Hindenburg report: Eliminate all conflicts of interest in probe of Adani, says Congress to govt

New Delhi: In the wake of the US short-seller Hindenburg Research levelling allegations against Sebi chairperson Madhabi Buch, the Congress on Saturday demanded the Centre act immediately to eliminate all conflicts of interest in the regulator's investigation of the Adani Group.

The opposition party also said the "seeming complicity of the highest officials of the land" can only be resolved by setting up a Joint Parliamentary Committee to investigate the full scope of the "scam".

The Hindenburg Research on Saturday launched a fresh broadside against market regulator Sebi chairperson Madhabi Buch, alleging she and her husband had stakes in obscure offshore funds used in the Adani money siphoning scandal.

In a blogpost, Hindenburg said 18 months since its damning report on Adani, "SEBI has shown a surprising lack of interest in Adani's alleged undisclosed web of Mauritius and offshore shell entities." No immediate comments were available from Securities and Exchange Board of India, whose X account was also found 'locked' with posts inaccessible to all non-followers.

In a statement on the development, Congress general secretary in-charge communications Jairam Ramesh said that the Sebi's "strange reluctance to investigate the Adani mega scam" has been long noted, not least by the Supreme Court's Expert Committee.

The Committee, he said, had noted that SEBI in 2018 diluted and in 2019, entirely deleted the reporting requirements relating to the ultimate beneficial (i.e. actual) ownership of foreign funds.

"This had tied its hands to the extent that 'the securities market regulator suspects wrongdoing, but also finds compliance with various stipulations in attendant regulations... It is this dichotomy that has led to SEBI drawing a blank worldwide'," Ramesh said quoting the Expert Committee.

The politician added, "Under public pressure, after the Adani horse had bolted, SEBI's board reintroduced stricter reporting rules on 28 June 2023. It told the Expert Committee on 25 August 2023 that it was investigating 13 suspicious transactions. Yet the investigations never bore fruit." He said that the the Hindenburg Research's Saturday revelations show that Buch and her husband invested in the same Bermuda and Mauritius-based offshore funds in which "Vinod Adani and his close associates Chang Chung-Ling and Nasser Ali Shahban Ahli invested funds earned from the over-invoicing of power equipment." "These funds are believed also to have been used to amass large stakes in Adani Group companies in violation of SEBI regulations. It is shocking that Buch would have a financial stake in these same funds," Ramesh said.

The Congress leader said that the revelation raise fresh questions about Gautam Adani's two 2022 meetings in quick succession with Buch, shortly after she became the stock market regulator's chairperson.

"The government must act immediately to eliminate all conflicts of interest in the SEBI investigation of Adani. The fact is that the seeming complicity of the highest officials of the land can only be resolved by setting up a JPC (joint parliamentary committee) to investigate the full scope of the Adani mega scam," the former Union minister said in his statement.

Earlier, tagging the Hindenburg post on the allegations on X, Ramesh said, "Quis Custodiet Ipsos Custodes (who will guard the guards themselves)." In another post on X, Ramesh suspected the reason behind adjourning of the Parliament two days ahead of the scheduled date.

"Parliament was notified to sit till the evening of August 12th. Suddenly it got adjourned sine die on the afternoon of Aug 9th itself. Now we know why," he wrote.

In January last year, Hindenburg Research, which in the past has shorted, or bet against, companies like electric truck maker Nikola Corp and Twitter (now X), accused Adani Group of pulling "the largest con in corporate history" by using a web of companies in tax havens to inflate its revenue and manipulate stock prices, even as debt piled up.

Though the conglomerate vehemently denied all allegations, the damning report sent the group's shares into a free fall, wiping out over USD 150 billion in market value of the 10 listed entities at their lowest point.

Most of the 10 listed companies have since recouped the losses.

After the Hindenburg report, the Supreme Court asked market regulator Sebi to complete its investigation and set up a separate expert panel to look into regulatory lapses.

The panel did not give any adverse report on Adani and the apex court too stated that no other probe other than the one being done by Sebi was required.

Sebi last year told a Supreme Court-appointed panel that it was investigating 13 opaque offshore entities that held between 14 per cent and 20 per cent across five publicly traded stocks of the conglomerate.

It hasn't stated if the two incomplete probes have since been completed.

"The current SEBI Chairperson 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," Hindenburg alleged.