Stakes in Adani offshore for SEBI chairperson, husband: Hindenburg

“We suspect SEBI’s unwillingness to take meaningful action against suspect offshore shareholders in the Adani Group may stem from chairperson Madhabi Buch’s complicity in using the exact same funds used by Vinod Adani, brother of Gautam Adani,” says a damning new report from Hindenburg Research released late on Saturday evening.

Sixteen hours earlier, the firm had posted a teaser saying “something big soon, India”, triggering speculation that it would be targeting another Indian company. In January 2023, the firm had released its now famous report accusing the Adani Group of committing corporate fraud.

However, the new report has taken everyone by surprise by pointing fingers at the SEBI (Securities and Exchange Board of India) chairperson Madhabi Puri Buch and her husband Dhaval Buch.

SEBI, the regulator of the Indian securities and capital market, was entrusted by the Supreme Court of India to inquire into the earlier Hindenburg report on the Adani Group, in which endeavour it had claimed to draw a blank. In July, SEBI also served a virtual show-cause to the US firm, over which it has no jurisdiction, but stopped short of accusing it of factual inaccuracies.

The damning new report implicating the SEBI chairperson, based on whistleblower documents — several of which have been made part of the new report, has strengthened the demand for an inquiry by a Joint Parliamentary Committee.

Despite the existence of a large number of mainstream and reputable onshore Indian mutual fund products, Madhabi Buch and her husband had stakes in a multi-layered offshore fund structure with miniscule assets “in the same entity run by an Adani director and used by Vinod Adani in the alleged Adani cash siphoning scandal”, the report points out.

The explosive report is likely to embarrass the already beleaguered Union government and give a fresh handle to the Opposition to attack the government. Minutes after the report was released, Trinamool Congress MP Mahua Moitra posted on X, “This is both conflict and capture of SEBI. Chairperson of SEBI is an opaque investor in Adani Group. Samdhi Cyril Shroff is on corporate governance committee. No wonder all complaints to SEBI fall on deaf ears.”

Congress MP Jairam Ramesh posted, “Parliament was notified to sit till the evening of  12 Aug. Suddenly it got adjourned sine die on the afternoon of 9 August itself. Now we know why.”

“We find it unsurprising that SEBI was reluctant to follow a trail that may have led to its own chairperson…We suspect SEBI’s unwillingness to take meaningful action against suspect offshore shareholders in the Adani Group may stem from chairperson Madhabi Buch’s complicity in using the exact same funds used by Vinod Adani, brother of Gautam Adani…to date, SEBI has taken no action against other suspect Adani shareholders operated by India Infoline: EM Resurgent Fund and Emerging India Focus Funds…,” observes the report.

The new Hindenburg report also accuses the SEBI chairperson of promoting her husband’s portfolio and his employer Blackstone’s business interests. However, the main thrust of the report remains her links to the offshore funds and possible complicity with the Adani Group.

Industrialist Gautam Adani, the head of the Adani Group, was the first industrialist to call on the SEBI chairperson in her office after her appointment in 2022, which had raised eyebrows at the time. The proverbial excrement had hit the ceiling when the Hindenburg report on the Adani Group emerged in January, 2023.

The new report released on 10 August by Hindenburg, makes the following points based on whistleblower documents:

• Madhabi Buch, chairperson of SEBI, 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

• From April 2017 to March 2022, while Madhabi Buch was a full-time member and chairperson of SEBI, she had a 100 per cent interest in an offshore Singaporean consulting firm called Agora Partners. On 16 March 2022, two weeks after her appointment as SEBI chairperson, she quietly transferred the shares to her husband

• Madhabi Buch currently has a 99 per cent stake in an Indian consulting business called Agora Advisory, where her husband is a director

• In 2022, this entity reported $261,000 in revenues from consulting, 4.4 times her disclosed salary at SEBI

• The couple first appear to have opened their account with IPE Plus Fund 1 on 5 June 2015 in Singapore. 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 was estimated at $10 million  

• On 22 March 2017, Dhaval Buch wrote to Mauritius fund administrator Trident Trust regarding his and his wife’s investment in the Global Dynamic Opportunities Fund (GDOF) requesting to “be the sole person authorised to operate the accounts”, seemingly moving the assets out of his wife’s name ahead of the politically sensitive appointment of Madhavi Buch as a full-time member of SEBI in April 2017

• The total value of Buch’s stake was worth US $872,762.25 in 2018 

• On 25 February, 2018 during Buch’s tenure as a full-time member of SEBI, she personally wrote to India Infoline using her private Gmail account, doing business in her husband’s name, to redeem the units in the fund

The full report can be read here.