The bombshell dropped by US short-seller Hindenburg Research has triggered a flurry of denials, with Sebi chief Madhabi Puri-Buch and husband Dhaval rubbishing the allegation that they had close links with the Adani group and this compromised the market regulator’s probe into the industrial conglomerate’s financial shenanigans.

Late on Sunday evening, a day after the Hindenburg revelations, Sebi issued a statement asserting it had investigated all the allegations against the Ahmedabad-based Adani group. It added that Puri-Buch had made relevant disclosures from time to time and recused herself from all matters involving potential conflicts of interest.

The nub of Hindenburg’s latest revelations is that Puri-Buch and Dhaval invested in a small offshore fund called IPE Plus Fund based in Mauritius. The US short seller claimed in its report that IPE Plus Fund had also received funds from certain Bermuda-based entities that were controlled by Gautam Adani’s NRI brother Vinod.

Puri-Buch and Dhaval have issued a detailed rebuttal, saying the investment in IPE Plus Fund was made in June 2015 when they were private citizens living in Singapore.

“The investment in the fund referred to in the Hindenburg report was made in 2015 when they were both private citizens living in Singapore and almost two years before Madhabi joined SEBI… as a Whole Time Member,” the statement added.

Puri-Buch first joined Sebi as a whole-time director in April 2017, rising to
become its chairperson on March 1, 2022.

The couple’s statement said it was unfortunate that instead of replying to the show-cause notice sent last month by Sebi, Hindenburg had “chosen to attack the credibility of the SEBI and attempt character assassination of the SEBI Chairperson”.

The couple said the decision to invest in the fund was made because its chief investment officer — Anil Ahuja — had been Dhaval’s “childhood friend from school and IIT Delhi”.

They added that Ahuja had worked with Citibank, JP Morgan and 3iGroup Plc and had many decades of experience in investment banking.

The couple claimed they had redeemed the investment in 2018 when Ahuja left “his position as CIO of the fund”.

However, the rebuttal did not respond to the Hindenburg revelation that when the investment in IPE Plus Fund was made in 2015, Ahuja doubled as a director of Adani Enterprises — a fact corroborated by the annual report of the Adani group’s flagship company for 2015-16.

The Hindenburg report added that Ahuja served three terms as director at Adani Enterprises, the last of them ending in June 2017.

But the Buch statement went on to suggest that IPE Plus Fund did not invest “in any bond, equity or derivative of any Adani group company”. It said this had been “confirmed by Mr Ahuja”.

However, the statement did not clarify whether this confirmation had been made privately to the couple or disclosed to Sebi and, if so, when.

Disclosures

The couple claimed they had made all disclosures of material information, including investments, to Sebi — both before Puri-Buch’s appointment and subsequently.

“Sebi has strong institutional mechanisms of disclosure and recusal norms as per the code of conduct applicable to its officers. Accordingly, all disclosures and recusals have been diligently followed, including disclosures of all securities held or subsequently transferred,” the couple’s statement said.

It said that from 2010 to 2019, Dhaval Buch had lived and worked in London and Singapore — both with Unilever.

Between 2011 and March 2017, Madhabi Puri-Buch lived and worked from Singapore, initially as an employee of a private equity firm and later as a consultant.

Hindenburg had accused Puri-Buch of a conflict of interest arising from the fact that Dhaval had been appointed as a senior adviser to Blackstone during her tenure as a whole-time member at Sebi.

The report alleged that despite a lack of relevant experience in the areas that Blackstone operated, Dhaval had joined the global private equity firm — a large investor in India — as a “senior advisor” in July 2019.

Hindenburg alleged that during Dhaval’s time as senior adviser, and while Puri-Buch was at Sebi, Blackstone sponsored Mindspace and Nexus Select Trust, India’s second and fourth real estate investment trusts (REITs), which received the regulatory approval for their IPOs.

Responding to these accusations, the statement said that Dhaval’s appointment, in 2019, as senior adviser to Blackstone Private Equity was on account of his deep expertise in the area of supply chain management. Moreover, his appointment predated Puri-Buch’s appointment as Sebi chairperson.

“This appointment has been in the public domain ever since. At no time has Dhaval been associated with the Real Estate side of Blackstone. On his appointment, the Blackstone Group was immediately added to Madhabi’s recusal list maintained with Sebi,” the statement said.

It maintained that over the last two years, Sebi had issued more than 300 circulars (including ease-of-doing-business initiatives in line with its developmental mandate) across the entire market ecosystem.

All the regulations were approved by the Sebi board, and not by its chairperson, after extensive public consultation.

“Insinuations that a handful of these matters related to the REIT industry were favours to any specific party are malicious and motivated,” the couple’s statement said.

Hindenburg has also claimed that from April 2017 to March 2022, when Puri-Buch was a whole-time member at Sebi, she had a 100 per cent interest in an offshore Singaporean consulting firm, Agora Partners. However, on March 16, 2022, two weeks after her appointment as Sebi chairperson, she “quietly transferred the shares to her husband”.

The US-based short seller also claimed that the Sebi chief had a 99 per cent stake in an Indian consulting business called Agora Advisory, where her husband was a director.

In their rebuttal, the Buchs said that Madhabi’s consulting companies — one in India and the other in Singapore —became “dormant” after her appointment by Sebi. Further, these companies (and her shareholding in them) were explicitly part of her disclosures to Sebi.

After Dhaval retired from Unilever in 2019, he started his own consultancy practice through these companies. With his supply chain expertise, he worked with a number of prominent clients in the Indian industry.

The statement added that Hindenburg’s attempt to link accruals in these companies to Madhabi’s current government salary was malicious.

According to the Hindenburg report, in 2022, the Indian consulting entity reported $261,000 in revenues from consulting, which was 4.4 times her disclosed salary at Sebi.

“When the shareholding of the Singapore entity moved to Dhaval, this was once again disclosed, not just to Sebi, but also to the Singapore authorities and the Indian tax authorities,” the statement added.