Sebi chair had stake in offshore entities used in Adani scandal: Hindenburg

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Securities and Exchange Board of India (Sebi) Chairperson Madhabi Puri Buch (Photo: PTI)

4 min read Last Updated : Aug 10 2024 | 10:37 PM IST


Eighteen months after its report on Adani Group, US-based short-seller Hindenburg Research claimed on Saturday that Securities and Exchange Board of India (Sebi) Chairperson Madhabi Puri Buch and her husband Dhaval Buch had stake in obscure offshore entities used in the alleged Adani money siphoning scandal. 


The short-seller said that despite the evidence, along with over 40 independent media investigations on its work, Sebi took no public action against Adani Group. 


“It has been nearly 18 months since our original report on Adani Group presented overwhelming evidence that the Indian conglomerate was operating “the largest con in corporate history”. Our report exposed a web of offshore, primarily Mauritius-based shell entities used for suspected billions of dollars of undisclosed related-party transactions, undisclosed investment and stock manipulation. Since then, despite the evidence, along with over 40 independent media investigations corroborating and expanding on our original work, Indian securities regulator Sebi has taken no public action against Adani Group. Instead, on June 27, 2024, Sebi sent us an apparent ‘showcause’ notice. It did not allege any factual errors in our 106-page analysis, but instead claimed the disclosure around our short position – which we disclosed repeatedly – was deficient, arguing that we should have provided even more robust disclosure,” said Hindenburg in its report published on its website on Saturday.


The Hindenburg report further read: “We had previously noted Adani’s total confidence in continuing to operate without the risk of serious regulatory intervention, suggesting that this might be explained through Adani’s relationship with Sebi Chairperson Madhabi Buch. What we hadn’t realised: the current Sebi Chairperson and her husband, Dhaval Buch, had hidden stakes in the exact same obscure offshore funds in Bermuda and Mauritius, found in the same complex nested structure, used by Vinod Adani.” 


According to Hindenburg, Buch and her husband may have first opened their account with IPE Plus Fund 1 on June 5, 2015, in Singapore. “IPE fund is a small offshore Mauritius fund set up by an Adani director through India Infoline (IIFL), a wealth management firm with ties 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.


“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 $10 million,” the short-seller firm further stated.


Hindenburg purportedly presented evidence of Buch doing business via private email through her husband’s name in offshore fund entities, citing the whistleblower documents.


Hindenburg alleges conflict of interest as Buch’s husband appointed senior advisor to Blackstone amid major REIT regulation changes in India


Hindenburg added during Madhabi Buch’s tenure as a whole-time member at Sebi, in 2019, her husband was appointed a senior advisor to Blackstone, an American alternative investment management company based in New York City. The company, according to the report, has been one of the largest investors in and sponsors of real estate investment trust (Reit), a nascent asset class in India.


Citing Dhaval Buch’s LinkedIn account, Hindenburg argued that over the past two decades, he had never worked for a fund, in real estate or at a capital markets firm. “Despite the lack of experience in these areas, he joined Blackstone, a global private equity firm and large investor in India, as a “Senior Advisor” in July 2019, per his Linkedin,” read the report.


“During Dhaval Buch’s time as senior advisor, while his wife was a Sebi official, Blackstone sponsored Mindspace and Nexus Select Trust, India’s second and fourth Reit to receive Sebi approval for IPO. India’s first ever Reit, Embassy, obtained Sebi approval and came with its IPO on April 1, 2019, sponsored by Blackstone, just 3 months before Dhaval Buch reported joining Blackstone in July 2019.”


During Dhaval Buch’s time as advisor to Blackstone, the report said, Sebi proposed, approved and facilitated major Reit regulation changes specifically benefiting private equity firms like Blackstone.


“Since Madhabi Buch became Chairperson in March 2022, Sebi has proposed and implemented a raft of Reit legislation, of significant benefit to Blackstone as one of the largest Reit sponsors in India, which her husband works for,” the report states.

First Published: Aug 10 2024 | 10:25 PM IST