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The Securities and Exchange Board of India said on Sunday it had completed all but one allegation against Adani Group in response to allegations by U.S. short seller Hindenburg Research that the probe was moving slowly, possibly because its chairman had invested in a fund at the heart of the probe – an allegation the market regulator’s head called “baseless” and an attempt at “personal attack”.
The regulator said in a statement that the Securities and Exchange Board of India had duly investigated the allegations, which the Securities and Exchange Board of India first raised in its damning report against Adani Group in January 2023, including using offshore investment funds to inflate share prices and not disclosing related party interests.
The Securities and Exchange Board of India said two of the 24 probes against Adani Group were pending when the Supreme Court last issued an order on the issue in January. Since then, one probe has been completed and the remaining one is about to be completed.
More than 100 subpoenas were reportedly issued during the investigation and more than 300 documents, totaling approximately 12,000 pages, were reviewed.
“On completion of investigation, SEBI initiated enforcement proceedings of a quasi-judicial nature, involving notice and hearing before passing orders, and made these proceedings public,” the regulator said, without disclosing the content of its investigation into Adani.
SEBI said as per policy it does not comment on any investigation/ongoing enforcement matters.
Hindenburg on Saturday accused Securities and Exchange Board of India chairperson Mahabhi Puri Bhuch and her husband of making undisclosed investments in unnamed offshore funds in Bermuda and Mauritius, which were also allegedly used by group chairman Gautam Adani’s brother Vinod Adani to round-trip investments and inflate the share price.
In a joint statement, Madhabi Puri Bhu and her husband Dawar Bhu strongly denied the “baseless allegations and insinuations in the report”, saying they had “no factual basis”.
SEBI also defended its chairperson. In a two-page statement, the agency said Buch had disclosed relevant information from time to time and she “also recused herself from questions involving potential conflict of interest”. Adani Group also denied any business dealings with the SEBI chief, while wealth management entity 360ONE (formerly known as IIFL Wealth Management) said Buch and her husband Dhaval Buch’s investment in IPE-Plus Fund 1 was less than 1.5% of total inflows and it had no investment in Adani Group shares.
Books said the investments were made in 2015, long before she was appointed a full-time member of the Securities and Exchange Board of India in 2017 and became its chairperson in March 2022, and that she made the investments as a “private citizen resident in Singapore.”
According to the statement, the investment in the two funds was made on the advice of Dhaval’s childhood friend Anil Ahuja, who is the founder and chief investment officer (CIO) of the Mauritius-based IPE Plus Fund, Hindenburg reported.
The Adani Group also said in the statement that Ahuja was a nominee of Adani Power 3i Investment Fund (2007-2008) and served as a director of Adani Enterprises for three terms for nine years till June 2017.
The Securities and Exchange Board of India in October 2020 began a probe into 13 opaque offshore entities holding 14% to 20% stake in five publicly traded stocks of the conglomerate to determine whether foreign investors were bona fide public shareholders or fronts for promoters.
Citing “whistleblower documents”, Hindenburg on Saturday alleged that the Securities and Exchange Board of India chairperson and her husband had invested in some offshore entities that were allegedly part of the fund structure managed by India Information Helpline, in which Vinod Adani had also invested.
The Bermuda-based Global Opportunities Fund allegedly had sub-funds that were allegedly used by entities linked to the Adani Group to trade shares in group companies. In 2015, Buh and her husband were investors in one of the sub-funds.
Hindenburg claimed that SEBI had “shown a surprising lack of interest in Adani’s alleged undisclosed web of Mauritius and offshore shell entities.” Buchs said Hindenburg had been served with a show-cause notice for “multiple violations in India.” In its June 26 show-cause notice, SEBI accused Hindenburg of “deliberately sensationalizing and misrepresenting certain facts” in its January 2023 report, which accused Adani Group of using a web of companies in tax havens to inflate its revenues and manipulate its share price even as debts mounted, perpetrating “the biggest scam in corporate history.”
“It is unfortunate that instead of responding to the query notice, they chose to attack the credibility of SEBI and try to discredit the SEBI chairman,” Books said in a statement.
SEBI said that the proceedings against Hindenburg are ongoing and are “being handled as per the established procedures and in compliance with the principles of natural justice.” Buchs further said that they will not hesitate to disclose all financial documents, including those relating to our time as private citizens, to any authority that may request them.
But the statement did not address questions raised by Hindenburg on the Securities and Exchange Board of India’s incomplete investigation into Adani.
Separately, the Adani Group company said in the same regulatory filing that Hindenburg’s allegations were “a malicious, mischievous and manipulative selection of information to be made public to draw predetermined conclusions for personal profiteering and with reckless disregard for facts and law.” “The Adani Group has absolutely no business relationship with the persons or matters mentioned in this deliberate attempt to defame our reputation,” it said. “We remain steadfast in our commitment to transparency and compliance with all legal and regulatory requirements.”
The group denied the allegations, saying they were nothing but “a repetition of discredited allegations that have been thoroughly investigated, proved to be baseless and dismissed by the Supreme Court in March 2023”. “We reiterate that our overseas holding structure is fully transparent and all relevant details are regularly disclosed in numerous public documents,” the Adani Group said, adding that Anil Ahuja was the nominee director of Adani Power 3i Investment Fund (2007-2008) and later served as a director of Adani Enterprises until 2017.
The article added: “For a notorious short seller that is under scrutiny for multiple violations of Indian securities laws, Hindenburg’s allegations are little more than a smokescreen thrown by a desperate entity that has total disdain for Indian laws.”
Hindenburg said Buch and her husband may have first opened an account in IPE Plus Fund 1 in Singapore on June 5, 2015. The IPE fund was a small Mauritius offshore fund set up by Adani directors through India Information Helpline (IIFL), a wealth management firm linked to the Wirecard embezzlement scandal.
Hindenburg claimed: “Vinod Adani, brother of Gautam Adani, used this structure to invest in the Indian market, funded allegedly by high invoices charged to the Adani Group for power equipment.”
The Congress party seized on Hindenburg’s allegations, saying the revelations only strengthened its demand for a “joint parliamentary committee to conduct a comprehensive investigation into the Adani mega scam”, while the Trinamool Congress said the Securities and Exchange Board of India chairman must resign.
The Left parties also supported the demand for formation of JPC.
Congress president Mallikarjun Kharge said the Securities and Exchange Board of India (SEBI) had previously acquitted Adani in the Supreme Court after the Hindenburg report came to light in January 2023. However, he said new allegations of “quid pro quo” regarding the SEBI chief have surfaced, demanding the government to take action.
The BJP has countered the opposition’s claims that they are part of a conspiracy to create financial instability and chaos in India and rejected Hindenburg’s allegations against the Securities and Exchange Board of India chairman as an attempt to discredit the financial regulator.
Although Adani Group strongly denied all allegations made in the January 2023 report by Hindenburg, which in the past has shorted or bet against companies such as electric truck maker Nikola Corporation and Twitter, the report caused the group’s stock price to plummet, with the market value of 10 listed companies evaporating by more than $150 billion at the lowest point. Most of the 10 listed companies have since recovered their losses.
After the Hindenburg report, the Supreme Court asked market regulator SEBI to complete its investigation and set up a separate panel to look into regulatory lapses. The panel did not make any adverse report against Adani and the Supreme Court also said that no additional investigation was needed other than the one being conducted by SEBI.
On June 26 this year, the Securities and Exchange Board of India, in a show-cause notice, had accused Hindenburg of “deliberately exaggerating and misrepresenting certain facts” and of teaming up with a New York-based hedge fund to place the bets.
Hindenburg responded by saying it made just $4.1 million in profit from its declared Adani stock position and criticised the regulator for not focusing its investigation on a January 2023 report that “provided evidence” that the conglomerate had set up a “vast network of offshore shell entities” and “secretly” transferred billions of dollars in and out of Adani public and private entities.
Hindenburg claimed on Saturday that just weeks before Buch was appointed as a commissioner at the Securities and Exchange Board of India, her husband asked to transfer their investments to his sole control, possibly to avoid any scrutiny related to her new regulatory role.
The couple’s investments were reportedly channelled through a complex, multi-layered offshore structure, raising questions about its legality and purpose.
Regarding the investment in the two offshore entities, the Bhuch duo said in their statement that the two entities became “dormant” after she assumed the office of the Securities and Exchange Board of India, adding that her shareholding in these entities has also been disclosed to the Securities and Exchange Board of India.
Hindenburg alleged that Dhaval Buch had written to Mauritius fund management company Trident Trust on March 22, 2017, weeks before his wife was appointed as a full-time member of the SEBI, seeking his appointment as the “sole person authorised to operate the accounts”. “When the shareholding in the Singapore entity was transferred to Dhaval, this was again disclosed, not only to SEBI but also to the Singapore authorities and Indian tax authorities,” the duo said, adding that SEBI has a strong institutional mechanism in place for disclosure and avoidance norms.
(This article has not been edited by News18 staff and is published from United News Agency – Pakistan Tehreek-e-Insaf）
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