A US-based short-seller has been accused by the Buch family of not only attempting to discredit India's capital markets regulator, Sebi, but also indulging in what was termed a "character assassination" of Sebi chairperson Madhabi Puri Buch and her husband, Dhaval Buch.
In an exhaustive statement on Sunday, the Buchs responded to Hindenburg's allegations which appeared in a report on Saturday.
"They have chosen to attack the credibility of Sebi and attempt character assassination of the Sebi chairperson," the Buchs said.
Hindenburg had said Sebi's reluctance to act against the Adani Group could be due to Madhabi's alleged stakes in offshore funds linked to the conglomerate. The Buchs were quick to deny these allegations as "baseless" in a statement issued early Sunday morning.
While Madhabi Puri Buch chairs Sebi, her husband Dhaval Buch is a senior adviser at Blackstone.
The Buchs have claimed in their latest statement that they had invested in the fund run by IIFL Wealth Management as private individuals, residing in Singapore, two years before Madhabi joined Sebi as a full time member in 2017.
It was claimed by the Buchs that the impetus for the investment in both funds came from a childhood friend of Dhaval's, one Anil Ahuja. Hindenburg's report identifies him as the founder and Chief Investment Officer of the Mauritius-based IPE Plus Fund. The Adani Group itself said in a statement that Ahuja was a nominee of 3i Investment Fund in Adani Power (2007-2008) and a director for nine years in Adani Enterprises, where he left in June 2017.
The Buchs quoted Ahuja as saying that the fund never, at any point in time, invested in any bonds, equities, and derivatives of any company belonging to the Adami Group of Companies.
To Hindenburg's observation relating to Dhaval's relationship with Blackstone, the Buchs said that he was appointed on account of his long experience in supply chain management and his appointment was made much before Madhabi's appointment as Sebi chairperson.
"At no time has Dhaval been associated with the real estate side of Blackstone," they clarified.
They further said that upon his appointment, Blackstone Group was immediately added to Madhabi's "recusal list," which is maintained by Sebi.
It further said that all regulations at Sebi are cleared by its board and not by any one individual, the chairperson, and dubbed the allegations that some decisions related to the REIT industry were undue favours to a few as "malicious and motivated".
The Buchs pointed out that in the last two years, Sebi has issued well over 300 circulars for the entire spectrum of the market, including steps for 'ease of doing business'.
On the two consulting firms of Madhabi, the Buchs clarified that the companies had become "dormant" after her appointment in Sebi, and her shareholding in those companies was fully disclosed to the regulator.
The statement also added that after Dhaval's retirement from Unilever, he set up a consultancy practice carrying out assignments for the same companies with reputed clients based in India.
The Buchs trashed the linking of the earnings from these consultancy firms to Madhabi's current government salary as "malicious".
The Hindenburg report further claimed that Madhabi "currently" holds 99% share in an Indian consulting outfit called Agora Advisory where her husband is a director.
The Buchs said that when this shareholding of the Singapore entity changed to Dhaval, it was disclosed to Sebi, in addition to the Singaporean authorities and the Indian tax authorities. They said Sebi has very good institutional mechanisms around disclosure and recusal norms.
It concluded by reminding the public that Hindenburg has been issued a show cause notice for violations here in India and dubbed it "unfortunate" that instead of responding to it, the entity has chosen to attack Sebi's credibility, an act the Buchs described as an attempt at character assassination of its chief.
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