Did Madhabi Puri Buch earn rental from company under SEBI scanner?

Yesterday, 5 September, as several hundred SEBI (Securities & Exchange Board of India) employees demanded the resignation of Madhabi Puri Buch as chairperson, an industrialist came out in her support.

“It’s disheartening to see Madhabi Puri Buch, head of SEBI, being cornered despite her strong moral values and integrity. Diplomacy may not be her strength, and it seems she’s made some enemies because of it. However, I’m confident she’ll rise above it all and come out stronger,” RPG Enterprises chairman Harsh Goenka posted on X.

Today, however, Congress leader Pawan Khera added to the growing list of examples of seemingly unethical conduct by Buch. Addressing a press conference, he alleged that as full-time member of SEBI, she earned rental income from Carol Info Services Ltd, affiliated to Wockhardt, which was under investigation by SEBI.

The company, Khera claimed, was also being investigated for insider trading. The rental income, which amounted to Rs 7 lakh in 2018-19, went up to Rs 46 lakh in 2023-24, he informed. It is not clear if the rent was for the same property or a different one throughout this period.

Earlier SEBI chairpersons appeared to hold up a higher standard, Khera pointed out, citing the example of M. Damodaran, who sold the 50 shares he held in State Bank of India when he took over as SEBI head in 2001.

A subsequent chairman, C.B. Bhave, began his innings by recusing from the affairs of the National Securities Depository Ltd, of which he was earlier chairman.

Since 10 August, however, Buch has been accused of investing in offshore funds used by the Adani Group and yet not recusing herself from the inquiry into allegations made against the group by short-seller Hindenburg Research.

Many more allegations of misconduct have been piling up in the days that followed. Among others, Zee Group chief Subhash Chandra has accused the SEBI chairperson of corruption, intimidation and bribery.

Khera produced documents to show that she has been the recipient of a ‘pension’ (retiral benefits according to ICICI) from ICICI Bank from which she resigned in 2013. Khera also asked if she was given preferential treatment by ICICI Bank in redeeming her ESOP (employee stock ownership plan).  

The issue relates to transparency and conflicts of interest. Did Buch disclose or did she not? Was she given permission, and if so by whom? Did she recuse from dealing with the affairs of listed companies being investigated by SEBI?

The questions have been raised repeatedly, but the only response from SEBI and its chairperson has been disdainful silence. Nor has Union finance minister Nirmala Sitharaman responded to the controversy.

Yesterday, several hundred SEBI officers (200 according to some reports, 800 according to others) went out of their office to demand the resignation of the chairperson and withdrawal of the press release in which SEBI had disparaged its own employees, accusing them of working at one-fourth of their processing capability and their selfish concerns about raising a house rent allowance fixed last year.

The press release also claimed that the officers, who at the entry level are being paid Rs 34 lakh per annum as salary and allowances, wanted it hiked by Rs 6 lakh.

A point-by-point rebuttal by the finance ministry or SEBI, or a press conference to answer the questions by Buch herself, would have been sufficient to scotch the controversy. Brazening out the storm as ‘business’ as usual is doing nobody any good. How long can Buch afford to remain silent is the question as pressure mounts on her to quit.