August 10th 2024.
A recent report by US short-seller Hindenburg Research has once again targeted SEBI chairperson Madhabi Buch, accusing her and her husband of having stakes in offshore funds that were allegedly involved in the Adani money siphoning scandal. This is not the first time that Hindenburg has raised concerns about Adani's undisclosed web of offshore entities, but they claim that SEBI has not shown much interest in the matter. According to the whistleblowers, Buch and her husband were stakeholders in these obscure Bermuda and Mauritius funds, which were reportedly controlled by Vinod Adani - the elder brother of Adani Group chairman Gautam Adani. These funds are said to have been used to round-trip funds and artificially inflate Adani Group's stock prices.
In their blog post, Hindenburg reveals that a declaration of funds, signed by a principal at IIFL, stated that the source of the investment was the couple's salary and their net worth was estimated at USD 10 million. This raised eyebrows, considering there are numerous mainstream and reputable mutual funds available in India. The documents also show that the Buchs were involved in a multi-layered offshore fund structure, with minimal assets, that passed through high-risk jurisdictions and was overseen by a company with reported ties to the Wirecard scandal. The same company is also run by an Adani director and was allegedly used by Vinod Adani in the Adani cash siphoning scandal.
Hindenburg further alleges that SEBI, which is responsible for regulating the Indian mutual fund industry, has been reluctant to investigate this matter that may lead to their own chairperson. They cite a Supreme Court order where it was recorded that SEBI had "drawn a blank" in their investigations into Adani's offshore shareholders. The short-seller suggests that if SEBI truly wanted to find these offshore fund holders, they could have started by looking in the mirror.
Last year, Hindenburg's report accusing Adani Group of inflating revenue and manipulating stock prices resulted in a significant drop in the group's market value. However, the conglomerate denied all allegations and most of the listed companies have since recovered from the losses. The Supreme Court had then asked SEBI to complete their investigation and appointed an expert panel to look into regulatory lapses. The panel did not find any wrongdoing by Adani, and the apex court stated that no further probe was required other than the one being conducted by SEBI.
In their investigation, SEBI revealed that they were looking into 13 offshore entities that held between 14% and 20% in five publicly traded Adani stocks. However, it is unclear if they have completed these probes. Hindenburg claims that Buch and her husband had hidden stakes in the same offshore Bermuda and Mauritius funds that were used by Vinod Adani. According to documents received from a whistleblower, just weeks before Buch's appointment as SEBI chairperson, her husband wrote to the Mauritius fund administrator, requesting to be the sole person authorized to operate the accounts. This email was regarding their investment in the Global Dynamic Opportunities Fund (GDOF). It is alleged that this was done to move the assets out of Buch's name before her politically sensitive appointment. Another account statement, addressed to Buch's private email, reveals the full details of the fund structure, including "GDOF Cell 90". According to Hindenburg, this is the exact same Mauritius-registered "cell" of the fund that was reportedly used by Vinod Adani.
PTI has reached out to SEBI for comments, but they have not responded yet. It is clear that this fresh attack by Hindenburg has brought the Adani Group and SEBI under scrutiny once again, raising questions about the transparency and legality of their operations.
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