SEBI Chairperson Implicated in Offshore Funds Linked to Adani Scandal by Hindenburg

Hindenburg Research has launched fresh allegations against SEBI chairperson Madhabi Buch, accusing her and her husband of having stakes in offshore funds linked to the Adani money siphoning scandal. The short-seller's blogpost claims that despite 18 months since its report on Adani, SEBI has shown little interest in investigating Adani's alleged web of Mauritius and offshore shell entities.

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In January last year, Hindenburg accused the Adani Group of orchestrating the largest con in corporate history. They alleged that the conglomerate used a network of companies in tax havens to inflate revenue and manipulate stock prices while accumulating debt. Although Adani Group denied these allegations, the report caused a significant drop in the group's shares, wiping out over USD 150 billion in market value at their lowest point. Most of these losses have since been recovered by the listed companies.

SEBI Chairperson's Alleged Involvement

According to Hindenburg, whistleblower documents reveal that Madhabi Buch and her husband had stakes in obscure offshore funds used in the Adani scandal. These funds, allegedly controlled by Vinod Adani, were used to round-trip funds and inflate stock prices. The blogpost also cited a declaration from IIFL stating that the couple's net worth is estimated at USD 10 million.

The blogpost further alleges that despite numerous reputable onshore Indian mutual fund products, SEBI Chairperson Madhabi Buch and her husband invested in a multi-layered offshore fund structure with minimal assets. This structure traversed high-risk jurisdictions and was overseen by a company with ties to the Wirecard scandal. The same entity was run by an Adani director and significantly used by Vinod Adani in the alleged cash siphoning scandal.

Supreme Court's Involvement

The Supreme Court had previously ordered SEBI to complete its investigation into the Adani Group and set up an expert panel to look into regulatory lapses. The panel did not find any adverse reports on Adani, and the apex court stated that no other probe was required apart from SEBI's ongoing investigation.

Hindenburg highlighted a Supreme Court order noting that SEBI had failed to identify who funded Adani's offshore shareholders. "If SEBI really wanted to find the offshore fund holders, perhaps the SEBI chairperson could have started by looking in the mirror," it said. The short-seller found it unsurprising that SEBI was reluctant to follow a trail leading to its own chairperson.

Details of Offshore Investments

Hindenburg also detailed an email dated March 22nd, 2017, from Dhaval Buch to Mauritius fund administrator Trident Trust. This email was sent just weeks before his wife was appointed as SEBI chairperson. Dhaval Buch requested to be the sole person authorised to operate their accounts, seemingly moving assets out of his wife's name ahead of her politically sensitive appointment.

A later account statement dated February 26th, 2018, addressed to Madhabi Buch's private email, revealed full details of their investment structure: GDOF Cell 90 IPEplus Fund 1. This is reportedly the same Mauritius-registered cell found several layers deep in a convoluted structure used by Vinod Adani.

Sebi has not provided any immediate comments regarding these allegations. Last year, SEBI informed a Supreme Court-appointed panel that it was investigating 13 opaque offshore entities holding between 14% and 20% across five publicly traded stocks of the conglomerate. It remains unclear if these probes have been completed.

The Hindenburg report has prompted significant scrutiny of SEBI's actions and raised questions about potential conflicts of interest within India's market regulator.