 "Baseless, devoid of truth: Sebi chief, husband deny Hindenburg allegations")
Eighteen months after its report on Adani Group, US-based short-seller Hindenburg Research claimed on Saturday that Securities and Exchange Board of India (Sebi) Chairperson Madhabi Puri Buch and her husband Dhaval Buch had stake in obscure offshore entities used in the alleged Adani money siphoning scandal.
The short-seller said that despite the evidence, along with over 40 independent media investigations on its work, Sebi took no public action against Adani Group.
"It has been nearly 18 months since our original report on 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 suspected billions of dollars of undisclosed related-party transactions, undisclosed investment and stock manipulation. Since then, despite the evidence, along with over 40 independent media investigations corroborating and expanding on our original work, Indian securities regulator Sebi has taken no public action against Adani Group. Instead, on June 27, 2024, Sebi sent us an apparent ‘showcause’ notice. It did not allege any factual errors in our 106-page analysis, but instead claimed the disclosure around our short position – which we disclosed repeatedly – was deficient, arguing that we should have provided even more robust disclosure," said Hindenburg in its report published on its website on Saturday.
The Hindenburg report further read: "We had previously noted Adani’s total confidence in continuing to operate without the risk of serious regulatory intervention, suggesting that this might be explained through Adani’s relationship with Sebi Chairperson Madhabi Buch. What we hadn’t realised: the current Sebi Chairperson and her husband, Dhaval Buch, had hidden stakes in the exact same obscure offshore funds in Bermuda and Mauritius, found in the same complex nested structure, used by Vinod Adani."
According to Hindenburg, Buch and her husband may have first opened their account with IPE Plus Fund 1 on June 5, 2015, in Singapore. "IPE fund is a small offshore Mauritius fund set up by an Adani director through India Infoline (IIFL), a wealth management firm with ties to the Wirecard embezzlement scandal."
"Vinod Adani, brother of Gautam Adani, used this structure to invest in Indian markets with funds allegedly siphoned from over-invoicing of power equipment to Adani Group," claimed Hindenburg.
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"A declaration of funds, 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 short-seller firm further stated.
Hindenburg purportedly presented evidence of Buch doing business via private email through her husband’s name in offshore fund entities, citing the whistleblower documents.
Hindenburg alleges conflict of interest
Hindenburg added during Madhabi Buch’s tenure as a whole-time member at Sebi, in 2019, her husband was appointed a senior advisor to Blackstone, an American alternative investment management company based in New York City. The company, according to the report, has been one of the largest investors in and sponsors of real estate investment trust (Reit), a nascent asset class in India.
Citing Dhaval Buch's LinkedIn account, Hindenburg argued that over the past two decades, he had never worked for a fund, in real estate or at a capital markets firm. "Despite the lack of experience in these areas, he joined Blackstone, a global private equity firm and large investor in India, as a “Senior Advisor” in July 2019, per his Linkedin," read the report.
"During Dhaval Buch’s time as senior advisor, while his wife was a Sebi official, Blackstone sponsored Mindspace and Nexus Select Trust, India’s second and fourth Reit to receive Sebi approval for IPO. India’s first ever Reit, Embassy, obtained Sebi approval and came with its IPO on April 1, 2019, sponsored by Blackstone, just 3 months before Dhaval Buch reported joining Blackstone in July 2019."
During Dhaval Buch’s time as advisor to Blackstone, the report said, Sebi proposed, approved and facilitated major Reit regulation changes specifically benefiting private equity firms like Blackstone.
"Since Madhabi Buch became Chairperson in March 2022, Sebi has proposed and implemented a raft of Reit legislation, of significant benefit to Blackstone as one of the largest Reit sponsors in India, which her husband works for," the report states.
Buch terms allegations baseless
In response, the Sebi chairperson termed the Hindenburg allegations baseless and "devoid of any truth".
In a statement issued late Saturday night, Madhabi Puri Buch and Dhaval Buch said: "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. 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. 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. Further, in the interest of complete transparency, we would be issuing a detailed statement in due course."
In a statement issued late Saturday night, Madhabi Puri Buch and Dhaval Buch said: "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. 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. 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. Further, in the interest of complete transparency, we would be issuing a detailed statement in due course."
They further said: "It is unfortunate that Hindenburg Research, against whom Sebi has taken an enforcement action and issued a showcause notice, has chosen to attempt character assassination in response to the same."
Earlier today, the short-seller had hinted at another significant disclosure involving India, 18 months after its so-called Adani Group exposé.