Lokpal seeks SEBI chief's explanation on impropriety, conflict of interest charges

Anti-corruption ombudsman Lokpal on Friday sought SEBI (Securities and Exchange Board of India) chairperson Madhabi Puri Buch's "explanation" on complaints of impropriety and conflict of interest filed by a Lok Sabha member and two others on the basis of a report by US-based short-seller Hindenburg Research, according to an official order.

The Lokpal, however, clarified its order is only a "procedural directive" and "not an expression of our opinion on any matter in issue, either way".

As chairperson of the capital markets regulator, Buch has been asked to submit her response within four weeks, according to the order.

"...We deem it appropriate to call upon the named RPS (respondent public servant) to offer explanation qua the allegations made against her in the respective complainant and elaborated in the concerned explanatory affidavit," reads the order signed by Lokpal chairperson Justice A.M. Khanwilkar and five other members.

"This opportunity is being afforded to the named RPS as per the mandate in the third proviso of sub section (1) of section 20 of the Lokpal Act, before the bench would proceed to determine whether there exists a prima facie case for investigation into the allegations," it said.

It said she can submit her response or explanation complaint wise in all the three complaints to avoid repetition. "We reiterated that this order is not an expression of our opinion on 'any matter in issue', either way. This is only a procedural direction...," it added.

The order, signed by judicial members Justices L. Narayana Swamy, Sanjay Yadav and Ritu Raj Awasthi, and members Sushil Chandra and Ajay Tirkey, said Buch can file an affidavit to offer her explanation within four weeks from the receipt of the order.

The Lokpal has listed the matter on 19 December for further consideration. In an order dated 20 September, the Lokpal had said the complaint by the Lok Sabha member alleging impropriety and conflict of interest by SEBI chief "falls short" of persuading it to order any probe.

The anti-graft ombudsman's observation came while hearing two complaints, including one by the parliamentarian, filed on the basis of a report by US-based "activist short-seller" Hindenburg Research.

In its report, Hindenburg Research alleged that Buch and her husband had stakes in obscure offshore funds used in the alleged money siphoning scandal involving the Adani Group.

The couple denied the allegations, saying the short-seller was attacking the capital markets regulator's credibility and attempting character assassination. The Adani Group had also termed Hindenburg Research's allegations malicious and manipulation of selective public information.

In a post on X, Trinamool Congress MP Mahua Moitra had on 13 September said she had filed a complaint against the SEBI chief with the Lokpal and said the anti-graft ombudsman should forward it to the Enforcement Directorate (ED) or the Central Bureau of Investigation (CBI) for preliminary probe followed by a "full FIR enquiry".

Without mentioning the name of the complainant, the Lokpal in its 20 September order had also sought details "regarding the efforts made by the respective complainant to verify the authenticity and credibility of the claims in the recent report of Hindenburg Research published on August 10, 2024".

The matter was then posted for hearing on 17 October and later on 8 November. While hearing the cases on 17 October, it was noted that the complainants had in between also filed affidavits in response to the Lokpal's order.

A third complaint was also filed on 14 October by "yet another complainant, once again raising the same issues", according to the Lokpal's order issued on Friday.