Hindenburg report hints towards SEBI chair Madhabi Puri Buch’s stake in offshore entities used in Adani Scandle.
Since the release of report 18 Month ago by Hindenburg , Adani group one of India’s largest conglomerates has been under the review that company has involved in one of biggest frauds in history. Hindenburg Report tells, how Group used a offshore shell entities based in Mauritius that conducts undisclosed related party transactions, manipulate stock ,engage in various malpractices. Regardless serious allegations, India’s Securities and Exchange Board (SEBI) has minimal public interest in taking action against the Adani group.
Overview of the Adani Report
Report published in early 2023, provided extensive evidence indicating the possible series of undisclosed financial activities, which includes use of offshore shell companies funnel billions of dollars into Indian markets, stock manipulation, and related party transactions, this has been described in report as “the largest con in corporate history.” Also questioning the integrity of the Indian financial markets.
Table of Contents
What Hidenberg report says on SEBI’s Lack of Action
Hidenberg report claims,
Many independent media investigations have expanded on the initial findings, since the release of the report. Regardless, SEBI has not taken any significant public action against the Adani Group but issues a ‘show cause’ notice to the authors of the report. SEBI did not challenge the accuracy of the report but criticized it as “reckless, particularly for quoting a banned broker who claimed that SEBI was complicit in the schemes used by Group.
The Indian Supreme Court also said SEBI had “drawn a blank” in its investigation of these shareholders, as detailed in the court records.
The Role of Mauritius and Offshore Shell Entities
One of the aspects of the report is the alleged involvement of Mauritius-based offshore shell entities in Group’s financial activities. The report tells how Vinod Adani, brother of Gautam Adani, used a complex structure of offshore entities to invest in Indian markets, which include funds from the over-invoicing of power equipment to the Adani Group.
As per report, A small offshore Mauritius fund, IPE Plus Fund 1,was as a key player. Managed by India Infoline (IIFL), a wealth management firm which has a history of involvement in complex fund structures, this fund had close ties to Group and was allegedly used to funnel money into Indian markets.
Conflict of Interest: SEBI Chairperson’s Alleged Involvement
The report also uncovered a potential conflict of interest involving Madhabi Buch, the current Chairperson of SEBI, and her husband, Dhaval Buch. Documents says that Chairperson of SEBI and husband had stakes in the same offshore funds used by Vinod Adani which are part of a structure allegedly used for money siphoning.
As per further reports by Hidenberg, during Madhabi Buch’s tenure Dhaval Buch husband of Chairperson of SEBI was appointed as a Senior Advisor to Blackstone, a global equity firm investments in India. This raises concerns about potential regulatory capture, as SEBI introduced several regulations that directly benefited Blackstone during this period.
Blackstone and REITs: A Closer Look
Blackstone is one of the largest sponsors of Real Estate Investment Trusts (REITs) in India benefited from SEBI’s regulatory changes under Madhabi Buch’s leadership. The report highlights how SEBI’s Chairperson promoted REITs as a promising asset class without disclosing her husband’s connection to Blackstone. This further indicates the potential conflict of interest and raises questions about SEBI’s impartiality in the Adani matter.
Latest report on the Adani Group and SEBI’s response raise serious concerns about regulatory oversight in India. The alleged involvement of SEBI’s Chairperson in the same offshore structures used by Adani Group, links with SEBI’s apparent reluctance to take action, suggests a troubling pattern of regulatory capture.As the story unfolds, it remains to be seen whether these allegations will lead to meaningful reforms in India’s financial regulatory framework.
Click here to read full Hidenberg report
Statement of Madhabi Puri Buch and her husband Dhaval Buch on Hidenberg claims
Madhabi Puri Buch and her husband Dhaval Buch in their joint statement issued at 1:40 AM on August 11, have denied the allegations by Hindenburg Research that the SEBI chairperson had stake in the entities used in scandal.
“In the context of allegations made in the Hindenburg Report dated August 10,2024 against us, we would like to state that we strongly deny the baseless allegations and insinuations made in the report. The same are devoid of any truth. Our life and finances are an open book. All disclosures as required have already been furnished to SEBI over the years. We have no hesitation in disclosing any and all financial documents, including those that relate to the period when we were strictly private citizens, to any and every authority that may seek them,” joint statement by Madhabi Puri Buch and her husband Dhaval Buch.
“Further, in the interest of complete transparency, we would be issuing a detailed statement in due course,”
“It is unfortunate that Hindenburg Research against whom SEBI has taken an Enforcement action and issued a show cause notice has chosen to attempt character assassination in response to the same,” added.
Adani Group On Report
Adani group said “For a discredited short-seller under the scanner for several violations of Indian securities laws, Hindenburg’s allegations are no more than red herrings thrown by a desperate entity with total contempt for Indian laws,”
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