Explore SEBI’s controversial handling of the Adani case, potential conflicts of interest, and the impact on India’s financial markets.

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Hindenburg Research

In January 2023, Hindenburg Research published a detailed report accusing the Adani Group of operating “the largest con in corporate history.”

The report highlighted a complex web of offshore entities, mainly based in Mauritius, allegedly used for billions of dollars of undisclosed related party transactions, investment, and stock manipulation.

Despite the gravity of these allegations and numerous independent media investigations that followed, the Securities and Exchange Board of India (SEBI) has taken no public action against the Adani Group.

SEBI’s Response: A Focus on the Messenger, Not the Message

Instead of addressing the allegations against Adani, SEBI issued a ‘show cause’ notice to Hindenburg Research in June 2024.

SEBI did not dispute the facts presented in the 106-page report but questioned the adequacy of Hindenburg’s disclosure about their short position in Adani stocks.

This move by SEBI has raised concerns about the regulator’s priorities and willingness to confront the powerful conglomerate.

Despite overwhelming evidence of offshore shell entities being used for significant financial misdeeds, Hindenburg questioned SEBI’s lack of action against the Adani Group.

The Indian Supreme Court also criticized SEBI for failing to uncover the true identities behind Adani’s offshore shareholders.

The Complex Web of Offshore Funds

Further investigations revealed that Vinod Adani, the brother of Gautam Adani, allegedly used an intricate network of offshore funds, such as the Global Dynamic Opportunities Fund (GDOF) in Bermuda and the IPE Plus Fund in Mauritius, to siphon funds from over-invoicing power equipment imports.

These funds were reportedly managed by India Infoline (now known as 360 One), a wealth management firm tied to the Wirecard scandal, Germany’s most significant fraud case.

Allegations Against SEBI Chairperson Madhabi Buch

Adding to the controversy, whistleblower documents suggest that SEBI Chairperson Madhabi Buch and her husband, Dhaval Buch, had stakes in the same offshore funds used by Vinod Adani.

These stakes were allegedly held through a multi-layered offshore structure in high-risk jurisdictions like Mauritius and Bermuda.

While in a regulatory position at SEBI, Madhabi Buch’s involvement in such funds raises serious questions about potential conflicts of interest.

SEBI’s Influence on REIT Regulations and Potential Conflicts

During her tenure as SEBI Chairperson, Madhabi Buch has advocated for Real Estate Investment Trusts (REITs) in India.

Shortly after she joined SEBI, her husband, Dhaval Buch, became a Senior Advisor to Blackstone, a significant player in India’s REIT market.

During this period, SEBI introduced several regulatory changes that benefited REITs, including those backed by Blackstone. This situation further complicates perceptions of SEBI’s impartiality in regulatory matters.

Conclusion: A Call for Transparency and Accountability

The revelations about SEBI’s potential conflicts of interest and inaction against Adani raise serious concerns about the regulator’s ability to act as an objective overseer of the Indian financial markets.

These findings highlight the need for greater transparency and accountability in how SEBI handles cases involving powerful corporations and potential conflicts within its leadership.

The situation underscores the importance of investigative journalism and independent research in holding powerful entities accountable, as illustrated by Hindenburg Research’s and other media outlets’ ongoing scrutiny of Adani Group and SEBI.

For more on how the Adani Group has been scrutinized and the role of SEBI in these matters, you can explore our related articles: