Hindenburg’s new report alleges ’SEBI chairperson had stake in offshore entities used in Adani scandal’

Hindenburg Research has alleged in its new investigative report that the ‘chairperson of Securities and Exchange Board of India (SEBI) had a stake in certain offshore entities used in the Adani scandal’. 

In its report, Hindenburg says, ‘’We had previously noted Adani’s total confidence in continuing to operate without the risk of serious regulatory intervention, suggesting that this may be explained through Adani’s relationship with SEBI Chairperson”

Hours after hinting at a major revelation, Hindenburg Research published a blog on Saturday night alleging that the unwillingness of the market regulator to act on its whistleblower report on Adani group was because of the complicity of the chairperson in using the same funds used by Gautam Adani’s brother Vinod Adani.

“We suspect SEBI’s unwillingness to take meaningful action against suspect offshore shareholders in the Adani Group may stem from Chairperson Madhabi Buch’s complicity in using the exact same funds used by Vinod Adani, brother of Gautam Adani”, the report stated.

This comes over a year after Hindenburg published allegations against the Adani Group, accusing them of insider trading and stock market violations. The January 2023 report led to a significant drop in Adani Group stock prices, reportedly causing losses of over $100 billion.

Hindenburg claimed that despite its evidence backed report with corroboration from over 40 independent media, Sebi had not taken any public action against the Adani Group.

In the blog post of Saturday, Hindenburg claimed that a Vinod Adani controlled company had invested in “Global Dynamic Opportunities Fund” (“GDOF”) in Bermuda, a British overseas territory and tax haven, which then invested in IPE Plus Fund 1, a fund registered in Mauritius. The parent fund of GDOF – the Bermuda-based Global Opportunities Fund (“GOF”) – was used by two Adani associates to amass and trade large positions in shares of the Adani Group. These nested funds are managed by Indian Infoline (“IIFL”), now called 360 One per private fund data and IIFL’s marketing material. The report claimed to have received “whistleblower documents” which showed that the Sebi chairperson and her husband Dhaval Buch had stakes in obscure Bermuda and Mauritius funds used in the Adani money siphoning scandal.

“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 report said.

The report also highlighted that from April 2017 to March 2022, Buch had a 100% interest in an offshore Singaporean consulting firm, called Agora Partners. On March 16th, 2022, two weeks after her appointment as chairperson, she “quietly transferred the shares to her husband,” the report said.

“This offshore Singaporean entity is exempt from disclosing financial statements so it is unclear the amount of revenue it derives from its consulting business and from whom – crucial information for those assessing the probity of the Chairperson’s external businesses interests”, the report further said.

The report also claimed that in 2019 Buch’s husband was appointed as advisor to Blackstone, a global private equity firm which has been one of the largest investors in of REITs. “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 to publicly IPO. Sebi has proposed, approved and facilitated major Reit regulations changes. These include 7 consultation papers, 3 consolidated updates, 2 new regulatory frameworks and nomination rights for units, specifically benefiting private equity firms like Blackstone”, the report said.

Hindenburg sought a response to their findings and questions raised through this report.

‘’What we hadn’t realized: the current SEBI Chairperson had hidden stakes in the exact same obscure offshore Bermuda and Mauritius funds, found in the same complex nested structure, used by Vinod Adani,” said Hindenburg in its report.

In January 2023, the US-based short-seller accused billionaire Gautam Adani’s ports-to-power conglomerate of stock market manipulation and financial misconduct.  

Adani group and chairman Gautam Adani have on multiple occasions vehemently denied all the allegations leveled by Hindenburg Research in January 2023 report. 

India’s capital markets regulator investigated the allegations levelled against the Adani Group and found no major malpractices on the part of the conglomerate. 
 

LiveMint has reached out to SEBI for a response on the latest report by Hindenburg Research. The story will be updated once we receive response.