The head of the Securities and Exchange Board of India (SEBI) invested in “obscure offshore funds” used by Vinod Adani, preventing the agency from impartially investigating allegations of fraud against the influential conglomerate led by his billionaire brother, Hindenburg Research disclosed on Saturday (10 August).
According to the research institute, leaked documents from a whistleblower reveal that Madhabi Buch, the current chairperson of SEBI, and her husband Dhaval Buch had investments in little-known offshore funds associated with the Adani money diversion controversy.
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On 24 January 2023, Hindenburg published a report accusing the Indian multinational conglomerate Adani Group of stock manipulation and accounting fraud in decades-long schemes, calling it “the largest con in corporate history”. However, the SEBI had “drawn a blank” in further investigations despite evidence of Adani group members’ involvement in alleged money laundering cases.
In its most recent report, Hindenburg revealed that a company controlled by Vinod Adani, brother of Adani founder and chairman Gautam Adani, had placed funds in the “Global Dynamic Opportunities Fund” (“GDOF”) in Bermuda, a British overseas territory known for its tax advantages. This fund was then invested in the “IPE Plus Fund 1”, a fund registered in Mauritius, also considered a tax haven.
On 22 March 2017, just before Madhabi Buch’s political appointment as a SEBI “whole time member”, her husband had corresponded with Mauritius fund administrator Trident Trust, according to documents obtained from a whistleblower.
In the correspondence, Dhaval Buch requested to “be the sole person authorised to operate the accounts”, indicating a potential transfer of assets to leave out his wife’s name before the politically sensitive appointment.
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By GlobalDataHindenburg also brought to attention Buch’s endorsement of real estate investment trusts (REITs) while not revealing her husband’s advisory position (which he was appointed during her tenure at SEBI) at investment manager Blackstone, which has become one of the largest sponsors and investors of Indian REITs.
Given the Buchs’ potential involvement in corrupt practices, Hindenburg concluded that it does “not think SEBI can be trusted as an objective arbiter in the Adani matter”.
How has India reacted to the allegations?
The couple has denied all the allegations made by Hindenburg. Additionally, the Buchs issued a point-by-point rebuttal of the allegations, suggesting that the allegations are “attacking” SEBI’s credibility and are a character assassination of the body’s chief without any notice.
The ruling party of India, Bharatiya Janata Party (BJP), has dismissed the allegations as “propaganda against India.” They have stated that George Soros, the main investor of Hindenburg Research, is inciting hatred against Prime Minister Narendra Modi and has developed hatred against India, as reported by Hindustan Times.
The potential connection between Modi and Gautam Adani is worth noting. Power Technology reported in April that Adani and Modi, both from the state of Gujarat, have had a longstanding relationship since 2002.
The BJP has also faced allegations of favouring the Adani Group in exchange for political donations. Earlier this year, Congress accused the BJP and Modi of granting the group monopolies in infrastructure projects.
In response to the most recent allegations of Buch’s involvement in the Adani scandal, the Congress Party in opposition has called for the immediate intervention of the central government to eliminate any conflicts of interest during the regulator’s investigation of the Adani Group, including Buch’s removal as SEBI chief.
The opposition party also emphasised that the only way to address the “seeming complicity of the highest officials of the land” is to establish a Joint Parliamentary Committee to investigate the entire extent of the scandal.
As per CNBC News, Adani Group’s shares dropped on Monday (12 August) following the recent report from Hindenburg. Adani Group companies experienced a market value decline of approximately $2.4bn, rebounding by the end of the trading day after an earlier reported decrease of up to $13.4bn.
The shares of its energy branches – Adani Total Gas, Adani Power and Adani Energy Solutions – individually also experienced significant declines following the announcement.
