Hindenburg's explosive claim: SEBI's chairman had stake in obscure offshore entities used in Adani scandal

Hindenburg Research, the firm behind the critical report on the Adani Group, has now leveled accusations against Madhabi Puri Buch, the chief of the Securities and Exchange Board of India (SEBI).

Hindenburg explosive claim: SEBI's chairman had stake in obscure offshore entities used in Adani scandal snt

Sunita Iyer

First Published Aug 10, 2024, 10:27 PM IST | Last Updated Aug 10, 2024, 11:16 PM IST

Hindenburg Research, the firm behind the critical report on the Adani Group, has now leveled accusations against Madhabi Puri Buch, the chief of the Securities and Exchange Board of India (SEBI). The allegations suggest that she held stakes in "obscure offshore entities" implicated in the Adani money siphoning scandal. This new claim intensifies the ongoing scrutiny surrounding the Adani Group, which has already faced serious allegations of financial misconduct, including fraud and accounting irregularities, leading to a dramatic loss in market value.

In a blogpost, Hindenburg said 18 months since its damning report on Adani, "SEBI has shown a surprising lack of interest in Adani's alleged undisclosed web of Mauritius and offshore shell entities."

Citing "whistleblower documents", it further said, "Madhabi Buch, the current chairperson Of SEBI, and her husband had stakes in both obscure offshore funds used in the Adani money siphoning scandal."

"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," the report read.

Allegations suggest that obscure offshore funds in Bermuda and Mauritius, purportedly controlled by Vinod Adani, the elder brother of Gautam Adani, the chairman of the Adani Group, were used to engage in round-tripping and artificially inflate stock prices.

Hindenburg said, "A declaration of funds, signed by a principal at IIFL states that the source of the investment is 'salary' and the couple's net worth is estimated at USD 10 million".

In January 2023, Hindenburg Research, known for shorting companies like Nikola Corp and Twitter (now X), accused the Adani Group of orchestrating "the largest con in corporate history." The firm claimed that Adani used a network of companies based in tax havens to artificially inflate revenue and manipulate stock prices while accumulating significant debt.

Despite the Adani Group's strong denial of these allegations, the explosive report led to a dramatic drop in the group's shares, erasing over USD 150 billion in market value across its 10 listed entities at their lowest point. Most of these companies have since recovered from their losses.

Following the Hindenburg report, the Supreme Court directed the market regulator Sebi to finalize its investigation and establish an expert panel to examine potential regulatory lapses. The panel found no adverse findings against Adani, and the Supreme Court confirmed that no additional probes beyond Sebi's investigation were necessary.

Sebi, which had been investigating the Adani Group prior to the Hindenburg report, informed the Supreme Court-appointed panel last year that it was scrutinizing 13 opaque offshore entities holding between 14% and 20% of five publicly traded stocks within the conglomerate. Sebi has not updated whether these investigations have since been concluded.

"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," Hindenburg said.

On March 22, 2017, just weeks before his wife was appointed SEBI chairperson, Dhaval Buch reportedly sent an email to Trident Trust, a Mauritius fund administrator, regarding his and his wife's investment in the Global Dynamic Opportunities Fund (GDOF), according to the report quoting documents provided by a whistleblower.

"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," it alleged.

"In a later account statement dated February 26th, 2018, addressed to Madhabi Buch's private email, the full details of the structure are revealed: "GDOF Cell 90 (IPEplus Fund 1)". Again, this is the exact same Mauritius-registered "cell" of the fund, found several layers deep in a convoluted structure, reportedly used by Vinod Adani," it alleged.

According to Hindenburg, Madhabi Buch and her husband had undisclosed investments in obscure offshore funds based in Bermuda and Mauritius, which are also allegedly connected to Vinod Adani. These investments reportedly began in 2015, prior to Madhabi Buch's appointment as a whole-time member of SEBI in 2017 and her promotion to SEBI chairperson in March 2022.

It is suggested that Buch and her husband may have initially opened their account with IPE Plus Fund 1 on June 5, 2015, in Singapore. The IPE Fund is a small offshore Mauritius fund established by an Adani director through India Infoline (IIFL), a wealth management firm linked to the Wirecard embezzlement scandal.

"Vinod Adani, brother of Gautam Adani, used this structure to invest in Indian markets with funds allegedly siphoned from over-invoicing of power equipment to Adani Group," claimed Hindenburg.

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