Hindenburg targets SEBI chief

New Delhi: US short-seller Hindenburg Research has said that it suspects SEBI's unwillingness to act against Adani Group may be because of its head Madhabi Puri Buch had stakes in offshore funds linked to the conglomerate - an allegation that the SEBI head called ‘baseless’ and an attempt of ‘character assassination’.

Hindenburg alleged that Buch and her husband had undisclosed investments in obscure offshore funds in Bermuda and Mauritius, the same entities allegedly used by Vinod Adani - the elder brother of group chairman Gautam Adani - to round-trip funds and inflate stock prices.

SEBI in October 2020 began a probe into the shareholding structure of Adani Group companies after red flags were raised over high concentration of foreign holdings in the conglomerate's listed companies. Investigation was launched to determine if the foreign investors are genuine public shareholders or acting as fronts for the promoters.

SEBI last year had told a Supreme Court-appointed panel that it was investigating 13 opaque offshore entities that held between 14 per cent and 20 per cent across five publicly traded stocks of the conglomerate. It hasn't stated if the two incomplete probes have since been completed, something which Hindenburg used to attack the market regulator. Madhabi and her husband Dhaval Buch in a joint statement strongly denied the "baseless allegations and insinuations made in the report". The same, they said, "are devoid of any truth". "Our life and finances are an open book," they said. "It is unfortunate that Hindenburg Research against whom SEBI has taken an enforcement action and issued a show cause notice has chosen to attempt character assassination in response to the same." While the statement did not talk on the questions Hindenburg raised over SEBI probe, the duo promised to come out with a detailed response.

Hindenburg on Saturday stated that the Madhabi and her husband invested in offshore entities that were allegedly part of a fund structure managed by India Infoline and in which Vinod Adani also had investments. These investments reportedly date back to 2015, well before her appointment as a whole-time member of SEBI in 2017 and the subsequent elevation as chairperson in March 2022.

It said Bermuda-based Global Opportunities Fund, which allegedly was used by entities connected to Adani Group to trade in shares of group companies, had sub-funds. Buch and her husband were investors in one of these sub-funds in 2015.

Citing "whistleblower documents", Hindenburg said, "Madhabi Buch, the current chairperson of SEBI, and her husband had stakes in both obscure offshore funds used in the Adani money siphoning scandal."

SEBI, it claimed, has "shown a surprising lack of interest in Adani's alleged undisclosed web of Mauritius and offshore shell entities." The Buchs may have first opened their account with IPE Plus Fund 1 on June 5, 2015 in Singapore. IPE fund is a small offshore Mauritius fund set up by Vinod Adani through India Infoline (IIFL), a wealth management firm with ties to the Wirecard embezzlement scandal.

"Vinod...Used this structure to invest in Indian markets with funds allegedly siphoned from over invoicing of power equipment to Adani Group," claimed Hindenburg.

Malicious, says Adani Group

Adani Group has denounced the latest allegations from Hindenburg Research, terming them as “malicious", "mischievous," and “manipulative. In a statement issued to stock exchanges, Adani group has rebuffed the latest claims made by Hindenburg saying that its overseas holding structure is fully transparent.