The Wire Staff 
New Delhi: In their response to Hindenburg’s new blogpost on matters related to the Adani Group and alleged irregularities therein on August 11, the second set of allegations after January 2023, SEBI chairperson Madhabi and her spouse Dhawal Buch did not deny investing in the funds Hindenburg Research referred to, but said they did so as “private citizens living in Singapore” – before Madhabi Buch joined SEBI – and because the chief investment officer of the Mauritius fund was a “childhood friend“ of her husband’s.
“Buch’s response now publicly confirms her investment in an obscure Bermuda/Mauritius fund structure, alongside money allegedly siphoned by Vinod Adani,” Hindenburg said in its rebuttal on August 11, adding that her response indicated a “massive conflict of interest”.
Hindenburg’s 2023 report accused the Adani Group, run by Gautam Adani, of “brazen stock manipulation”, an “accounting fraud scheme” and pulling the “largest con in corporate history” – which Adani denies – following which SEBI was tasked with investigating the group.
In its response to the Buchs, Hindenburg also said that one of Buch’s consulting companies she set up in India, which she said became inactive upon her joining the SEBI in 2017 and was used by her husband in 2019 to start his own practice, was “still 99% owned by Madhabi Buch, not her husband”.
“This entity is currently active and generating consulting revenue,” the short-seller added.
It also said that she “remained a 100% shareholder” in the other company she set up – in Singapore – and that she transferred her shares to her husband only two months after being chosen to lead SEBI in 2022.
“The Singaporean consulting entity she set up doesn’t publicly report its financials like revenue or profit so it’s impossible to see how much money this entity has earned during her time at SEBI,” Hindenburg said on X.
“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.”
Citing these documents, Hindenburg claimed that Buch used her husband’s name to transfer her investment in the offshore fund structure to her husband after she became SEBI member, asking: “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?” Hindenburg asked further.
Given Buch’s “commitment to complete transparency”, Hindenburg asked if she would publicly release the list of clients of the two firms she set up and their engagements, as well as in “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 asked.
SEBI on August 11 noted that “relevant disclosures required in terms of holdings of securities and their transfers have been made by the chairperson [Buch] from time to time” and that she “has also recused herself in matters involving potential conflicts of interest”.
Former editor of The Hindu N. Ram said on Monday (August 12) that for SEBI to “wade into this affair in blanket defence of its chairperson’s, and her husband’s, personal financial dealings is inappropriate and improper”.
Buch’s “failure” to address Hindenburg’s allegations meant her “continuance as SEBI chairperson has become untenable”, Ram also said on X.
The Indian Express cited former SEBI chairpersons and board members as pointing to two specific aspects of the issue that warranted attention: whether Buch made “complete disclosures to the government” and whether she “recuse[d] herself while investigating a regulated entity where she or her husband had a direct or indirect interest”.
“What is important to know is her conduct as a whole time member or the chairperson of SEBI when Adani-related complaints or investigations came to her desk. Did she recuse herself?”, the Express quoted a former SEBI chairperson as saying.