Bengaluru: Securities and Exchange Board of India (SEBI) Chairperson Madhabi Puri Buch and her husband Dhaval denied any wrongdoing in light of the latest allegations by Hindenburg Research and said that they had invested in a fund promoted by IIFL Wealth Management as Singapore-based private citizens, two years before Buch joined as a whole-time member in 2017.
In a separate statement, the markets regulator also said that Buch made relevant disclosures from time to time and recused herself in matters involving potential conflicts of interest. It also asked investors to "remain calm and exercise due diligence" before reacting to reports like the one published by Hindenburg.
"The allegations made by Hindenburg Research, against the Adani Group, have been duly investigated by Sebi," the regulator said on Sunday. Regulatory experts who spoke to DH also sided with Sebi and Buch. Sebi said the investigation in only one of the 26 aspects it was probing on Adani is pending and the same is close to completion.
On Saturday, US-based short-seller Hindenburg Research alleged that it suspects Sebi's unwillingness to act against the Adani group may be because Buch had stakes in offshore funds linked to the conglomerate.
It alleged that the Buchs had invested in one of the funds which was allegedly being used by Vinod Adani. It also flagged Dhaval's association with private equity major Blackstone, a promoter of multiple real estate investment trusts (REITs) and Sebi's continued pitch for investors to invest in them.
In response on Sunday, the Buchs termed the allegations as ‘baseless’ and said that Hindenburg is attacking Sebi's credibility and attempting a character assassination of the chairperson and her husband. Dhaval Buch is a senior advisor with Blackstone.
According to the statement, Buchs decided to invest in the two funds on advice of Dhaval's childhood friend, Anil Ahuja.
It said Bermuda-based Global Opportunities Fund, which allegedly was used by entities connected to Adani Group to trade in shares of group companies, had sub-funds. Buch and her husband were investors in one of these sub-funds in 2015.
Citing "whistleblower documents", Hindenburg said, "Madhabi Buch, the current chairperson of SEBI, and her husband had stakes in both obscure offshore funds used in the Adani money siphoning scandal."
SEBI, it claimed, has "shown a surprising lack of interest in Adani's alleged undisclosed web of Mauritius and offshore shell entities."
The Buchs may have first opened their account with IPE Plus Fund 1 on June 5, 2015 in Singapore. IPE fund is a small offshore Mauritius fund set up by Vinod Adani through India Infoline (IIFL), a wealth management firm with ties to the Wirecard embezzlement scandal.
"Vinod...used this structure to invest in Indian markets with funds allegedly siphoned from over invoicing of power equipment to Adani Group," claimed Hindenburg.
Latching on to the Hindenburg allegations, Congress said the revelations only reinforced its demand for setting up a "joint parliamentary committee to investigate the full scope of the Adani mega scam" while the Trinamool Congress said the SEBI chairperson must resign.
Ahuja was identified by Hindenburg as the founder and Chief Investment Officer of Mauritius-based IPE Plus Fund and who the Adani Group also in its statement said was a nominee of 3i Investment Fund in Adani Power (2007-2008) and served as a director of Adani Enterprises for three terms spanning nine years ended June 2017.
On the Hindenburg report's concerns surrounding Dhaval's association with Blackstone, the Buch couple said the appointment was on account of his deep expertise in supply chain management and predates Madhabi's elevation of becoming the Sebi chairperson. They also clarified that immediately on Dhaval's appointment, the Blackstone Group was added to Madhabi's "recusal list" maintained with Sebi.
“Under the guidelines of Sebi, Buch had to disclose all her investments to the regulator when she joined as whole-time member,” JN Gupta, former executive director of SEBI, told DH.
Terming Hindenburg’s latest allegations as nothing more than an attempt to create controversy, Gupta said that there is no way the Buchs would have been able to know who the other investors in the IIFL-promoted fund were.
On Sunday, Sebi said that it has issued over 100 summons, around 1,100 letters and emails to seek information as part of its investigation, and that over 300 documents containing around 12,000 pages have been examined.
In July, Sebi issued a show cause notice to Hindenburg itself for potential violations. The notice said gains of $22.25 million were made by Hindenburg and entities associated with it following the publishing of the report against Adani Group in January 2023. In response Hindenburg had said that Sebi had no jurisdiction over it, and that it has made no more than a little over $4 million in profits.