SEBI Employees are demanding withdrawal of an earlier Sebi press release and resignation of Madhabi Puri Buch
John Davis
On 5 September, around 400 employees of the Securities and Exchange Board of India (Sebi) protested silently at the organisation’s headquarters in Mumbai. The employees were protesting the Sebi’s clarification that their earlier letter to the finance ministry on unprofessional work culture is ‘misguided by external elements’. Earlier, Sebi had said that the allegations of toxic work culture in Sebi is misguided by external elements.
“The claims of unprofessional work culture in the letter dated August 6, 2024, are misplaced,” Sebi had said in a statement.
The regulator suspects that junior officers have been receiving messages from outside parties encouraging them to “go to the media, the Ministry, or the Board,” possibly for the outsiders’ own agendas.
“Sebi apprehends that the junior officers have been receiving messages from external elements outside their group, effectively instigating them to ‘go to media, go to the Ministry, go to Board’, perhaps to serve their own purpose. In fact, the letter of August 06, 2024, was not sent by the Sebi employee associations to the Government (and a section of the media),” the statement noted.
In response, the protesting employees shared an internal message where they said their protest is for the purpose of showing dissent and unity against the arm-twisting exercise done by the top management in the garb of a press release. The immediate demand is withdrawal of press release and resigning of SEBI chairperson for spreading lies against SEBI’s employees.
This is the first time in the history of Sebi employees are holding a protest and seek the resignation of the top boss. It also shows how serious is the issue the employees are raising. In the letter sent to finance ministry, the employees had alleged that there was “immense pressure” at the office, amounting to a “stressful and toxic work environment”.
Employees had raises issues like mistrust and lack of trust shown at work, name callings and scolding/ public humiliation in meetings. Even officers at the highest levels. In a letter, titled ‘Grievances of SEBI officers-A Call for Respect’, the employees complained about “harsh and unprofessional language used by top management for the members.”
“Sometimes it is the point wise KRA systems with unrealistic targets with changing goalposts, the other time it’s the monitoring of minute-by-minute movement of SEBI employees.”
Regulator facing scrutiny
Sebi employee protests are happening at a time when the regulator is already in the headlines for all the wrong reasons– a range of allegations raised against its chief Madhabi Puri Buch by US short-seller Hindenburg and charges against Buch on the grounds of conflict of interest.
The Congress party’s accusations that Buch drew income from previous employers while working as Sebi chairperson is a major allegation against the regulator. Toxic work culture is not accepted not only at a regulatory organisation but in any organization.
It is even more important when such charges arise at a regulatory institution. Sebi is the guardian of Indian investors in the securities market. It cannot operate in the shadow of accusations and mistrust. It is extremely important for Sebi to clean up its house and restore confidence among its own employees and investors.
Charges against Buch
It has been over a month since US short seller Hindenburg raised serious allegations against Sebi chief Madhabi Puri Buch and her husband regarding stake in offshore funds used in Adani money laundering scandal are damning.
The allegations essentially cast a shadow on the credibility of the top Indian markets regulator. The report broadly raises the following allegations:
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.