Hindenburg to Madhabi Buch: ‘Husband’s clients include those Sebi is tasked with regulating?’

American short-seller Hindenburg Research on Sunday said that Sebi chairperson Madhabi Buch’s response to its report raised numerous new critical questions.

The firm, which has accused the Buch-led market regulator of not probing its allegations against the Adani Group because Buch had stakes in the conglomerate’s offshore funds, alleged a “massive conflict of interest” on the part of the Sebi chief.

Reacting to Madhabi Buch and her husband Dhaval Buch’s joint statement, the US-based firm asked if the Sebi chief’s consulting clients include those Sebi is tasked with regulating.

In a late-night series of posts on X, Hindenburg claimed Buch had confirmed with her response to the firm’s allegation that the offshore fund was run by her husband Dhaval Buch’s childhood friend, a director in the Adani Group.

“SEBI Chairperson Madhabi Buch’s response to our report includes several important admissions and raises numerous new critical questions. Buch’s response now publicly confirms her investment in an obscure Bermuda/Mauritius fund structure, alongside money allegedly siphoned by Vinod Adani. She also confirmed the fund was run by a childhood friend of her husband, who at the time was an Adani director,” it said.

“SEBI was tasked with investigating investment funds relating to the Adani matter, which would include funds Ms. Buch WAS PERSONALLY INVESTED IN and funds by the same sponsor which were specifically highlighted in our original report. This is obviously a massive conflict of interest,” it added.

The research firm said the two consulting companies she set up, including the Indian entity and the opaque Singaporean entity, “became immediately dormant on her appointment with SEBI” in 2017, with her husband taking over starting in 2019. It said the firm is still owned by her, not her husband. “This entity is currently active and generating consulting revenue,” it added.

“Furthermore, Buch remained a 100% shareholder of Agora Partners Singapore until March 16th, 2022, per Singaporean records, owning it during her entire time as a SEBI Whole Time Member. She only transferred her shares into her husband’s name 2 weeks after her appointment as SEBI Chairperson. This is especially important given whistleblower documents showing that Buch used her personal email to do business using her husband’s name while serving as a Whole Time Member of SEBI,” it alleged.

Hindenburg also said weeks ahead of her appointment as Sebi chief, she ensured all accounts linked to Adani be registered solely in the name of Dhavan Buch.

“Despite disclaiming control, a private email she sent a year into her SEBI term shows she redeemed stakes in the funds through her husband’s name, per the whistleblower documents,” it added.

“This raises the question: What other investments or business has the SEBI chairperson engaged in through her husband’s name while serving in an official capacity?

“Buch said her husband used the consulting entities starting in 2019 to transact with unnamed ‘prominent clients in the Indian industry’. Do these include clients SEBI is tasked with regulating? Buch’s statement promised a ‘commitment to complete transparency’. Given this, will she publicly release the full list of consulting clients and details of the engagements, both through the offshore Singaporean consulting firm, the Indian consulting firm and any other entity she or her husband may have an interest in? Finally, will the SEBI Chairperson commit to a full, transparent and public investigation into these issues?” it added.

What Madhabi Puri Buch had said on Hindenburg’s allegations?

Madhabi Puri Buch and her husband Dhaval said in a joint statement on Sunday evening that Hindenburg Research was attacking capital markets regulator Sebi’s credibility. The Buchs said their investment in a fund promoted by IIFL Wealth Management was as Singapore-based private citizens and was made two years before Madhabi joined Sebi as a whole-time member in 2017.

According to the statement, the Buchs decided to invest in the two funds on the advice of Dhaval’s childhood friend, Anil Ahuja.

Ahuja is the person who the Hindenburg report has identified as the founder and chief investment officer of the Mauritius-based IPE Plus Fund.

Citing Ahuja’s statement, the Buchs said that at no point did the fund invest in any bond, equity, or derivative of any Adani Group company.

On the Hindenburg report’s concerns surrounding Dhaval’s association with Blackstone, the Buch couple said the appointment was made on account of his deep expertise in supply chain management and predates Madhabi’s appointment as the Sebi chairperson.

“At no time has Dhaval been associated with the real estate side of Blackstone,” they added.

They also clarified that immediately on Dhaval’s appointment, the Blackstone Group was added to Madhabi’s “recusal list” maintained with Sebi.

On Madhabi’s two consulting firms, the couple said the entities became “dormant” on her appointment at Sebi and added that her shareholding in them was also disclosed to Sebi.

However, it also added that on Dhaval’s retirement from Unilever, he started a consultancy practice through the same companies and worked for prominent clients in India.

Linking the earnings in the consultancy companies to Madhabi’s current government salary is “malicious”, the statement added.

In the report, Hindenburg alleges that Madhabi “currently” has a 99 per cent ownership in an Indian consulting business called Agora Advisory where her husband is a director.

“When the shareholding of the Singapore entity moved to Dhaval, this was once again disclosed, not just to Sebi, but also to the Singapore authorities and the Indian tax authorities,” it said.

Political slugfest over Hindenburg allegations

The Congress and other INDIA bloc parties have demanded Madhabi Buch’s resignation as the Sebi chief. The BJP, on the other hand, accused the Opposition of being a part of a conspiracy to create financial instability in India.

The Opposition has also demanded a joint parliamentary committee (JPC) probe into the allegations.