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SEBI Head Accused in Adani Scandal
Hindenburg Research has once again brought the Adani Group under scrutiny, this time targeting the Chairperson of India’s Securities and Exchange Board (SEBI), Madhabi Buch. The US-based short-seller claims that Buch and her husband have stakes in obscure offshore funds tied to the Adani Group’s alleged financial misconduct. These allegations come 18 months after Hindenburg’s explosive report accused the Adani conglomerate of orchestrating “the largest con in corporate history.”
The Allegations
In a recent blog post, Hindenburg claims that SEBI, under Buch’s leadership, has shown a “surprising lack of interest” in investigating the alleged web of offshore entities linked to the Adani Group. These entities, primarily based in Mauritius and Bermuda, are allegedly controlled by Vinod Adani, the elder brother of Adani Group Chairman Gautam Adani. Hindenburg alleges that these offshore structures were used to round-trip funds and artificially inflate the stock prices of Adani Group companies.
The report further alleges that Madhabi Buch and her husband, Dhaval Buch, had undisclosed stakes in these very offshore funds. According to whistleblower documents cited by Hindenburg, a declaration of funds signed by a principal at India Infoline (IIFL) states that the Buch couple’s net worth is estimated at $10 million, with the source of the investment listed as “salary.”
Offshore Funds and SEBI’s Role
Hindenburg’s accusations are particularly damning given Buch’s position as the head of SEBI, the regulatory body responsible for overseeing India’s financial markets. The report claims that despite the availability of numerous reputable onshore Indian mutual funds, Buch and her husband chose to invest in a “multi-layered offshore fund structure with minuscule assets,” traversing high-risk jurisdictions. The same structure is allegedly tied to the Wirecard scandal, a major financial fraud case, and overseen by a company with reported ties to the Adani Group.
The blog post suggests that SEBI’s investigation into the Adani Group’s offshore shareholders has been ineffective, quoting a Supreme Court order that noted SEBI had “drawn a blank” in its probe. Hindenburg sarcastically remarked that if SEBI truly wanted to find the offshore fund holders, “perhaps the SEBI chairperson could have started by looking in the mirror.”
SEBI’s Silence and the Supreme Court’s Involvement
SEBI has not yet commented on these allegations, which raises further questions about the integrity of its ongoing investigation into the Adani Group. In response to Hindenburg’s initial report in January 2023, the Supreme Court of India had directed SEBI to complete its investigation and also set up an expert panel to examine potential regulatory lapses. Although the panel did not provide any adverse findings against the Adani Group, the Supreme Court stated that no further probe beyond SEBI’s was necessary.
However, Hindenburg’s latest claims complicate the narrative, suggesting that Buch’s undisclosed investments in offshore funds could have influenced SEBI’s reluctance to pursue the investigation more aggressively.
The Offshore Funds in Question
According to Hindenburg, Madhabi Buch and her husband’s involvement in these offshore funds dates back to 2015, well before her appointment as a whole-time member of SEBI in 2017 and her elevation to Chairperson in March 2022. The funds in question include the Global Dynamic Opportunities Fund (GDOF), registered in Mauritius, which Hindenburg alleges is part of a convoluted structure used by Vinod Adani for siphoning money from over-invoicing power equipment to the Adani Group.
The whistleblower documents also reveal that just weeks before Buch was appointed SEBI chairperson, her husband requested to be the sole operator of the accounts, seemingly moving the assets out of her name ahead of her politically sensitive appointment. An account statement dated February 2018, addressed to Madhabi Buch’s private email, reportedly details the structure of GDOF Cell 90, which is alleged to be linked to Vinod Adani.
Implications and the Road Ahead
The latest revelations by Hindenburg Research cast a shadow over the ongoing investigation into the Adani Group, raising serious concerns about the potential conflict of interest involving the SEBI chairperson. While the allegations remain unproven, they underscore the need for transparency and accountability at the highest levels of India’s financial regulatory system.
As the story unfolds, the integrity of SEBI’s investigation into the Adani Group will be closely watched, especially in light of these new allegations. Whether SEBI will address these claims directly or continue its investigation remains to be seen, but the stakes for India’s financial markets and regulatory credibility are higher than ever.
