Hindenburg-Adani case: Top 10 allegations by the US firm on Madhabi Buch and the Sebi chief’s response

Hindenburg-Adani case: Hindenburg Research has raised fresh allegations in the Adani Group saga, this time linking the chief of India's markets regulator to the conglomerate.

On Saturday, the US-based short seller alleged that the Securities and Exchange Board of India was unwilling to act on its January 2023 report on the Adani Group because Sebi chairperson Madhabi Puri Buch and her husband Dhaval Buch had investments in offshore funds that had links with the Gautam Adani-led enterprise.

The Sebi chief and her husband have denied the allegations, terming them ‘baseless’ and an attempted ‘character assassination’.

“In the context of allegations made in the Hindenburg Report dated August 10, 2024 against us, we would like to state that we strongly deny the baseless allegations and insinuations made in the report," Madhabi Puri Buch said in a statement.

The top 10 allegations by Hindenburg against the Sebi chief

1. It has been 18 months since Hindenburg's Adani report, and Sebi has shown a surprising lack of interest in the Adani Group’s alleged undisclosed web of Mauritius and offshore shell entities. As per Hindenburg, an Adani director established the "IPE Plus Fund", a .small offshore fund in Mauritius, through India Infoline Ltd (IIFL), a wealth management company. Vinod Adani, Gautam Adani's brother, allegedly siphoned money from the Adani Group using the structure by over-invoicing for power equipment and used that to invest in Indian markets.
2. Hindenburg said whistleblower documents showed that Madhabi Puri Buch and her husband had stakes in both obscure offshore funds allegedly used by the Adani Group to siphon money.
3. India's Supreme Court has said that Sebi's investigations into who funded Adani's offshore shareholders had “drawn a blank”. Hindenburg said in its latest report that if Sebi genuinely wanted to identify the offshore fund holders highlighted in the short seller's January 2023 report, the Sebi chairperson chould have started by looking in the mirror. 
4. Hindenburg added that Sebi has not acted against any other Indian-origin suspected Adani shareholders operated by India Infoline: EM Resurgent Fund and Emerging India Focus Funds.
5. Hindenburg alleged that from April 2017 till March 2022, while Madhabi Buch was a wholetime member of Sebi, she had a 100% interest in an offshore Singaporean consulting firm called Agora Partners. It was only on 16 March, 2022, two weeks after her appointment as Sebi chairperson that she transferred the shares to her husband, Hindenburg alleged.
6. Hindenburg added that Madhabi Buch's husband, Dhaval Buch, was appointed as a senior adviser to Blackstone in 2019 while she was a wholetime member of Sebi although, according to his LinkedIn profile, he had never worked for a fund in the real estate or capital markets.
7. Hindenburg added that during Dhaval Buch’s time as a senior adviser to Blackstone, while his wife was a Sebi official, Blackstone sponsored Mindspace and Nexus Select Trust, India's second and fourth real estate investment trusts (Reits) to receive Sebi approval for an IPO.
8. Hindenburg alleged that Sebi approved significant changes to India's Reit regulations while Dhaval Buch served as an adviser to Blackstone.
9. It also pointed to Madhabi Buch referring to Reits as her "favorite products for the future" and encouraging investors to see the asset class "positively", at industry conferences. However, Hindenburg alleged, “while making those statements, she omitted to mention that Blackstone, who her husband advises, stands to gain significantly from the asset class”.
10. Hinderburg added that Madhabi Buch allegedly owned 99% of Indian consulting company Agora Advisory, of which her husband is a director. “In 2022, this entity reported $261,000 revenue from consulting, 4.4 times her disclosed salary at Sebi,” Hindenburg Research said.

Sebi chief's response

“In the context of allegations made in the Hindenburg Report dated August 10,2024 against us, we would like to state that we strongly deny the baseless allegations and insinuations made in the report," Madhabi Puri Buch said in a statement.

“We have no hesitation in disclosing any and all financial documents, including those that relate to the period when we were strictly private citizens, to any and every authority that may seek them.”

Buch added that it was unfortunate that Hindenburg Research, against whom Sebi has taken an enforcement action and issued a show cause notice, has chosen to attempt character assassination in response.

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