According to Hindenburg, Madhabi Buch and her husband made undeclared investments in obscure offshore funds in Bermuda and Mauritius, the same entities allegedly used by Vinod Adani.

New Delhi: In a shocking development on Saturday evening, US-based short-seller Hindenburg Research has intensified its attack on India's financial regulator, this time targeting Sebi chairperson Madhabi Buch. In a shocking revelation, Hindenburg alleged that Buch and her husband participated in offshore funds allegedly linked to the ongoing Adani dispute, news agency PTI reported.

In a blogpost, Hindenburg said, 18 months after his damning report on Adani, “Sebi has shown a surprising lack of interest in Adani's allegedly unknown web of Mauritius and offshore shell entities.” Citing “whistleblower documents”, it said, “Sebi's current chairperson Madhabi Buch and her husband had stakes in both murky offshore funds used in the Adani money siphoning scandal.”

An obscure offshore Bermuda and Mauritius fund, allegedly controlled by Vinod Adani – elder brother of group chairman Gautam Adani – is accused of using round-trip funds and stock prices to prop up prices.

Hindenburg said, “The declaration of funds signed by the IIFL principal mentions the source of investment as 'salary' and the couple's net worth at USD 10 million”.

“In short, despite the existence of thousands of mainstream, reputable onshore Indian mutual fund products, an industry it is now responsible for regulating, documents show that SEBI chairperson Madhabi Buch and her husband had small holdings in a thinly-layered offshore fund structure. , from known high-risk jurisdictions, under the supervision of a company linked to the wirecard scam, run by an Adani director and significantly used by Vinod Adani in the alleged Adani cash siphoning scam.

It cited a Supreme Court order where Sebi was reported to have given “no space” to its probe into who provided funds to Adani's offshore shareholders.

“If SEBI really wanted to find offshore funders, perhaps the SEBI Chairperson could have started by looking in the mirror,” it said. “We find it surprising that SEBI was reluctant to follow the trail that led to its own chairperson.”

There was no immediate response from SEBI

In January last year, Hindenburg Research, which has previously shorted or bet against companies such as electric truck maker Nicola Corp and Twitter (now X), accused Adani Group of using the web to pull off “the biggest con in corporate history”. Companies in tax havens to inflate revenues and manipulate stock prices, even while piling up debt.

Although the group vehemently denied all the allegations, the damning report wiped the group's shares off more than $150 billion in market value at their lowest point. Most of the 10 listed companies have recovered losses since then.

Following the Hindenburg report, the Supreme Court asked market regulator SEBI to complete its probe and set up an independent expert panel to find regulatory loopholes. The panel did not give any adverse report on Adani and the Supreme Court also held that there was no need for any inquiry other than the investigation by SEBI.

Allegations against SEBI chief

Sebi (Securities and Exchange Board of India), which was probing the Adani group even before the Hindenburg report, had last year told a panel appointed by the Supreme Court that it was probing 13 opaque offshore entities holding between 14 and 20 per cent. Among the group's five publicly traded stocks. It did not say whether the two incomplete inquiries have since been completed.

“The current SEBI chairperson and her husband, Dhaval Buch, had hidden stakes in exactly the same murky offshore Bermuda and Mauritius funds found in the same complex nested structure used by Vinod Adani,” Hindenburg said.

On March 22, 2017, weeks before her wife's appointment as SEBI chairperson, Dhaval Buch wrote to Mauritius fund administrator Trident Trust, according to documents obtained by a whistleblower. The email was about his and his wife's investment in the Global Dynamic Opportunities Fund (GDOF).

“In the letter, Dhaval Buch, as “the only person authorized to operate the account”, has requested that the property be transferred from his wife's name before the politically sensitive appointment,” it was alleged.

“A subsequent account statement dated February 26, 2018, addressed to Madhabi Buch's private email, revealed full details of the structure: “GDOF Cell 90 (IPEplus Fund 1)”.

“Again, this is a Mauritius-registered “cell” of the fund, found several layers deep as used by Vinod Adani,” it alleged.

According to Hindenburg, Madhabi Buch and her husband made undeclared investments in obscure offshore funds in Bermuda and Mauritius, the same entities allegedly used by Vinod Adani. These investments date back to 2015, before Madhabi Buch's appointment as a full-time member of SEBI in 2017 and her appointment as SEBI Chairperson in March 2022.

(with input from agencies)