The Hindenburg Report: A Deep Dive into Allegations Against SEBI and the Adani Group
In August 2024, Hindenburg Research published a groundbreaking report that uncovered alarming details surrounding the Securities and Exchange Board of India (SEBI) and the Adani Group. This report came 18 months after Hindenburg’s initial expose on the Adani conglomerate, which had previously revealed what was described as “the largest con in corporate history.” This new report not only revisits these allegations but also unveils shocking connections between SEBI’s Chairperson, Madhabi Buch, and the complex offshore structures allegedly used by the Adani Group for money siphoning.
The Background: SEBI’s Silence on Adani’s Offshore Web
In January 2023, Hindenburg Research released a detailed report on the Adani Group, accusing it of operating a vast network of offshore entities primarily based in Mauritius. These entities were allegedly used for undisclosed related party transactions, stock manipulation, and other fraudulent activities. Despite the significant evidence provided by Hindenburg and corroborated by over 40 independent media investigations, SEBI, India’s securities regulator, has taken no public action against the Adani Group. Instead, SEBI issued a ‘show cause’ notice to Hindenburg, not disputing the report’s factual accuracy but questioning the disclosure around Hindenburg’s short position on Adani stocks.
Adani’s Alleged Offshore Structure: A Closer Look
One of the central allegations revolves around the “IPE Plus Fund,” a small offshore Mauritius fund reportedly used by Vinod Adani, the brother of Gautam Adani, to funnel money into the Indian market. This fund, and its intricate connections with other offshore entities, is at the heart of the alleged money laundering and over-invoicing scandal that has plagued the Adani Group. According to documents from India’s Directorate of Revenue Intelligence (DRI), Adani grossly overvalued the importation of power equipment, siphoning off funds through offshore entities.
Further investigations revealed that these offshore entities were connected to Indian Infoline (IIFL), now rebranded as 360 One, a wealth management firm with a history of setting up convoluted fund structures and ties to the infamous Wirecard scandal in Germany.
The Shocking Revelation: SEBI Chairperson’s Alleged Involvement
Perhaps the most damning revelation in the Hindenburg report is the alleged involvement of SEBI Chairperson Madhabi Buch and her husband, Dhaval Buch, in these offshore structures. Whistleblower documents suggest that the Buchs had hidden stakes in the same offshore Bermuda and Mauritius funds used by Vinod Adani. The documents show that the Buchs opened an account with IPE Plus Fund in June 2015 and held significant assets in the Global Dynamic Opportunities Fund (GDOF), a key part of the alleged Adani money siphoning network.
The whistleblower documents further reveal that Madhabi Buch, just weeks before her appointment as a Whole-Time Member of SEBI, transferred the control of these offshore assets to her husband. This move raises serious questions about potential conflicts of interest, especially given that SEBI has shown a surprising reluctance to investigate the very offshore structures in which its chairperson allegedly had financial interests.
SEBI’s Investigation Hits a Dead End
Despite the Indian Supreme Court’s directive to investigate the Adani Group’s offshore shareholders, SEBI has made little progress. The Supreme Court noted that SEBI had “drawn a blank” in its investigation, raising suspicions about the regulator’s willingness or ability to take meaningful action against the Adani Group.
Additional Conflicts of Interest: Blackstone and REIT Regulations
The Hindenburg report also points to potential conflicts of interest involving Madhabi Buch’s husband, who was appointed as a Senior Advisor to Blackstone in 2019. During his tenure, Blackstone became a major player in India’s nascent REIT (Real Estate Investment Trust) market, receiving SEBI approval for multiple REIT IPOs. Notably, SEBI, under Madhabi Buch’s leadership, has pushed through significant REIT regulations that have benefited private equity firms like Blackstone.
Conclusion: A Crisis of Confidence in SEBI
The findings in the Hindenburg report cast serious doubt on SEBI’s ability to act as an impartial regulator in the Adani matter. The alleged involvement of SEBI’s chairperson in the same offshore funds used by the Adani Group, combined with the regulator’s lack of action against the conglomerate, suggests a deep-seated conflict of interest. As the Indian public and global investors watch closely, the need for transparency and accountability in this case has never been more urgent.
Legal Disclaimer
This report represents Hindenburg Research’s opinion and investigative commentary. Readers are encouraged to conduct their own research and consult financial, legal, and tax advisors before making any investment decisions. Hindenburg Research is not liable for any direct or indirect trading losses resulting from information in this report.
This blog post summarizes the key allegations and findings from Hindenburg Research’s latest report on SEBI and the Adani Group. The contents are based on whistleblower documents and extensive investigations that raise serious questions about the integrity of India’s financial regulatory system.
