After the reply of SEBI Chairperson, Hindenburg raised new questions, shared many documents in X post

After the allegations leveled by short selling firm Hindenburg Research against Securities and Exchange Board of India (SEBI) Chairperson Madhabi Puri Buch and her husband Dhaval Buch and the response of the Buch couple to it, Hindenburg has again raised new questions. Hindenburg said in a post on X late Sunday night that in response to our report by SEBI chief Madhabi Puri Buch, she has accepted many important facts and raised many new important questions.

“Buch’s response has now publicly confirmed her investment in a shadowy Bermuda/Mauritius fund structure, as well as the money allegedly sent out from Vinod Adani,” Hindenburg said in a post on X late Sunday night. She also confirmed that the fund was run by her husband’s childhood friend, who was a director of Adani at the time.

Citing massive ‘conflicts of interest’ in Sebi’s probe into the Adani case, Hindenburg Research said, “Sebi was tasked with investigating investment funds related to the Adani case, which would include funds in which Buch had personally invested and funds from the same sponsors that were specifically highlighted in our original report.”

Buch’s statement also claimed that two consulting firms she founded, an Indian and a Singaporean company, became inactive soon after her appointment to SEBI in 2017, and her husband took over in 2019, Hindenburg said.

As per the latest shareholding list as of March 31, 2024, Agora Advisory Limited (India) is still 99% owned by Madhabi Buch, not her husband. The company is currently active and generating consulting revenue.

Further, as per Singapore records, Buch remained a 100% shareholder of Agora Partners Singapore till March 16, 2022, and owned it throughout her tenure as a SEBI Whole Time Member. She transferred her shares to her husband’s name just two weeks after her appointment as SEBI chairperson.

It said, “The Indian unit, which is still 99 per cent owned by the SEBI Chairperson, generated Rs 23.985 million (US$312,000) in revenue (i.e. consultations) during FY ’22, ’23 and ’24 during the period she was serving as Chairperson, as per its financial statements.”

Showing a copy of a personal email claiming to be from the Sebi chief, Hindenburg alleged in a report on Saturday that “Buch used her personal email to conduct business under her husband’s name while serving as a full-time member of Sebi.” It asked: “What other investments or business transactions has the Sebi chairperson conducted under her husband’s name while holding official positions?”

What is the Buch couple’s response to Hindenburg’s allegations?

SEBI Chairperson Madhabi Puri Buch and her husband Dhaval Buch responded to the allegations leveled by Hindenburg on Saturday (August 10). The Buch couple said, the investment in IIFL Wealth Management Fund was made as a private citizen two years before Madhavi Puri Buch became a part of SEBI. The SEBI Chairperson said, the investment in the fund mentioned in the Hindenburg report was made in 2015, when both of them were private citizens living in Singapore and this investment was made about 2 years before Madhabi joined SEBI as a full-time member. The decision to invest in this fund was taken because Chief Investment Officer Anil Ahuja is a childhood friend of Dhaval from school and IIT Delhi and has a strong investment career spanning several decades, being a former employee of Citibank, JP Morgan and 3i Group Plc. The statement said that, as confirmed by Anil Ahuja, at no point of time has the fund invested in any bonds, equities or derivatives of any Adani Group company.

Dhaval’s appointment as a senior advisor to Blackstone Private Equity in 2019 was due to his deep expertise in supply chain management. Thus his appointment predates Madhabi’s appointment as SEBI chairman. This appointment has since been in the public domain. Dhaval Buch has no connection with the real estate segment of leading private equity company Blackstone. After his appointment, Blackstone Group was immediately added to Madhabi’s disavowal list kept with SEBI.

Two consulting companies set up by Madhabi while he was in Singapore, one in India and one in Singapore, became defunct soon after his appointment to SEBI. These companies were clearly part of her disclosures to SEBI. Two of Madhavi’s consulting firms became inactive soon after her appointment to SEBI.

After Dhaval retired from Unilever in 2019, he started his own consultancy practice through these companies. Dhaval’s deep expertise in supply chains gave him the opportunity to work with key clients in Indian industry. Thus, linking the income earned in these companies to Madhavi’s current government salary is malicious, the statement said.

When the shareholding of the Singapore entity went to Dhaval, it was once again disclosed not only to SEBI, but also to the Singapore authorities and Indian tax authorities.

Several notices to Hindenburg, did not respond

Hindenburg has been issued show cause notices for various types of violations in India. Hindenburg was served notices for several violations; it is unfortunate that it is not responding to the notices, but the credibility of SEBI is being questioned In a statement soon after Hindenburg released its latest report, Buch had called the allegations baseless. According to Hindenburg, Madhavi and her husband had made undeclared investments in obscure offshore funds in Bermuda and Mauritius. It said these were the same funds that were allegedly used by Vinod Adani to launder money and raise the share prices of Adani Group companies. Vinod Adani is the elder brother of Adani Group chairman Gautam Adani.