As SEBI continues to face criticism for its inaction and potential conflicts of interest, the Adani case has become a litmus test for the regulator's commitment to upholding transparency and accountability in India's financial markets.
Mumbai, August 2024 – Eighteen months after Hindenburg Research published its damning report on the Adani Group, accusing the Indian conglomerate of operating “the largest con in corporate history,” the Securities and Exchange Board of India (SEBI) has yet to take meaningful action against the company. Despite substantial evidence and corroboration by over 40 independent media investigations, SEBI’s response has been notably subdued, leading to widespread criticism.
Hindenburg’s original report, released in early 2023, revealed an alleged intricate web of offshore shell entities, primarily based in Mauritius, used by the Adani Group for billions of dollars in undisclosed transactions, investment activities, and stock manipulation. The report painted a picture of a conglomerate engaging in large-scale financial misconduct while avoiding regulatory scrutiny.
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| U.S. Ambassador to Sri Lanka Julie Chung, DFC Chief Executive Officer (CEO) Scott Nathan, and Gautam Adani, Chairperson of Adani Group [ Sri Lanka Guardian Illustration] |
However, instead of pursuing the alleged infractions, SEBI issued a ‘show cause’ notice to Hindenburg Research in June 2024. The regulator did not challenge the facts presented in the 106-page report but questioned the adequacy of Hindenburg’s disclosure of its short positions in Adani stocks, which Hindenburg had disclosed multiple times.
SEBI further accused Hindenburg of being “reckless” for quoting a banned broker who claimed that SEBI was complicit in the Adani Group’s operations. Hindenburg, in its response, expressed astonishment at SEBI’s apparent disinterest in investigating the Adani Group’s alleged secret offshore shell empire and billions in undisclosed transactions.
The inaction has not gone unnoticed. The Indian Supreme Court recently commented on SEBI’s investigation, stating that the regulator had “drawn a blank” in its probe into Adani’s offshore shareholders. Meanwhile, Adani Group’s Chief Financial Officer, Jugeshinder Singh, has reportedly dismissed SEBI’s inquiries as “trivial.”
Further complicating matters is the revelation that SEBI Chairperson Madhabi Buch and her husband had undisclosed stakes in the very offshore funds allegedly used by Vinod Adani, brother of Gautam Adani, to siphon funds from over-invoiced power equipment. Whistleblower documents suggest that the Buchs had investments in Mauritius-based funds that were part of the complex financial structures associated with the Adani Group.
These revelations raise significant concerns about potential conflicts of interest and the impartiality of SEBI’s investigation. Critics argue that SEBI’s reluctance to act against the Adani Group may stem from Chairperson Buch’s connections to the same offshore funds involved in the alleged wrongdoing.
Despite the mounting evidence and public outcry, SEBI has not taken action against other suspect Adani shareholders or associated funds managed by India Infoline, now rebranded as 360 One. These funds, including EM Resurgent Fund and Emerging India Focus Funds, have been linked to suspicious trading patterns that may have artificially inflated Adani stocks.
The controversy extends beyond SEBI’s handling of the Adani case. During her tenure, Madhabi Buch reportedly held a 100% interest in an offshore Singaporean consulting firm, Agora Partners, which she transferred to her husband just two weeks after becoming SEBI Chairperson. This transfer has raised questions about potential conflicts of interest and the transparency of her financial dealings.
Adding to the concerns, Madhabi Buch has been a vocal proponent of Real Estate Investment Trusts (REITs) in India, a nascent asset class that has seen significant regulatory support from SEBI under her leadership. Her husband, Dhaval Buch, serves as a Senior Advisor to Blackstone, one of the largest REIT sponsors in India. During his tenure, Blackstone-backed REITs received SEBI approval to go public, raising questions about the impartiality of SEBI’s regulatory actions.
As SEBI continues to face criticism for its inaction and potential conflicts of interest, the Adani case has become a litmus test for the regulator’s commitment to upholding transparency and accountability in India’s financial markets. The public and industry observers alike are calling for a thorough investigation into the allegations and greater transparency from SEBI.
However, in statmemnet, SEBI chairperson Madhabi Puri Buch and her husband Dhaval Buch have emphasized their commitment to transparency and integrity, underscoring that their professional and personal lives have always been conducted with the highest ethical standards. They reiterated that all financial dealings and disclosures have been meticulously recorded and shared with the appropriate regulatory authorities, including SEBI, over the years. The couple expressed confidence that a thorough review of their records would vindicate them against the allegations made by Hindenburg Research.
Furthermore, the Buchs criticised the timing of the report, suggesting that it was a deliberate attempt to undermine the credibility of SEBI at a critical juncture. They argued that such tactics are not only an attack on their personal integrity but also an affront to the functioning of India’s regulatory framework. The Buchs reaffirmed their resolve to continue upholding the values of transparency and fairness, vowing to address the issue through appropriate legal channels while ensuring that the truth prevails
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