SEBI on Sunday in a statement said it has finished all but one investigation into the Adani Group, responding to Hindenburg Research’s claim that it was slow because its chairperson had investments in the funds being investigated. SEBI’s chairperson called the accusation "baseless" and an attempt at "character assassination."
SEBI stated that it has "duly investigated" the allegations made by Hindenburg Research in its January 2023 report against the Adani Group, which include using offshore funds to inflate stock prices and failing to disclose related party interests.
What Did SEBI Say In Its Statement?
On Investigation Against Adani Group
SEBI said two of the 24 investigations against Adani group were pending when the Supreme Court last passed an order on the issue in January this year. Subsequent to that, one investigation was completed and the one remaining is close to completion.
During the probe, it said, more than 100 summons were issued and more than 300 documents containing around 12,000 pages have been examined.
"Pursuant to the completion of investigations, SEBI initiates enforcement proceedings which are quasi-judicial in nature involving notices and hearings before orders are passed, which are made public, the regulator said without disclosing the content of its investigation against Adani.
SEBI said as a matter of policy it refrains from commenting on any investigation/ongoing enforcement matter.
On Allegations Against Chairman Madhabi Buch
SEBI too defended its chairperson. In a two-page statement, it said Buch had made relevant disclosures from time to time and she "had also recused herself in matters involving potential conflicts of interest."
According to the statement, investment in the two funds was made on advice of Dhaval's childhood friend, Anil Ahuja - the person which Hindenburg report identified as the founder and Chief Investment Officer (CIO) of the Mauritius-based IPE Plus Fund.
Adani Group Denied Allegations
The Adani group also in its statement said Ahuja was a nominee of 3i Investment Fund in Adani Power (2007-2008) and served as a director of Adani Enterprises for three terms spanning nine years ending in June 2017.
SEBI in October 2020 began a probe into 13 opaque offshore entities that held between 14 per cent and 20 per cent across five publicly traded stocks of the conglomerate to determine if the foreign investors are genuine public shareholders or acting as fronts for the promoters.
Separately, Adani group companies in identical regulatory filings called the allegations by Hindenburg as "malicious, mischievous and manipulative selections of publicly available information to arrive at predetermined conclusions for personal profiteering with wanton disregard for facts and the law."
"The Adani Group has absolutely no commercial relationship with the individuals or matters mentioned in this calculated deliberate effort to malign our standing," it said. "We remain steadfastly committed to transparency and compliance with all legal and regulatory requirements".
Rejecting the allegations, it said they were nothing but "recycling of discredited claims that have been thoroughly investigated, proven to be baseless and already dismissed by the Supreme Court in March 2023."
"It is reiterated that our overseas holding structure is fully transparent, with all relevant details disclosed regularly in numerous public documents," Adani group said adding Anil Ahuja was a nominee director of 3i investment fund in Adani Power (2007-2008) and, later, a director of Adani Enterprises until 2017.
"For a discredited short-seller under the scanner for several violations of Indian securities laws, Hindenburg's allegations are no more than red herrings thrown by a desperate entity with total contempt for Indian laws," it added.
"Vinod Adani, brother of Gautam Adani, used this structure to invest in Indian markets with funds allegedly siphoned from over-invoicing of power equipment to Adani Group," claimed Hindenburg.
Statement By Madhabi Buch, Dhaval Buch
Hindenburg Research alleged that SEBI chairperson Madhabi Puri Buch and her husband had undisclosed investments in obscure offshore funds in Bermuda and Mauritius, similar to those used by Vinod Adani, Gautam Adani's elder brother, to manipulate stock prices.
Hindenburg claimed that whistleblower documents show Buch and her husband invested in offshore entities linked to a fund structure managed by India Infoline, where Vinod Adani also invested.
The Bermuda-based Global Opportunities Fund, used by Adani Group-connected entities to trade shares, included sub-funds in which Buch and her husband were investors in 2015. Hindenburg criticized SEBI for its "surprising lack of interest" in investigating Adani's alleged offshore entities.
Madhabi Puri Buch and her husband Dhaval Buch in a joint statement strongly denied the "baseless allegations and insinuations made in the report", saying the charges were "devoid of any truth".
Buchs said Hindenburg has been sent a show cause notice for "a variety of violations in India."
In the June 26 show cause notice, SEBI charged Hindenburg of "deliberately sensationalising and distorting certain facts" in its January 2023 report that accused Adani Group of pulling "the largest con in corporate history" by using a web of companies in tax havens to inflate its revenue and manipulate stock prices, even as debt piled up.
"It is unfortunate that instead of replying to the show cause notice, they have chosen to attack the credibility of the SEBI and attempt character assassination of the SEBI chairperson," the statement by Buchs said.
SEBI said the proceedings in the showcase to Hindenburg are ongoing and "the same is being dealt with in accordance with established procedure and in compliance with the principles of natural justice."
Buchs further said they have no hesitation in disclosing any and all financial documents, including those that relate to the period when we were strictly private citizens, to any and every authority that may seek them.
The statement however did not talk on the questions Hindenburg raised over the incomplete SEBI probe against Adani.
Opposition Demands JPC To Investigate
Latching on to the Hindenburg allegations, Congress said the revelations only reinforced its demand for setting up a "joint parliamentary committee to investigate the full scope of the Adani mega scam" while the Trinamool Congress said the SEBI chairperson must resign.
Left parties too supported the demand for a JPC.
Congress president Mallikarjun Kharge said the Securities and Exchange Board of India (SEBI) previously cleared Adani before the Supreme Court following the January 2023 Hindenburg Report revelations. However, new allegations have surfaced regarding a "quid-pro-quo" involving the SEBI chief, he said, demanding government action on the same.
The BJP countered the opposition saying they were part of a conspiracy to create financial instability and chaos in India, and rejected Hindenburg allegations against the SEBI chairperson as an attempt to discredit the financial watchdog.
(With PTI inputs)
