Hindenburg Research, a US-based firm, made allegations on Saturday that Madhabi Puri Buch, the chairperson of SEBI, and her husband, Dhaval Buch, have ties to offshore entities linked to the Adani money siphoning scandal.
Hindenburg claims that, according to whistleblower documents and other investigations, Madhabi and Dhaval Buch opened an account with IPE Plus Fund 1 in Singapore on June 5, 2015. A principal at IIFL reportedly stated that the source of the investment was “salary,” estimating the couple’s net worth at $10 million.
Hindenburg-Adani Case
Hindenburg Research has made new accusations in the ongoing Adani Group controversy, this time involving the head of India’s market regulator.
The US-based short seller claimed on Saturday that the Securities and Exchange Board of India (SEBI) did not take action on its January 2023 report concerning the Adani Group because SEBI chairperson Madhabi Puri Buch and her husband, Dhaval Buch, held investments in offshore funds connected to the Gautam Adani-led group.
Both the SEBI chief and her husband have denied these claims, calling them “baseless” and an attempt at “character assassination.”
Responding to the allegations in the Hindenburg Report dated August 10, 2024, Madhabi Puri Buch stated, “We strongly deny the baseless allegations and insinuations made in the report.”
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Who is Madhabi Puri Buch?
Madhabi Puri Buch is the chairperson of SEBI (Securities and Exchange Board of India), having taken on the role on March 2, 2022. Before this position, she served as a Whole Time Member at SEBI, where she played a crucial role in overseeing key departments like Market Regulation, Investment Management, and Information Technology. Buch’s career also includes significant international experience.
She worked as a consultant for the New Development Bank in Shanghai and led the Singapore office of the private equity firm Greater Pacific Capital. In addition, she was the Managing Director and CEO of ICICI Securities and served as an executive director on the board of ICICI Bank. Her educational background includes an MBA from IIM Ahmedabad and a degree in Mathematics from St. Stephen’s College, New Delhi
Who is Dhaval Buch?
Dhaval Buch is a senior advisor at Blackstone and Alvarez & Marsal, and he also holds the position of non-executive director on the board of Gildan. An alumnus of the Indian Institute of Technology, Delhi (IIT-D), Buch graduated in 1984 with a degree in mechanical engineering.
He has had a notable career at Unilever, where he served as an executive director and later rose to the position of chief procurement officer. Buch is known for his extensive experience in procurement and various aspects of the supply chain.
Key Allegations by Hindenburg Against SEBI Chief
The following are the key allegations by Hindenburg Against SEBI Chief:
Delayed Investigation: Hindenburg claims that despite 18 months passing since their report on Adani, SEBI has shown little interest in investigating the alleged network of undisclosed offshore entities linked to the Adani Group.
Hindenburg alleges that an Adani director set up the “IPE Plus Fund,” a small offshore fund in Mauritius, through India Infoline Ltd (IIFL), with Vinod Adani, Gautam Adani’s brother, reportedly siphoning money from the Adani Group by over-invoicing for power equipment and then using that money to invest in Indian markets.
Conflicting Interests: Hindenburg alleges that whistleblower documents reveal Madhabi Puri Buch, SEBI chief, and her husband had stakes in obscure offshore funds, which were allegedly used by the Adani Group to funnel money.
Supreme Court’s Concern: India’s Supreme Court criticized SEBI’s failure to uncover the source of Adani’s offshore funding. Hindenburg suggests that if SEBI were serious about identifying these offshore investors, the SEBI chairperson could start by reflecting on her own involvement.
Inaction on Related Funds: Hindenburg also criticizes SEBI for not taking action against other suspected Indian-origin Adani shareholders linked to India Infoline, such as EM Resurgent Fund and Emerging India Focus Funds.
Conflict of Interest Allegations: Hindenburg claims that from April 2017 to March 2022, while Madhabi Buch was a SEBI official, she had a 100% interest in an offshore consulting firm in Singapore called Agora Partners. Allegedly, she transferred her shares to her husband only two weeks after becoming SEBI chairperson.
Blackstone Connection: According to Hindenburg, Madhabi Buch’s husband, Dhaval Buch, was appointed as a senior adviser to Blackstone in 2019 while she was a SEBI member, despite his LinkedIn profile showing no prior experience in real estate or capital markets.
IPO Approvals: During Dhaval Buch’s tenure at Blackstone, Hindenburg alleges that Blackstone-sponsored entities Mindspace and Nexus Select Trust, which became India’s second and fourth real estate investment trusts (REITs), received SEBI approval for an IPO, raising concerns about conflicts of interest.
Regulatory Changes: Hindenburg further claims that SEBI approved major changes to India’s REIT regulations while Dhaval Buch was advising Blackstone.
Public Endorsement of REITs: Hindenburg notes that Madhabi Buch has publicly endorsed REITs as promising investment products, but allegedly failed to disclose that Blackstone, which her husband advises, could benefit significantly from such investments.
Consulting Company Ownership: Finally, Hindenburg alleges that Madhabi Buch owned 99% of an Indian consulting company called Agora Advisory, where her husband is a director. In 2022, this company reportedly earned $261,000 in consulting revenue, which is 4.4 times her declared salary at SEBI.
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Sebi Chief’s Response
Madhabi Puri Buch, the chief of Sebi, addressed the allegations made in the Hindenburg Report dated August 10, 2024. She firmly rejected the baseless claims and insinuations presented in the report.
Buch emphasized that Sebi is fully prepared to share all financial documents, including those from the time when its members were private citizens, with any requesting authority.
She expressed disappointment that Hindenburg Research, which is currently facing enforcement action and a show-cause notice from Sebi, chose to resort to character assassination instead of addressing the issues directly.
Hindenburg-Adani Case FAQs
Q.1. What are the allegations against Madhabi Puri Buch by Hindenburg Research?
Ans. Hindenburg claims that SEBI chief Madhabi Puri Buch and her husband have offshore connections linked to the Adani money siphoning scandal and delayed investigation into related funds.
Q.2. How did Madhabi Puri Buch respond to the allegations?
Ans. Madhabi Puri Buch strongly denied the allegations, calling them baseless and stating that SEBI is prepared to share all financial documents with any requesting authority.
Q.3. What is Hindenburg Research’s criticism of SEBI’s actions?
Ans. Hindenburg criticizes SEBI for not investigating offshore entities linked to the Adani Group and for potential conflicts of interest involving Madhabi Puri Buch and her husband.
Q.4. What specific issues does Hindenburg raise about Dhaval Buch’s role?
Ans. Hindenburg alleges Dhaval Buch’s connections to Blackstone and his involvement in approving IPOs raise conflict of interest concerns, particularly in relation to SEBI’s regulatory decisions.
Q.5. What actions has SEBI taken against Hindenburg Research?
Ans. SEBI has issued a show-cause notice and taken enforcement action against Hindenburg Research, which is accused of character assassination rather than addressing the substantive issues raised.
