Hindenburg Report Brings Sensational Allegations Against SEBI Chief And Indian Conglomerate

Hindenburg Research's fresh allegations suggesting a potential conflict of interest come following the Adani Group's denials and SEBI's report finding no wrongdoing.

US-based short-seller Hindenburg Research, in a new report released on Saturday, alleged that the current Chairperson of the Securities and Exchange Board of India (SEBI), Madhabi Buch, and her husband Dhaval Buch had stakes in offshore funds linked to the Adani Group's alleged money siphoning scandal. The report cited “whistleblower documents”, which ABP LIVE could not independently verify, to suggest a potential conflict of interest within the regulatory body tasked with overseeing corporate governance in India.

The report comes a year and a half after its damaging report on the Adani Group that had far-reaching consequences, including the cancellation of the company's flagship Rs 20,000 crore follow-on public offer. The Adani Group has consistently denied the allegations. Questions were raised on the credibility of the allegations by Hindenburg Research as a Supreme Court-backed report from SEBI found no evidence of wrongdoing.

The fresh allegations centre around the use of offshore entities, primarily based in Mauritius and Bermuda, which were reportedly utilised by Vinod Adani, brother of Gautam Adani, to siphon funds through over-invoicing of power equipment imports. The funds were allegedly laundered through a complex web of shell companies, with ties to the Adani Group, as claimed in the report by Hindenburg Research.

In a blog post, Hindenburg claimed that 18 months after its initial report on Adani, the Securities and Exchange Board of India (SEBI) has shown a "surprising lack of interest" in investigating Adani's alleged web of undisclosed Mauritius and offshore shell entities.

Citing whistleblower documents, Hindenburg alleged that Madhabi Buch and her husband were involved in the same offshore Bermuda and Mauritius funds allegedly controlled by Vinod Adani, the elder brother of Adani Group Chairman Gautam Adani. These funds are believed to have been used for round-tripping funds and inflating stock prices. According to Hindenburg, a declaration of funds signed by a principal at IIFL stated that the source of the investment was "salary," and the couple's net worth was estimated at USD 10 million.

Hindenburg further alleged that on 22 March 2017, just weeks before Madhabi Buch's appointment as SEBI Chairperson, Dhaval Buch wrote to Mauritius fund administrator Trident Trust, requesting to be the sole person authorised to operate the accounts. The email, allegedly obtained from a whistleblower, appeared to indicate an attempt to move the assets out of his wife's name ahead of her politically sensitive appointment. A later account statement dated 26 February 2018, addressed to Madhabi Buch's private email, reportedly revealed the full details of the structure, including GDOF Cell 90 (IPEplus Fund 1) — the same Mauritius-registered cell allegedly used by Vinod Adani.

Congress Demands Govt Action To ‘Eliminate All Conflicts Of Interest’ In SEBI Investigation Of Adani

The Congress party took a jab at SEBI Chairperson Madhabi Buch on Saturday, employing the Latin phrase Quis Custodiet Ipsos Custodes—translated as "Who will guard the guards themselves?"—in response to allegations made by US short-seller Hindenburg Research. It also demanded a government probe into the alleged conflict of interest.

Congress General Secretary Jairam Ramesh commented on the abrupt adjournment of Parliament, which was initially scheduled to sit until the evening of August 12 but was unexpectedly adjourned sine die on the afternoon of August 9. He remarked on X: “Now we know why,” suggesting a connection between the sudden adjournment and the unfolding controversy.

In a statement, he expressed "shock" over the SEBI chairperson's alleged "financial stake" and stated "This raises fresh questions about Gautam Adani's two 2022 meetings in quick succession with Ms Buch shortly after she became SEBI chairperson. Recall that SEBI was supposedly investigating Adani transactions at the time."

"The government must act immediately to eliminate all conflicts of interest in the SEBI investigation of Adani. The fact is that the seeming complicity of the highest officials of the land can only be resolved by setting up a JPC to investigate the full scope of the Adani MegaScam," he added.

Sena (UBT) MP Priyanka Chaturvedi also quipped, "Now we know why our letters went unanswered and unacknowledged."

Adani-Hindenburg Row

In January last year, Hindenburg Research accused the Adani Group of orchestrating the "largest con in corporate history" by using a web of companies in tax havens to inflate its revenue and manipulate stock prices while accumulating debt. The report led to a massive sell-off in Adani Group shares, wiping out over USD 150 billion in market value at their lowest point. Although most of the 10 listed companies have since recovered their losses, the controversy continues to simmer.

Following the Hindenburg report, the Supreme Court of India directed SEBI to complete its investigation and established an expert panel to examine potential regulatory lapses. The panel did not provide any adverse findings against Adani, and the Supreme Court stated that no additional probes beyond SEBI's were necessary. SEBI had informed the court that it was investigating 13 opaque offshore entities holding between 14 per cent and 20 per cent of five publicly traded stocks of the conglomerate, but it has not yet confirmed whether these investigations have been completed.

These allegations aim to cast a shadow over SEBI’s impartiality in handling the Adani investigation.  

No immediate reactions have come from SEBI and Adani Group regarding the fresh claims.

UPDATE: Sebi Chief Madhabi Buch, Husband Deny Hindenburg Allegations

Securities Exchange Board of India chairperson (SEBI) Madhabi Puri Buch and her husband Dhaval Buch denied allegations levelled by US short-seller Hindenburg Research, of having stakes in offshore funds linked to the Adani Group's alleged money siphoning scandal.

In a press statement the couple "strongly denied" the "baseless allegations and insinuations" made in the report. They claimed that all the required disclosures have already been furnished to SEBI and they have no hesitation in disclosing any and all financial documents.