Eighteen-odd months after Hindenburg Research accused the Adani group of “brazen stock market manipulation” and “accounting fraud”, allegations that the group denied and the Supreme Court said don’t need any CBI or court-monitored probe, the firm, facing a show-cause notice from Sebi, the stock market regulator, is back. It claims it’s connecting the dots between what it sees as inaction on the issue by the regulator and its chairperson Madhabi Puri Buch’s investments. A series of revelations, based on whistleblower papers, made by the US-based firm raise questions for SEBI, and turn the spotlight, specifically, on the regulator’s disclosure norms. The outright denial by all parties is hardly an answer.
Hindenburg has alleged that Buch and her husband “had hidden stakes in the exact same obscure offshore Bermuda and Mauritius funds, found in the same complex nested structure, used by Vinod Adani”. During her tenure as a whole-time member of SEBI, it says, Buch was in communication with the managers of the offshore fund, and wrote to India Infoline to redeem the units in the fund. And that during this time she had an interest in an offshore Singapore consulting firm, Agora, and it was only two weeks after she was appointed as SEBI chairperson that she transferred the shares to her husband. In her defence, Buch has said that “all disclosures as required have already been furnished to SEBI”. The SEBI code for board members asks that they disclose their interests which may conflict with their duties, along with transactions of family members. However, in light of the latest controversy, it must be asked: When the regulator was investigating the allegations surrounding the Adani Group, why were the disclosures not made available to the wider public? After all, members of Parliament openly declare their assets. Any connection between the regulator and the regulated must be publicly disclosed. It is especially odd considering that the same stock market regulator had, in the words of the Supreme Court appointed expert committee, “drawn a blank” in its inquiry to determine the contributors to the foreign portfolio investors who had invested in the Adani Group. It must be asked whether the regulator’s associations with parties who themselves are key players in private investment firms should also have been publicly disclosed.
