And….the ugly Adani scandal resurfaces, around 18 months back Hindenburg Research released an explosive report on the Adani Group and in a new report the U.S-based short-seller has released another report that has the potential to blow the lid right off SEBI.

The new report states that the SEBI Chairperson and her husband, Madhabi Puri Bach and Dhaval Buch have stakes in the offshore funds used in the Adani money siphoning scadal.

So what exactly does the Hindenburg report say?

It has been nearly 18 months since our original report on the Adani group presented overwhelming evidence that the Indian conglomerate was operating “the largest con in corporate history”.

Our report exposed a web of offshore, primarily Mauritius-based shell entities used for suspecting billions of dollars of undisclosed related party transactions, undisclosed investment and stock manipulation, says Hindenburg in its report title, “Whistleblower documents reveal SEBI’s chairperson had a stake in obscure offshore entities used in Adani Money Symphony scandal”.

Linking Adani’s relationship with the Sebi chairperson, the report says she and her husband had stakes in the “same obscure offshore Bermuda and Mauritius funds” found in the same complex nested structure used by Vinod Adani.

Citing whistleblower documents, the short seller says they opened an account with the IPE Plus Find 1 on June 5 2015 in Singapore.

The “IPE Plus Fund” is a small offshore Mauritius fund set up by Adani Director through India Infoline (IIFL), a wealth management firm with ties to the Wirecard scandal”, says the report.

” A declaration of the fund signed by a principal at Iifl States that the source of the investment is salary and the couple’s net worth is estimated at 10 million”.

The report also alleges that “Vinod Adani, brother of Gautam Adani, used the structure to invest in Indian markets with funds allegedly syphoned from over-invoicing of power equipment to the Adani Group”.

Raising questions over SEBI’s investigation into the Adani case, Hindenburg says if the regulator wanted to find the offshore fund holders, perhaps she could “started by looking in the mirror”. We find it unsurprising that SEBI was reluctant to follow a trail that may have led to its chairperson.

Further, alleging a conflict of interest, Hindenburg says that during Buch’s tenure as a full-time member at Sebi, her husband was appointed a senior adviser to US-based investment major Blackstone in 2019. “He had not worked for a fund in real estate or capital markets before per his LinkedIn profile”.

Blackstone has been one of the largest investors and sponsors of REITS, A new asset class in the country.

“During Dhaval Buch’s time as a senior advisor, while his wife was SEBI official, Blackstone sponsored Mindspace and Nexus Select Trust, India’s 2nd and 4th reit to review Sebi approval to publicly IPO” says the Hindenburg Report.

It also alleges that during Dhaval Buch’s time, as an advisor to Blackstone, SEBI has “proposed approved and facilitated major REIT regulation changes”.

These include 7 Consultation Papers, 3 Consolidated Updates, 2 New Regulatory Frameworks And Nomination Rights For Units, Specifically Benefiting Private Equity Firms Like Blackstone,” Hindenburg report said.

Among other allegations, the report says during conferences the SEBI chairperson has stated REITs as her “Favorite Products For The Future” and urged investors to look “positively” upon the asset Class.

” While making those statements, she omitted to mention that Blackstone, who her husband advises, stands to gain significantly from the asset class.”

The short seller says “SEBI cannot be trusted as an objective arbiter in the Adani matter.”

SEBI on June 27 2024 had sent a ‘show cause’ notice to Hindenburg for its earlier 106-page report and said the disclosure around its short position was “deficient”. Hindenburg retorted, saying that SEBI’s notice was “nonsense” and “concocted”.

Notably, the capital markets regulator is still probing the Adani group in the Hindenburg case.

The Supreme Court in January 2024 had refused to transfer the probe being carried out by Sebi to a separate special investigation team (SIT) saying the “power of this court to enter the regulatory framework of SEBI is limited”.

The SC also said there was no “ground” to transfer the case from Sebi to an SIT.

However, even as there is a lot of smoke coming out, is there an actual fire that needs to be put out?

Ironically, Inventiva had put an RTI asking for some specific information – the details are here –RTI Regarding SEBI’s Investigation Into Hindenburg Research’s Report On Adani Group

There’s a question that pops up, on what basis was Madhabi Puri Buch appointed as SEBI’s Chairperson?

1. Madhabi Puri Buch took charge as the chairperson of Sebi on March 2, 2022.

2. She previously served as a Whole Time Member at Sebi, overseeing key departments like Market Regulation, Investment Management, and Information Technology.

3. Buch has international experience, having worked as a consultant for the New Development Bank in Shanghai and as the Head of the Singapore office for the private equity firm Greater Pacific Capital. She was the managing director and CEO of ICICI Securities and also served as an executive director on the board of ICICI Bank.

4. Buch holds an MBA from IIM Ahmedabad and a degree in Mathematics from St. Stephen’s College, New Delhi.

Now, here are some interesting facts –

—In 2022, there were 181 initial public offerings (IPOs) in India, which was third in the world for the number of IPOs that yea

—In 2023, the number of IPOs increased to 243, though the amount raised decreased.

—The fourth quarter of 2023 was a standout period for IPOs, accounting for almost 40% of the total listings for the year.

—The small and medium enterprise (SME) markets saw a 79% increase in IPOs in Q4 2023 compared to Q4 2022.

The reason why these facts are important is because these were IPOs that also include those of loss making startup’s, something that we have been asking as to why “loss making startup’s are being allowed to launch their IPOs”?

Who is Dhaval Buch?

1. Dhaval Buch is a senior advisor at Blackstone and Alvarez & Marsal. He also serves as a non-executive director on the board of Gildan.

2. Buch is an alumnus of the Indian Institute of Technology, Delhi (IIT-D), where he graduated in mechanical engineering in 1984.

3. He held the position of executive director at Unilever and eventually became the company’s chief procurement officer.

4. Buch describes himself as having deep experience in procurement and all aspects of the supply chain.

SEBI chairperson Madhabi Puri Buch and her husband on Saturday issued a joint statement to dismiss the Hindenburg’s allegations as baseless, asserting their finances are transparent.

“We would like to state that we strongly deny the baseless allegations and insinuations made in the report,” the Buchs said.

“The same are devoid of any truth. Our life and finances are an open book. All disclosures as required have already been furnished to SEBI over the years,” the statement said.

Moreover, they said that Hindenburg Research has chosen to ‘attempt character assassination’ in response to Sebi’s Enforcement action and a show cause notice issued to it, adding that a detailed statement would be issued in due course.

The Political Uproar
Congress general secretary Jairam Ramesh, in an official statement, said the government must act immediately to eliminate all conflicts of interest in the SEBI investigation of Adani.

“SEBI’s strange reluctance to investigate the Adani MegaScam has been long noted, not least by the Supreme Court’s Expert Committee. That Committee had pointed out in its report that SEBI had 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,” according to the Expert Committee.

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.

The Hindenburg Research revelations today show that SEBI Chairperson Madhabi Puri 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.

This raises fresh questions about Gautam Adani’s two 2022 meetings in quick succession with Ms Buch shortly after she became SEBI chairperson. Recall that SEBI was supposedly investigating Adani’s transactions at the time.

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 to investigate the full scope of the Adani Mega Scam.”

Commenting on the Hindenburg Research’s latest allegations on SEBI chairperson Madhabi Puri Buch, Trinamool Congress leader Mahua Moitra said, “crony capitalism is at its finest”, asking that will the CBI and ED file cases.

In a post on X (formerly Twitter), Moitra wrote, “In true Adani style – even SEBI Chairman is an investor in his group. Crony Capitalism at its finest. @CBiHeadquarters & @Dir_ED – will you be filing POCA and PMLA cases or not?” she asked.