Allegations Against SEBI Chairperson Madhabi Puri Buch
Madhabi Puri Buch, the Chairperson of the Securities and Exchange Board of India (SEBI), has recently come under scrutiny due to serious allegations raised by Hindenburg Research. The controversy centers around potential conflicts of interest involving her consulting firms and investments linked to the Adani Group, which has been under investigation for financial irregularities. This article aims to break down the series of events, allegations, and criticisms surrounding Ms. Buch and the SEBI Board of Directors.
1. The Emergence of the Controversy: Hindenburg Report
On August 10, 2024, Hindenburg Research, a U.S.-based short seller, published a report highlighting potential conflicts of interest involving Madhabi Puri Buch. Two of her consulting firms, Agora Advisory (India) and Agora Consulting (Singapore), were flagged in the report. The research also claimed that Ms. Buch and her husband, Dhaval Buch, had invested in offshore funds linked to the Adani siphoning scandal. These revelations have raised questions about the integrity of SEBI’s leadership, given the regulator’s role in overseeing the financial markets in India.
2. The Consulting Firms and Alleged Conflicts of Interest
Agora Advisory and Agora Consulting came under the spotlight due to their connection to Ms. Buch. Agora Advisory, based in India, was established by Madhabi Puri Buch in 2013, before she took on the role of SEBI chairperson. However, statutory documents revealed that despite her claim that the firm went dormant after her SEBI appointment, it continued to operate actively between 2019 and 2024, generating significant revenue.
Furthermore, Agora Advisory shared its address with its statutory auditor, Shah and Savla LLP, a practice considered “shady” and indicative of poor corporate governance. Experts have criticized this arrangement, pointing out that it raises questions about the independence and objectivity of the auditor.
3. The Role of Agora Advisory: A Deeper Dive
Documents from the Registrar of Companies revealed that Madhabi Puri Buch held a 99% stake in Agora Advisory until March 2024, despite stepping down as a director in 2017. The firm reported revenues of Rs 2 crore in the financial year 2021-2022, a figure that significantly exceeded her salary as SEBI chairperson. This discrepancy has further fueled concerns about potential conflicts of interest and the ethical implications of her dual roles.
Moreover, the fact that the firm’s auditor and Agora Advisory shared the same address has been criticized as a sign of poor corporate governance. Such practices are generally seen in the informal sector and raise doubts about the transparency and accountability of the firm’s financial dealings.
4. Hindenburg’s Allegations: Offshore Investments and Adani Connection
Hindenburg Research’s report also alleged that Madhabi Puri Buch and her husband had stakes in offshore funds linked to the Adani Group, which has been embroiled in a financial scandal. The report suggested that these investments were made through a multi-layered offshore fund structure, which has been associated with the Adani money siphoning scandal. This connection has raised questions about SEBI’s impartiality in investigating the Adani Group.
Hindenburg further alleged that Ms. Buch had transferred her shares in Agora Consulting to her husband shortly after being appointed SEBI chairperson. This move has been criticized as an attempt to distance herself from potential conflicts of interest while still benefiting from the firm’s operations.
5. The Buch Couple’s Defense
In response to the allegations, Madhabi Puri Buch and her husband issued a statement claiming that the investments were made while they were private citizens living in Singapore, before Ms. Buch joined SEBI. They also asserted that SEBI would issue an independent statement and that their personal investments had no connection to the Adani Group.
However, this defense has not quelled the criticism, as the timing of the investments and the continued operation of Agora Advisory during her tenure at SEBI have raised doubts about the ethical conduct of the SEBI chairperson.
6. Criticism of SEBI’s Role and Governance
The controversy surrounding Ms. Buch has brought to light broader concerns about SEBI’s role and governance under her leadership. Critics have questioned why SEBI did not take proactive measures to investigate the rapid growth of the Adani Group’s market capitalization, especially given the allegations of stock manipulation and financial irregularities.
The lack of action by SEBI, despite the glaring red flags raised by Hindenburg and other sources, has led to accusations that the regulator may have been influenced by political pressures or conflicts of interest. The situation has prompted calls for greater transparency and accountability within SEBI to restore public confidence in the regulator’s ability to oversee India’s financial markets.
7. Political Repercussions: Congress Calls for Investigation
The political fallout from the controversy has been significant. The Congress party, India’s main opposition, has announced a nationwide protest demanding a Joint Parliamentary Committee (JPC) probe into the allegations against the Adani Group and Madhabi Puri Buch. The party has also called for Ms. Buch’s resignation as SEBI chairperson, citing the need for an independent investigation into the matter.
Congress leaders have argued that the close ties between the Adani Group and the ruling Bharatiya Janata Party (BJP) have compromised SEBI’s ability to conduct a fair and impartial investigation. They have also criticized the Modi government for allowing SEBI to be used as a tool to protect powerful corporate interests at the expense of ordinary investors.
8. Conclusion: The Need for Transparency and Accountability
The allegations against Madhabi Puri Buch and the SEBI Board of Directors have raised serious concerns about the integrity and independence of India’s financial regulator. The controversy has highlighted the need for greater transparency, accountability, and oversight in SEBI’s operations to ensure that it can fulfill its mandate of protecting investors and maintaining fair and transparent markets.
The calls for an independent investigation into the Adani Group and SEBI’s role in the controversy underscore the importance of upholding ethical standards and preventing conflicts of interest in the regulation of India’s financial markets. As the situation unfolds, it remains to be seen whether SEBI will take the necessary steps to address these concerns and restore public confidence in its leadership.Sources : –
https://www.thehindu.com/news/national/hindenburg-allegations-against-sebi-chief-casts-an-atmosphere-of-doubt-direct-completion-of-probe-against-adani-group-plea-asks-supreme-court/article68519364.ece
https://www.livemint.com/market/hindenburg-sebi-chief-madhabi-puri-buch-majority-ownership-agora-advisory-offshore-entities-conflict-of-interest-corpora-11723370151228.html
https://www.firstpost.com/vantage/hindenburg-accuses-sebi-chief-of-adani-ties-political-storm-erupts-vd438843-shorts.html
https://www.indiatoday.in/law/story/supreme-court-lawyer-seeks-status-report-sebi-probe-against-adani-group-2581707-2024-08-13
