India Tomorrow
NEW DELHI: Hindenburg Research, a US-based short-selling firm, released a report on August 10 accusing Chairperson of the Securities and Exchange Board of India (SEBI) Madhabi Puri Buch, and her husband of having investments in offshore funds associated with the Adani Group. The report specifically points to the Bermuda-based Global Opportunities Fund, which was reportedly used by entities linked to the Adani Group to trade its shares. According to Hindenburg, Buch and her husband invested in a sub-fund of this entity, IPE Plus Fund 1, from 2015 to 2018.
Hindenburg argues that these investments may have influenced SEBI’s slow response to allegations against the Adani Group. The firm suggests that Buch’s financial connections create a conflict of interest, hindering a thorough investigation into potential manipulation and fraud involving the Adani Group. Hindenburg’s report states, “It is not surprising that SEBI might have been reluctant to pursue an investigation that could implicate its own chairperson.”
Previous Claims and Market Impact
In January 2023, Hindenburg disclosed holding short positions in Adani Group companies through US-traded bonds and derivatives. The initial report alleged that the Adani Group utilized tax havens improperly and was burdened by excessive debt. Despite the Adani Group’s vehement denials, describing the allegations as “unsubstantiated speculations,” the report triggered a massive $150 billion decline in the value of Adani’s publicly traded shares.
Details of Buch’s Investments and SEBI’s Response
The latest report also reveals that Buch owned 100% of Agora Partners, a consulting firm based in Singapore, from 2013 to 2022 before transferring it to her husband shortly after assuming the role of SEBI Chairperson. Buch now holds a 99% stake in an Indian consulting firm, Agora Advisory, which reported revenue 4.4 times her SEBI salary in 2022. Furthermore, concerns were raised about Buch promoting real estate investment trusts (REITs) without disclosing her husband’s role as an adviser to Blackstone Inc., which sponsors two of India’s listed REITs.
Buch has firmly denied these allegations, maintaining that all investments were made before her SEBI tenure and that all required disclosures have been duly made. In a statement, she asserted, “We categorically deny the baseless allegations and insinuations presented in the report. All necessary disclosures have been made to SEBI over the years, and we are prepared to provide any financial documents to relevant authorities.” SEBI’s spokesperson supported Buch’s stance and advised investors to remain composed and cautious when responding to such reports.
SEBI’s Ongoing Investigation into Adani Group
SEBI has announced that it has completed investigations into 23 out of 24 issues related to the Adani Group. Six companies within the Adani Group have received show-cause notices from SEBI, indicating potential disciplinary action if satisfactory explanations are not provided. Additionally, SEBI issued a show-cause notice to Hindenburg for violating Indian regulations, which was disclosed by the firm in July. The IPE-Plus Fund 1, mentioned in the report, has denied any investment in Adani Group shares.
Political Fallout and Criticism
The Hindenburg report has ignited intense political debate. Opposition parties, including Congress, have demanded a parliamentary inquiry and Buch’s resignation. Rahul Gandhi, the Leader of the Opposition in the Lok Sabha, criticized SEBI’s integrity and questioned why Buch had not stepped down. He raised concerns about accountability, suggesting that if investors face losses, responsibility should fall on the Prime Minister, SEBI Chairperson, or Gautam Adani.
Trinamool Congress MP Mahua Moitra also strongly criticized the situation, underscoring the need for transparency and swift action to preserve India’s reputation as a global investment hub. Moitra, known for her critical stance on Gautam Adani and his ties to Prime Minister Narendra Modi, was expelled from Parliament in 2023 but re-elected in June.
BJP’s Defense and Counterattack
In contrast, the BJP has rejected the Congress demand for a Joint Parliamentary Committee (JPC) probe, branding it as a tactic to destabilize the Indian economy and undermine investment. BJP leader Ravi Shankar Prasad accused Congress and its allies of orchestrating economic chaos based on what he described as a fictitious report. He claimed that investors have recognized the “conspiracy” and dismissed efforts to disrupt the market.
The Hindenburg allegations have added to the ongoing controversy surrounding the Adani Group, and the political response reflects deepening divisions over accountability and transparency in the financial sector.
