18 Months Since Adani Report: SEBI’s Alleged Lack of Action Raises Concerns

It’s been 18 months since Hindenburg Research released its damning report on the Adani Group, accusing the Indian conglomerate of orchestrating “the largest con in corporate history.” The report laid out a complex web of offshore shell entities, primarily based in Mauritius, allegedly used for undisclosed related party transactions and stock manipulation worth billions. Despite the gravity of these allegations and multiple corroborating investigations by independent media, the Securities and Exchange Board of India (SEBI) has yet to take any meaningful public action against Adani.

In a surprising twist, SEBI, instead of addressing the core issues raised by the report, has focused on Hindenburg’s disclosures regarding its short position in Adani stocks. The regulatory body sent a ‘show cause’ notice to Hindenburg on June 27, 2024, claiming that its report was “reckless” for citing a banned broker and alleging deficiencies in the disclosure of Hindenburg’s short position. Hindenburg has responded, expressing dismay at SEBI’s lack of interest in pursuing the more significant allegations against Adani.

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The Indian Supreme Court has also expressed dissatisfaction with SEBI’s investigation, noting that the regulator had “drawn a blank” in its probe into Adani’s offshore shareholders. Meanwhile, Adani Group’s CFO, Jugeshinder Singh, has downplayed the severity of SEBI’s notices, labeling them as “trivial.”

The Hindenburg report also highlighted the involvement of Vinod Adani, Gautam Adani’s brother, in using offshore entities to siphon funds through over-invoicing power equipment imports. These funds were allegedly funneled into the Indian market via a network of shell entities, including the IPE Plus Fund, a small Mauritius-based fund set up by an Adani director through India Infoline (IIFL). This fund, along with others like it, has been linked to stock manipulation and undisclosed related party transactions within the Adani Group.

Further complicating the issue is the revelation that SEBI’s current chairperson, Madhabi Buch, and her husband, Dhaval Buch, allegedly had stakes in the same offshore funds implicated in the Adani scandal. Whistleblower documents suggest that both had investments in the Global Dynamic Opportunities Fund, a Bermuda-based fund used by Vinod Adani. This raises serious questions about potential conflicts of interest within SEBI, further undermining confidence in the regulator’s ability to act impartially in the Adani investigation.

In addition to the offshore fund allegations, concerns have been raised about Madhabi Buch’s involvement in an Indian consulting business, Agora Advisory, which generated significant revenue during her tenure at SEBI. Her husband’s appointment as a senior advisor to Blackstone, a major player in India’s REIT market, during her time at SEBI, has also sparked questions about potential conflicts of interest.

As the Adani controversy continues to unfold, the lack of decisive action from SEBI raises concerns about the regulator’s independence and its ability to serve as an objective arbiter in this case. Hindenburg Research has called for further investigation and transparency, as the world watches to see whether SEBI will finally take meaningful steps to address the serious allegations against one of India’s largest conglomerates.