The report citing “whistle blower documents” made the claim that the entities were part of a network used by Vinod Adani, Gautam Adani’s elder brother for money siphoning. The documents also claimed that the Sebi chief and her husband had made investments since as early as in 2015, in offshore funds in Barmuda and Mauritius linked to entity allegedly used by Adani group to manipulate financial markets.

There had been another investigative report released in January, 2023. It was alleged in the report that Adani group had created the largest scam in corporate history, through stock manipulation and financial misconduct. After these scams were exposed by Hindenburg Research report, Adani had suffered huge losses, shaving over hundred billion dollars off their market valuation.

Before the release of its latest report, Hindenburg wrote in a post on X claiming that “something big soon in India”. In the report released on August 10, 2024, Hindenburg makes other serious allegations about SEBI chairperson Buch and husband Dhaval Buch potentially personally benefitting from certain statements made by her in her capacity as chairperson of India’s stock market regulator. It also says that she may have not disclosed the total income she receives from ‘consulting’ via her ownership of Agora Consulting.

Hindenburg alleges that despite the existence of large number of mainstream, reputable onshore Indian mutual fund products, sort of an industry she now is responsible for regulating, documents in its possession show Madhabi Buch and her husband “…had stakes in a multi-layered offshore fund structure with minuscule assets, traversing known high-risk jurisdictions, overseen by a company with reported ties to the Wirecard scandal, in the same entity that is run by an Adani director and significantly used by Vinod Adani.”

As per the documents cited by Hindenburg, “Madhabi Buch and her husband Dhaval Buch first appear to have opened their account with IPE Plus Fund 1 on June 5, 2015 in Singapore.” These offshore Bermuda and Mauritius funds, says Hindenburg, were “found in the same complex nested structure, used by Vinod Adani”. Two weeks prior to her appointment as SEBI chief, says the report, “Madhabi’s husband, Dhaval Buch, wrote to Mauritius fund administrator Trident Trust, according to documents we received from a whistleblower. The email was regarding his and his wife’s investment in the Global Dynamic Opportunities Fund (“GDOF”).” In his communication, Dhaval Buch requested to “be the sole person authorised to operate the Accounts.”

The Supreme Court Expert Committee Report of May 6, 2023 had said that SEBI had “drawn a blank” in its investigations into who funded Adani’s offshore shareholders. Hindenburg says it finds it “unsurprising that SEBI was reluctant to follow a trail that may have led to its own chairperson.”

The Adani Group has denied all allegations levelled by the short-seller, though the role of Gautam Adani – seen to be personally close to Narendra Modi since his days as the chief minister of Gujarat and the BJP – became a political hot potato and was a major election issue.

In its January 2023 report, Hindenburg claimed it had identified, among other funds, “two Mauritius entities called EM Resurgent Fund and Emerging India Focus Funds. Both entities were disclosed as related parties of India Infoline (now called 360 One) and overseen by its employees, per its annual reports.” The allegation according to “the trading patterns of these funds” was that “the stock parking entities and the suspicious offshore entities may have artificially inflated the volume and/or price of some Adani listed companies.”

Hindenburg says its findings were buttressed by an August 2023 investigation by the Financial Times, that had found a “secret paper trail” at EM Resurgent and Emerging India Focus Funds. This raised issues on whether Adani had used business associates as “front men” to “bypass rules for Indian companies that prevent share price manipulation.”

SEBI has yet to take any action against these funds. On June 27, 2024, SEBI sent Hindenburg a ‘show cause’ notice. SEBI said the disclosure around Hindenburg’s short position “was deficient”, especially about complex offshore entities to flout rules, and that the regulator participated in the schemes.

From April 2017 to March 2022, Hindenburg alleges, “when Madhabi Buch was a whole time member and chairperson at SEBI, she had a 100 percent interest in an offshore Singaporean consulting firm, called Agora Partners” and on March 16, 2022, “two weeks after her appointment as SEBI chairperson, she quietly transferred the shares to her husband”.

Hindenburg also goes on to allege that Madhabi Buch currently has a 99 percent stake in an Indian consulting business called Agora Advisory, where her husband is a director and that in 2022, this company reported revenue of 261,000 dollars from consulting, which it says is “4.4 times her disclosed salary at SEBI”. (IPA Service)