Madhabi Buch-Adani links: Why is SEBI’s credibility at an all-time low after latest Hindenburg report?

Ever since US-based short seller Hindenburg Research released its new, damning report linking the Securities and Exchange Board of India (SEBI) chairperson Madbhabi Puri Buch and Adani conglomerate, the  Indian market regulator's credibility has taken a nosedive. 

This is because SEBI appears reluctant to open an investigation against its chairperson about her alleged investment in funds linked to the Adani money siphoning scandal, as highlighted in the Hindenburg report. 

After the report was released on August 10, SEBI released its cookie-cutter response via a press release and to this date, it is the only form of clarification that the regulator has issued on the matter. Neither the board of directors nor the finance ministry, which oversees SEBI, have come up with their version of the events. 

Additionally, the clarification rather skims past the fact that Madhabi, alongside her husband Dhaval Buch, invested in funds that were used by Vinod Adani, the brother of Adani Group chief Gautam Adani.  

In April earlier this year, media reports claimed that investigation against 12 offshore companies that invested in Adani stocks would be settled. A couple of months later, a showcause notice was issued to Hindenburg over its report, which suggests that something had transpired behind the scenes.

Reports also claim that Madhabi held two meetings with Gautam Adani while the investigation was underway. 

Calls grow for probe against Madhabi

Leader of Opposition (LoP) in Lok Sabha (Lower House of Indian Parliament) and Indian National Congress (INC) leader, Rahul Gandhi has demanded a Joint Parliamentary Committee (JPC) inquiry into the charges against the watchdog chief. 

Gandhi asked the government if something were to go wrong and investors were to lose their hard-earned money, then "who would be held responsible?" 

“Is the Prime Minister of India responsible? Is Madhabi Buch responsible, or is Mr Adani responsible? It’s slowly becoming crystal clear why PM [Narendra] Modi is against a JPC looking into this matter,” said Gandhi. 

Meanwhile, former finance ministry secretary EAS Sarma told WION that an independent judicial panel should probe the alleged links between Adani Group and the SEBI chairperson. 

"Such accusations should wake up the powers that be to refrain from interfering with the independence of any statutory institution for that matter, as such interference will erode public trust and credibility of that institution," he added. 

Last week, a petition was filed in the Supreme Court, urging it to direct the completion of a probe into Adani that it had ordered after Hindenburg made the first allegations. The petition said the claims by Hindenburg create an ‘atmosphere of doubt’.