Hindenburg Research, a US-based investment research firm in a new report has launched a direct attack on the Securities and Exchange Board of India (Sebi), accusing it of a cover-up in probing the Adani Group’s undisclosed network of shell entities due to its alleged links with the Group.
The Sebi chief, Madhabi Puri Buch, and the Adani Group have strongly refuted the allegations.
In its latest report, Hindenburg last week accused SEBI chief Madhabi and her husband Dhaval Buch of having held “stakes in both the obscure offshore funds used in the Adani money siphoning scandal.”
The new report connected the alleged links of the Sebi chief’s family with the Adani Group as the main reason for the delay in the investigation.
“We suspect Sebi’s unwillingness to take meaningful action against suspect offshore shareholders in the Adani Group may stem from [the] Chairperson’s complicity in using the exact same funds used by Vinod Adani, brother of Gautam Adani,” the US-based short-seller states.
“To date, Sebi has taken no action against other suspected Adani shareholders operated by IIFL: EM Resurgent Fund and Emerging India Focus Funds,” it adds. It claimed that in its original report, it had identified, among other funds, two Mauritius-based entities called EM Resurgent Fund and Emerging India Focus Funds.
These two funds were disclosed as related parties of IIFL (now called 360 One) and overseen by its employees. “Vinod Adani... used this structure to invest in Indian markets with funds allegedly siphoned from over-invoicing of power equipment to the Adani Group,” Hindenburg alleges.
It alleges Buch and her husband, Dhaval Buch, had stakes in the same offshore funds—Global Dynamic Opportunities Fund (GDOF) and IPE Plus Fund 1—found in the same complex nested structure used by Vinod Adani.
Quoting whistle-blower documents, Hindenburg has alleged that the Sebi Chairperson and her husband Dhaval Buch held stakes in obscure multi-layered offshore funds involved in the Adani “money siphoning scandal”.
One of them refers to IPE Plus Fund 1, a small offshore fund set up by former Adani director Anil Ahuja and backed by GDOF, a Bermuda-based fund allegedly linked to Vinod Adani. This fund was managed by IIFL (now 360 One), a wealth management firm.
The Hindenburg report has made two serious allegations: the couple’s investment in Ahuja’s fund and that this fund was used to invest in Adani firms.
Madhabi Puri Buch in its response recently said the decision to invest was driven by the fact that Ahuja, its Chief Investment Officer, is Dhaval Buch’s childhood friend and had an extensive investing career with Citibank, JP Morgan, and 3i Group plc. “The fact that these were the drivers of the investment decision is borne out by the fact that when Ahuja left his position as CIO of the fund in 2018, we redeemed the investment,” she said in a statement issued by the couple.
The Adani Group has responded by saying that Ahuja was a nominee director of 3i, an investment firm that had invested in Adani Power (2007-2008) and, later, a director of Adani Enterprises until 2017.
The Adani Group has called the latest allegations malicious, mischievous, and manipulative selections of publicly available information for profiteering. “We completely reject these allegations... which are a recycling of discredited claims that have been thoroughly investigated, proven to be baseless, and already dismissed by the Supreme Court in March 2023,” it said in a statement.
‘Sebi probes’
Notably, Sebi’s probes focussed on three areas including alleged violations of minimum public shareholding norms; disclosure of related party transactions; and share price manipulation.
Its probe into public shareholding is dependent on whether 13 overseas entities, that hold stakes in Adani Group companies, are compliant with Sebi norms on disclosure of beneficial owners.
Sebi had launched an investigation into the shareholding structure of Adani Group firms in October 2020. It is not known if any of these 13 FPIs have approached Sebi for a settlement.
In January 2023, Hindenburg Research in a report accused the Adani Group of indulging in billions of dollars worth of undisclosed related party transactions, investment, and stock manipulation. The Adani Group had denied all those allegations.
