New developments have emerged in the Adani-Hindenburg row. This began in January 2023 with the release of the by the US-based short-selling investment firm Hindenburg Research which alleged that the Adani group had used offshore funds to siphon public money.
Hindenburg has now alleged in a that the current Securities Exchange Board of India (SEBI) chair Madhabi Buch and her husband Dhaval Buch had stakes in these offshore funds linked to the Adani group named in its first report.
The new report presents a conflict of interest between Madhabi Buch’s position as chair of the regulatory authority and her personal financial dealings. The report cites the Supreme Court, which observed that the SEBI had “drawn a blank” in its attempt to identify the holders of offshore funds at the centre of scrutiny in the initial Hindenburg report and alleges that this was because the current SEBI chair and her husband were beneficiaries – a majority of it during Madhabi Buch’s time at the SEBI as a full-time member.
The report also alleges that SEBI made favourable changes to regulations related to real estate investment trusts (REITs), which benefited Blackstone where Dhaval Buch worked as a senior adviser. Blackstone is one of the largest investors and sponsors of REITs. Whistleblower documents containing personal emails, account statements, fund details etc., have been mentioned to support the findings.
A SEBI released following Hindenburg’s recent report draws investor attention to the disclaimer in the document. The SEBI says the research firm may have short positions in the securities included in the report. The statement provides that proceedings are currently ongoing against the Adani group before the quasi-judicial authority and hence the regulatory body shall refrain from commenting on the matter. It also adds that any changes to regulations related to REITs were done with due process, and all encouragement and promotion of REITs were done with a view to develop the securities market in India.
The statement also states that the regulatory body has adequate mechanisms to address any conflict of interest and the same have been followed by the chair, including her recusal wherever such conflict has occurred. The SEBI has reiterated that it is a robust regulatory body aligning with global best standards in its framework and protection of investors.
