Anika Begay
By Jayshree P Upadhyay
MUMBAI (Reuters) – U.S. short-selling firm Hindenburg Research said on Saturday that the head of India’s markets regulator, Madhabi Puri Buch, had previously invested in offshore funds also used by the Adani Group.
In a late-night statement to the press, Buch denied that the allegations in the report were unfounded, saying he would issue a detailed statement later.
In a personal statement released on Sunday, Buch said all disclosure requirements had been scrupulously complied with and that the investments in the fund referred to in the Hindenburg report were made in 2015 in a private capacity, two years before it joined SEBI.
The Hindenburg Report sparked renewed criticism from India’s opposition political parties, who called for a parliamentary investigation.
Citing whistleblower documents, Hindenburg said Buch and her husband held shares in an offshore fund in which a significant amount of money had been invested by associates of Vinod Adani, brother of Adani Group Chairman Gautam Adani.
Adani Group on Sunday rejected the allegations and said its foreign holding structure was fully transparent.
The conglomerate’s spokesman described the charges against Hindenburg as “nothing more than red herrings launched by a desperate entity that has total disregard for Indian laws.”
“Adani Group has absolutely no business relationship with the individuals or matters mentioned in this deliberate and calculated attempt to discredit our position,” the spokesperson said.
In January 2023, Hindenburg released a report exposing Adani Group’s misuse of tax havens and stock manipulation, triggering a $150 billion sell-off in the conglomerate’s shares despite its denials of wrongdoing. The stock has since recovered somewhat.
The 2023 report also prompted an ongoing investigation by regulator Buch, the Securities and Exchange Board of India (SEBI). In May, six Adani group companies said they had received notices from SEBI alleging violations of Indian stock market rules.
In parallel with the probe into Adani Group, SEBI sent a “communication” notice to Hindenburg, alleging that the short seller had violated Indian rules by arranging a short bet using non-public information.
In July Hindenburg called the charges “nonsense.”
In his new report, Hindenburg attempts to link the offshore funds that traded Adani Group shares with the personal investments of Buch and her husband.
The Bermuda-based Global Opportunities Fund, which the Financial Times said was used by entities linked to Adani Group to trade shares in group companies, was said to have had underfunding.
Buch and her husband were investors in one of these subfunds in 2015, Hindenburg claims, citing whistleblower documents.
In 2017, before Buch was appointed a full-time member of SEBI, her husband asked to be the sole manager of the account, Hindenburg said, citing whistleblower documents.
In 2018, Buch wrote an email asking to redeem her husband’s entire investment in the fund, whistleblower documents show.
In 2022, she was appointed head of the regulatory body.
“We believe our findings raise questions that deserve further investigation. We welcome greater transparency,” Hindenburg said.
A statement from Buch and her husband said their finances were an open book and they had no hesitation in disclosing any financial documents to any authority. “All required disclosures have already been provided to SEBI over the years,” they said.
The fund in which Buch and her husband invested, IPE-Plus Fund 1, said on Sunday that it had not invested directly or indirectly in Adani Group shares.
“No investor was involved in the fund’s operations or investment decisions. Ms. Madhabi Buch and Mr. Dhaval Buch’s holdings in the fund were less than 1.5% of the total inflow into the fund,” the fund’s asset manager said in a filing to Indian stock exchanges.
The Adani conglomerate, which comprises 10 companies and is active in airports, ports, electricity, gas and other sectors, has benefited from Prime Minister Narendra Modi’s government’s push to develop India’s infrastructure.
The main opposition Congress party has previously claimed that there were close ties between the Adani group and the ruling Bharatiya Janata Party, both claims it has denied.
A Congress party spokesperson, in a statement posted on social media platform X on Saturday evening, called on the government to “eliminate all conflicts of interest in the SEBI probe into Adani”.
The party has called for a parliamentary inquiry to “investigate the full extent” of the matter.
