Madhabi Buch faces allegations of conflict of interest over consultancy earnings

SEBI chief Madhabi Puri Buch, is under scrutiny for potential conflicts of interest, according to documents reviewed by Reuters. The controversy centres on Buch’s continued earnings from a consultancy firm during her seven-year tenure at SEBI, which may have violated regulatory rules.

U.S. short seller, Hindenburg Research, has raised concerns about Buch’s impartiality in ongoing investigations into the Adani Group. The conglomerate, led by Gautam Adani, has been under investigation following allegations made by Hindenburg in January 2023. The claims led to a significant drop of Adani Group’s share price, triggering SEBI’s ongoing inquiry.

The allegations against Buch stem from her investments in two consultancy firms—Singapore-based Agora Partners and India-based Agora Advisory—operated by her and her husband. Buch joined SEBI in 2017 and was appointed chairperson in March 2022.

During her tenure, Agora Advisory, where she holds a 99 per cent share, generated Rs 37.1 million ($442,025) in revenue, as per public documents from the Registrar of Companies analysed by Reuters.

These holdings may breach a 2008 SEBI policy that prohibits officials from earning income from professional activities outside of their regulatory roles.

Buch has denied any conflict of interest, stating that the consultancy firms were disclosed to SEBI and that her husband used them for his business after retiring from Unilever in 2019.

However, Hindenburg Research pointed out that Buch transferred her shares in Agora Partners to her husband in March 2022. Yet, as per records for the financial year ending March 2024, she still holds shares in the Indian consultancy. Although the reviewed documents do not detail the nature of the consultancy’s business, they do not indicate any link to the Adani Group.

The Reuters report quoted Subhash Chandra Garg, former finance secretary and a SEBI board member during Buch’s tenure, criticized her continued stake in the firm, labelling it a “very serious” breach of conduct.

He argued that Buch should not have been allowed to retain her equity after joining SEBI, even with full disclosure. This sentiment was echoed by another SEBI board member who highlighted that no business-related disclosures were made to the board, raising questions about transparency.

As the controversy grows, there have been calls for Buch’s resignation, though a BJP spokesperson dismissed the allegations as unfounded. Whether Buch was granted a waiver to retain her shares remains unclear, as specific queries on the matter have gone unanswered.

The situation raises critical questions about governance and regulatory ethics within SEBI, with potential implications for its ongoing investigations and market credibility.