosures as required have already been furnished to SEBI over the years. We have no hesitation in disclosing any and all financial documents, including those that relate to the period when we were strictly private citizens… It is unfortunate that Hindenburg Research, against whom SEBI has taken enforcement action and issued a show-cause notice, has chosen to attempt character assassination in response.” Hindenburg’s report also alleged that Madhabi Buch had a 100 per cent interest in an offshore Singaporean consulting firm, Agora Partners, until March 2022, just weeks before she assumed the role of SEBI Chairperson.

The shares were quietly transferred to her husband, but she reportedly retains a 99 per cent stake in the entity. In conclusion, Hindenburg Research has cast doubt on SEBI’s ability to serve as an impartial arbiter in the ongoing Adani matter, given the chairperson’s alleged offshore interests and potential conflicts of interest.