Fresh allegations have come up against Sebi Chairperson Madhabi Puri Buch. The Congress party has now alleged that SEBI chairperson has been investing in Chinese firms at a time when India is facing geopolitical tensions with China.
John Davis
Fresh allegations have come up against Sebi Chairperson Madhabi Puri Buch. The Congress party has now alleged that SEBI chairperson has been investing in Chinese firms at a time when India is facing geopolitical tensions with China.
In a detailed investigation, Congress Party leader Pawan Khera has alleged that the Sebi chief has been investing in foreign assets traded in listed securities (Table 1) worth Rs 36.9 crores between 2017 and 2023.
This is in violation of section 6 of SEBI’S Code on Conflict of Interest for Members of Board (2008), said Khera.
Also, the party has information that between 2017-2021, Ms. Madhabi P. Buch held foreign assets, Khera said in a release.
“We hereby ask: When was the first time she declared the foreign assets and to which agency of the government? Is it true that Ms. Madhabi P. Buch was actively involved in Agora Partners PTE (Singapore) as she was a signatory to the bank account?,” said Khera.
Also, the party has highlighted that it is deeply concerning to learn that Madhabi P. Buch, the SEBI Chairperson, has been investing in Chinese funds. When the Prime Minister of India can publicly give China a clean chit, it’s hardly surprising that a key regulatory figure is engaging in investments linked to China.
Allegations against Madhabi Buch
US Shortseller Hindenburg has raised several allegations against Buch.
One, citing documents from a whistleblower, Hindenburg report alleged that Sebi chief Buch and her husband, Dhaval Buch, held stakes in offshore Bermuda and Mauritius funds through complex structures./
Also, just weeks ahead of her appointment as a whole time SEBI member in 2017, Dhaval Buch had written to a Mauritius fund administrator to make him the “sole person authorised to operate the accounts”, Hindenburg report alleged.
“We suspect SEBI’s unwillingness to take meaningful action against suspect offshore shareholders in the Adani Group may stem from Chairperson Madhabi Buch’s complicity in using the exact same funds used by Vinod Adani, brother of Gautam Adani,” Hindenburg Research said.
Second charge relates to Buch’s ownership of offshore Singaporean consulting firm, Agora Partners, the ownership of which was transferred to the husband shortly after her appointment as Sebi chief.
The third allegation pertains to possible conflict of interest in Blackstone. Even when Buch was Sebi chief, her husband was appointed as a senior advisor to Blackstone, a major investor in Real Estate Investment Trusts (REITs).
As per Hindenburg, under Buch’s leadership, SEBI approved significant regulatory changes favouring REITs, hinting a possible conflict of interest.
Finally, the Sebi chief allegedly owns 99 per cent stake in a consulting business called Agora Advisory, where her husband is a director. At the end of financial year 2022, the firm generated Rs 19.8 million (US $261,000) in revenue from consulting, per its annual report. This was 4.4 times Madhabi Buch’s previously disclosed salary as a whole-time member of SEBI.
Charge of conflict of interest
Hindenburg’s allegations suggest possibility of conflict of interest. We don’t have any evidence to say whether the Sebi chief has officially misused the position yet. If yes, what are the tangible gains received needs to be ascertained. Only a detailed probe will unveil the truth.
Also, an investigation need to be conducted to assess the ultimate beneficiaries of the alleged Adani scam (as explained in the 2023 Hindenburg report)
The latest Hindenburg whistleblower allegations have some similarities with the 2012 quid-pro-quo allegations faced by former ICICI Bank chief executive officer Chanda Kochhar linked to the Videocon loan deal.
In the Videocon case case, the ICICI Bankz when Kochhar was the CEO, had sanctioned around Rs 3250 crores worth loans to NuPower Renewables Pvt Ltd, owned by Kochhar’s husband Deepak Kochhar. In return, Dhoot invested in the company of Chanda Kochhar’s husband Deepak Kochhar.
As the allegations were made public, Chanda Kochhar had to resign from the CEO post after the case emerged. Subsequently, Kochhar was arrested in the case by the Central Bureau of Investigation (CBI). The case is currently still in the courts.
Congress party questions
From 2nd September 2024, the Indian National Congress started unravelling the long-kept secrets of the current SEBI Chairperson Madhabi P. Buch on how she has been deceiving the people of India:
1. 2nd September 2024: The fact that the current SEBI Chairperson drew an income of Rs. 16.8 crores from ICICI Bank and ICICI Prudential (In the form of salary, ESOPS, TDS on ESOPs) while also drawing a salary from SEBI was brought to the forefront. Shockingly, SEBI was also adjudicating complaints against ICICI and its affiliates during this period.
2. 3rd September 2024: In lieu of a clarification issued by the ICICI Bank, we presented facts with regards to questions raised on “retiral benefits”, “ESOPs”, and “TDS on ESOPs.” So far ICICI has not responded to our newly- presented facts.
3. 6th September 2024: We disclosed that Ms. Madhabi P. Buch rented her property to ‘Carol Info Services Limited’, an affiliate of Wockhardt Limited, between 2018-2024. Wockhardt has been under SEBI’S investigation for cases including that of insider trading.
4. 10th September 2024: We exposed Ms. Madhabi P. Buch’s public lie that Agora Advisory Pvt Ltd became ‘immediately dormant’ upon her joining SEBI. She still holds a 99% stake in it, and the company has actively provided consultancy/advisory services, receiving Rs 2.95 Crores from six SEBI-regulated entities between 2016-2024.
5. Our response to Mahindra & Mahindra, Dr. Reddy’s Laboratories & Pidilite. Through their response, Dr. Reddy’s Laboratories and Pidilite confirm that they made payments to Dhaval Buch via Agora Advisory Private Limited. Payments from listed companies which are regulated by SEBI to Agora Advisory Private Limited violate Section 5 of Code on Conflict of Interests for Members of Board (2008) Further, Mahindra & Mahindra must clarify whether they paid large sums to both Dhaval Buch personally and his joint consultancy, Agora Advisory Private Limited, in which Madhabi Buch holds a 99% stake. If yes, did Mahindra & Mahindra fail to conduct KYC and due diligence before transferring substantial public funds to Agora Advisory Private Limited? If Dhaval Buch was paid Rs. 4.78 Crores personally, they must also clarify the payment of Rs. 2.59 Crores to Agora Advisory Private Limited, a supposedly ‘dormant’ company
Who will probe Sebi chief?
In the case of Madhabi Buch, the bigger question is who will probe the allegation against Sebi chief herself. Sebi is the top regulator to probe market manipulations in India. The Hindenburg’s first report on Adani was probed by Sebi, which gave a clean chit to the Adani group. Who will probe charges against Buch this time when she is the head of Sebi?
During the 2023 Hindenburg report, the charges or allegations were against the company and not regulator. This time, the US research firm has questioned the credibility of the markets regulator itself by raising allegations against Sebi Chief Madhabi Buch and her husband.
An impartial investigation is must into the charges raised by Hindenburg, particularly the ownership of offshore funds, Buch’s ownership of advisory business and whether the company has benefitted from Sebi’s policies under Buch etc.
Remember, in the ICICI Bank-Videocon case too, Chanda Kochhar didn’t personally sanction the loans to Videocon group. She was only part of a committee that approved the loan. Yet, there were allegations of misusing the official position as CEO and conflict of interest. Subsequently, Kochhar faced quid-pro quo allegations in the deal and had to eventually resign and face arrest.
Kochhar was a banker and Buch is a regulator. Yet, there are similarities in both cases. Going by that precedent, Buch has every reason to come clean of the quid-pro-quo charges. For the sake of safeguarding the credibility of the market regulator, Buch must step down and facilitate a fair probe into the Hindenburg’s allegations against her personal dealings.
Sebi’s refusal, in embracing an independent investigation and ask the Sebi chief to step aside during the period of the probe, sets a bad precedent. It raises serious questions on the very credibility of the regulator.