Hindenburg Research alleges Sebi chief Madhabi Buch, spouse had stakes in offshore funds tied to its Adani report

SEBI chairperson Madhabi Puri Buch. Photo: sebi.gov.in

Almost 18 months after Hindenburg Research flagged allegations of malfeasance and stock price manipulation at the Adani group of companies, the U.S.-based short seller on Saturday (August 10, 2024) alleged that the chairperson of India’s stock market regulator, in charge of probing these issues, herself had a stake in obscure offshore entities used in what it alleged was ‘the Adani money siphoning scandal’.

Citing documents from a whistleblower, Hindenburg Research alleged that Securities Exchange Board of India (Sebi) chairperson Madhabi Puri Buch and her husband, Dhaval Buch, held stakes in offshore Bermuda and Mauritius funds through complex structures. Weeks ahead of her appointment as a whole time Sebi member in 2017, Mr. Dhaval Buch had written to a Mauritius fund administrator to make him the “sole person authorised to operate the accounts”, Hindenburg alleged.  

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It further cited an account statement dated February 26, 2018, addressed to what it alleged was Ms. Madhabi Puri Buch’s private e-mail account, that pegged the value of their stake in a fund called “GDOF Cell 90 (IPEplus Fund 1)” under the aegis of ‘Global Dynamic Opportunities Fund Ltd.” (GDOF), operated by IIFL Global, at over $872,000 at the time.

Ms. Madhabi Puri Buch, the report alleged, had written to India Infoline [IIFL] from the alleged private e-mail account a day earlier, stating that Mr. Dhaval Buch would like to redeem 100% of the units they held in GDOF.

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GDOF Cell 90, Hindenburg alleged, was the “exact same Mauritius-registered ‘cell’ of the fund found several layers deep in a convoluted structure, reportedly used by Vinod Adani”, the brother of Gautam Adani named in its report into the Adani group.

Drawing a connection to the Supreme Court’s finding that Sebi had “drawn a blank” in its investigations into who funded Adani’s offshore shareholders, Hindenburg Research, which had recently got a show-cause notice from Sebi, remarked: “We find it unsurprising that Sebi was reluctant to follow a trail that may have led to its own chairperson.” Till date, Sebi had taken no action against other suspect Adani shareholders operated by IIFL, it asserted.

Emails seeking comment sent to Sebi and Ms. Madhabi Puri Buch’s Gmail account, as cited in the Hindenburg report, remained unanswered till the time of publication.

Going beyond these links, Hindenburg has also alleged that the Sebi chief had a 100% interest in an offshore Singaporean consulting firm registered in 2013 called Agora Partners, till March 2022, when she transferred her holding to her spouse. It also alleged that Mr. Dhaval Buch, who had been the chief procurement officer at Unilever and had never worked in real estate or capital markets before, was appointed as a senior advisor at global private equity firm Blackstone.

Blackstone has large investments in India, and sponsors several real estate investment trusts (REITS) that Ms. Madhabi Puri Buch has championed during her tenure as Sebi chief, beginning March 2022, Hindenburg argued. While she touted REITs as her “favourite product for the future” and urged investors to look “positively” at them, Ms. Madhabi Puri Buch omitted to mention that Blackstone stood to gain from the asset class, the short-seller alleged.

Hindenburg has also flagged an Indian firm called Agora Advisory, where Ms. Madhabi Puri Buch currently has a 99% stake and her husband is a director. “At the end of financial year 2022, Agora Advisory generated ₹19.8 million ($2,61,000) revenue from consulting, per its annual report,” Hindenburg alleged, noting this was 4.4 times Ms. Madhabi Puri Buch’s previously disclosed salary as a whole-time member of Sebi.

Concluding that these links suggested a “conflict or capture”, Hindenburg Research said: “Either way, we do not think Sebi can be trusted as an objective arbiter in the Adani matter. We think our findings raise questions that merit further investigation. We welcome additional transparency.”