The much-awaited report that Hindenburg teased earlier today is in. Citing whistleblower documents, the US-based shortseller has accused Madhabi Puri Buch, the chief of Securities and Exchange Board of India (SEBI), and her husband Dhaval Buch, of having stakes in offshore funds that were invested in the Adani Group.
The latest salvo from Hindenburg began as such: "18 Months Since Our Adani Report, SEBI has shown a surprising lack of interest in Adani’s alleged undisclosed web Of Mauritius and offshore shell entities."
"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. 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," Madhabi Puri Buch and Dhaval Buch said in a press statement issued on August 11.
These are the key highlights from the latest Hindenburg report:
"The current SEBI Chairperson and her husband, Dhaval Buch, had hidden stakes in the exact same obscure offshore Bermuda and Mauritius funds, found in the same complex nested structure, used by Vinod Adani," the report added.
Vinod Adani is the elder brother of Gautam Adani, the Chairman of the $32 billion Adani Group, whose interests range from ports and airports to generation and transmission of power, both from coal and renewable sources.
On June 5, 2015, SEBI chief Madhabi Puri Buch and her husband Dhaval Buch opened an account with the Mauritius-based IPE Plus Fund 1,which was allegedly involved in siphoning of funds.
Madhabi Buch was appointed a Whole Time Member of SEBI in April 2017, according to her LinkedIn profile, and she became the chairperson of SEBI in 2022.
On February 25, 2018, Madhabi Buch wrote to IIFL, from her private Gmail account, seeking to redeem the units in the fund.
The IPE Plus Fund 1 fund received money from another Bermuda-based Global Dynamic Opportunities Fund, which is allegedly controlled by Vinod Adani who facilitated round-tripping of funds and inflated stock prices.
"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 report added. IIFL is the short form for India Infoline, a Mumbai-based broking firm that is listed on the stock exchanges.
"We find it unsurprising that SEBI was reluctant to follow a trail that may have led to its own chairperson," the report added.
Who is Dhaval Buch?
Madhabi's husband Dhaval Buch was appointed as senior advisor at Blackstone, a global private equity firm, in 2019. Before joining Blackstone, Dhaval Buch had worked Unilever as the chief procurement officer.
Madhabi Buch currently has a 99% stake in Agora Advisory, a consulting firm where her husband Dhaval is a director.In 2022, Agora reported $261,000 revenue from consulting, 4.4 times her disclosed salary at SEBI, Hindenburg said.
The opposition party Congress has been quick to issue a statement following the latest report from Hindenburg. "The government must act immediately to eliminate all conflicts of interest in the SEBI investigation of Adani. The fact is that the seeming complicity of the highest officials of the land can only be resolved by setting up a joint Parliamentary committee to investigate the full scope of the Adani mega scam," member of Parliament Jairam Ramesh said in a post he shared on X, the social media platform formerly called Twitter.
Here's a brief history of the Adani-Hindenburg case so far
In January 2023, Hindenburg accused Adani manipulating prices of the group's stocks through a web of offshore funds, undisclosed investments and related-party transactions.
Adani group denied the charges. The case went up to the Supreme Court, which chose to place its faith on the market regulator SEBI to conduct a fair investigation.
The stocks took a severe beating and it wasn't until May 2024 that all shares of Adani Group recovered the value lost in the wake of Hindenburg's allegations in January 2023. Currently, the 62-year-old Gautam Adani is estimated to have a net worth of $84 billion, according to Forbes.
Earlier in July 2024, Hindenburg said that it had received a showcause notice from SEBI seeking a response on suspected violations of the Indian securities law by the US-based shortseller. You can read more about it here.