“The current SEBI Chairperson and her husband, Dhaval Buch, had hidden stakes in the exact same obscure offshore Bermuda and Mauritius funds, found in the same complex nested structure, used by Vinod Adani,” Hindenburg said in a report published on its website.
Dubai-based Vinod is the elder brother of Gautam Adani and is said to have used the aforesaid structure to invest in Indian markets with funds allegedly siphoned from over invoicing of power equipment to the Adani Group.
The report, citing whistleblower documents, claimed that the Buchs appeared to have opened their account with IPE Plus Fund 1 on June 5th, 2015 in Singapore. The offshore Mauritius fund is said to have been set by an Adani director through IIFL and is registered in tax haven Mauritius.
“Beyond being used as an alleged funnel for Vinod Adani’s money, the tiny fund had other close ties to Adani. The Founder and Chief Investment Officer (CIO) of the IPE Plus Fund was Anil Ahuja, per his biography. At the same time, Ahuja was a director of Adani Enterprises where he served three terms spanning nine years ending in June 2017, per his biography and exchange disclosures. Prior to that he was a director of Adani Power,” Hindenburg alleged.It said Adani’s confidence in continuing to operate without the risk of serious regulatory intervention can be “explained through Adani’s relationship with SEBI Chairperson, Madhabi Buch.””What we hadn’t realized: the current SEBI Chairperson and her husband, Dhaval Buch, had hidden stakes in the exact same obscure offshore Bermuda and Mauritius funds, found in the same complex nested structure, used by Vinod Adani,” Hindenburg said.
The whistleblower 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 separate investigation by the Financial Times showed that the parent fund of GDOF was used by two Adani associates “to amass and trade large positions in shares of the Adani Group”.
Hindenburg said Sebi’s “unwillingness to take meaningful action against suspect offshore shareholders in the Adani Group may stem from Buch’s complicity in using the exact same funds used by Vinod Adani”.
The US-based short-seller also produced a copy of the records from the Ministry of Corporate Affairs which ostensibly shows that Sebi chief owns 99% stake in a consulting business called Agora Advisory, where her husband is a director.
“In 2022, this entity reported $261,000 revenue from consulting, 4.4 times her disclosed salary at SEBI,” the report said, adding that the 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.
“In brief, despite the existence of thousands of mainstream, reputable onshore Indian mutual fund products, an industry she now is responsible for regulating, documents show SEBI Chairperson Madhabi Buch and her husband had stakes in a multi-layered offshore fund structure with miniscule assets, traversing known high-risk jurisdictions, overseen by a company with reported ties to the Wirecard scandal, in the same entity run by an Adani director and significantly used by Vinod Adani in the alleged Adani cash siphoning scandal,” the report said.
Pointing out that Sebi has taken no action against other suspect Adani shareholders operated by India Infoline: EM Resurgent Fund and Emerging India Focus funds, it said: “If Sebi really wanted to find the offshore fund holders, perhaps the Sebi chairperson could have started by looking in the mirror. We find it unsurprising that Sebi was reluctant to follow a trail that may have led to its own chairperson.”
On Sebi chief’s husband Dhaval Buch, Hindenburg said during his tenure as senior advisor in Blackstone, the regulator gave nod to IPOs of two REITS backed by the PE firm – Mindspace and Nexus Select Trust.
“During Dhaval Buch’s time as advisor to Blackstone, 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,” Hindenburg said.
“During industry conferences, Sebi chairperson Madhabi Buch has touted REITs as her “favourite products for the future” and urged investors to look “positively” upon the asset class. While making those statements, she omitted to mention that blackstone, who her husband advises, stands to gain significantly from the asset class,” it said.
On Agora Advisory, which is said to 99% owned by Madhabi Buch, the firm generated Rs 19.8 million revenue from consulting, which was 4.4 times Madhabi Buch’s previous disclosed salary as a Whole-Time member at SEBI.
Citing the data, Hindenburg said the regulator Sebi can’t be trusted as an objective arbiter in the Adani issue and that proceeds from this report will be donated to causes that support free expression.
ET has written to Sebi seeking comments on the allegations. Their response is awaited.
