Hindenburg attack is on SEBI credibility, character assassination of chief: Buchs

Securities and Exchange Board of India (SEBI) chairperson Madhabi Puri Buch and her husband Dhaval Buch have said that by making allegations involving them and the Adani Group, US-based short-seller Hindenburg Research is attacking the credibility of the Indian capital markets regulator and attempting a character assassination of its head.

The couple rubbished the allegation on Sunday (August 11) morning. Later, in a detailed statement issued in the evening, the Buchs made further clarifications.

Hindenburg row

“They have chosen to attack the credibility of SEBI and attempt a character assassination of the SEBI chairperson,” the statement said.

Hindenburg has alleged that it suspects SEBI’s unwillingness to act against Adani Group because of Madhabi’s stakes in offshore funds linked to the conglomerate. The Buchs termed the allegations “baseless” in the morning statement.

While Madhabi serves as the chairperson of SEBI, her husband is a senior adviser with Blackstone.

Anil Ahuja’s role

In the fresh statement, the Buchs said their investment in a fund promoted by IIFL Wealth Management was as Singapore-based private citizens, and made two years before Madhabi joined SEBI as a full-time member in 2017.

According to the statement, the Buchs decided to invest in the two funds on the advice of Dhaval’s childhood friend, Anil Ahuja.

The Hindenburg report has identified Ahuja as the founder and Chief Investment Officer of the Mauritius-based IPE Plus Fund. The Adani Group also said in its statement that Ahuja was a nominee of 3i Investment Fund in Adani Power (2007-2008) and served as a director of Adani Enterprises for three terms spanning nine years ending June 2017.

Citing Ahuja’s statement, the Buchs said that at no point did the fund invest in any bond, equity, or derivative of any Adani Group company.

Dhaval’s Blackstone link

On the Hindenburg report’s concerns surrounding Dhaval’s association with Blackstone, the Buchs said the appointment was on account of his deep expertise in supply chain management and predates Madhabi’s elevation to the post of SEBI chairperson.

“At no time has Dhaval been associated with the real estate side of Blackstone,” they added.

They also clarified that immediately upon Dhaval’s appointment, the Blackstone Group was added to Madhabi’s “recusal list” maintained with SEBI.

Insinuations “malicious and motivated”

Making it clear that all the regulations in SEBI are approved by its board and not by the chairperson, the statement said insinuations of a handful of the decisions concerning the Real Estate Investments Trusts industry being favours to a specific party are “malicious and motivated”.

They said in the past two years, SEBI has issued over 300 circulars across the entire market ecosystem, and these include ease of doing business initiatives.

On Madhabi’s two consulting firms, the couple said the entities became “dormant” on her appointment at SEBI and added that her shareholding in them was also disclosed to SEBI.

However, it also added that on Dhaval’s retirement from Unilever, he started a consultancy practice through the same companies and worked for prominent clients in India. Linking the earnings in the consultancy companies to Madhabi’s current government salary is “malicious”, the statement said.

Everything disclosed: Buchs

In the report, Hindenburg alleges that Madhabi “currently” has a 99 per cent ownership in Indian consulting business called Agora Advisory where her husband is a director.

“When the shareholding of the Singapore entity moved to Dhaval, this was once again disclosed, not just to SEBI, but also to the Singapore authorities and the Indian tax authorities,” the statement said, adding that SEBI has strong institutional mechanisms on disclosure and recusal norms.

The statement reminded all that Hindenburg has been served a show-cause notice for violations in India, and called it “unfortunate” that instead of replying to it, the entity has chosen to attack SEBI’s credibility and attempt the character assassination of its chief.

(With agency inputs)