Hindenburg Research, known for its scathing reports on high-profile companies, has once again found itself at the centre of a heated controversy. The firm has escalated its feud with the Securities and Exchange Board of India (SEBI), weighing further into its allegations of conflicts of interest and financial impropriety against Chairperson Madhabi Puri Buch and her husband.
The short seller took to X saying Buch’s rebuttal all but proves their claims, saying, “Sebi Chairperson Madhabi Buch’s response to our report includes several important admissions and raises numerous new critical questions”.
As the battle intensifies, the political landscape has also become embroiled, with the ruling Bharatiya Janata Party (BJP) alleging a “conspiracy” by the opposition Congress party to create “chaos and instability” in the country’s financial sector.
Alleged ties to Adani-linked offshore funds
Hindenburg claims to have obtained whistleblower documents that show Buch and her husband had a stake in obscure offshore entities used in the alleged Adani money siphoning scandal. The firm alleges that this represents a massive conflict of interest, as SEBI was tasked with investigating investment funds related to the Adani Group, which would include the funds in which the Buchs had a personal interest.
Concerns over Buch’s consulting firms
Hindenburg has also raised questions about the transparency of Buch’s consulting firms, which she set up during her time in Singapore. The firm notes that one of these companies, Agora Advisory Limited (India), was still 99% owned by Buch and generating revenue while she oversaw investigations into the Adani Group.
Allegations of improper email usage
The short-seller further alleges that Buch used her personal email for business dealings under her husband’s name while serving as a SEBI Whole Time Member, raising concerns about the integrity of her actions.
SEBI and Buch’s response
In response to Hindenburg’s allegations, SEBI and Buch have vehemently denied any wrongdoing. They have described the claims as “baseless allegations and insinuations” and insisted that the fund in question never invested in Adani securities. The Buchs have also maintained that their stake in the fund was minor and they had no influence over investment decisions.
BJP’s accusations of a “Congress conspiracy”
Amid the escalating feud, the BJP has entered the fray, claiming that the opposition Congress party and other opposition parties are part of a “conspiracy to create financial instability and chaos in India.” BJP spokesperson Sudhanshu Trivedi has accused Hindenburg of facing scrutiny from Indian probe agencies and alleged that the opposition is “echoing its allegation” in an attempt to “create chaos and instability, especially in the financial sector.”
Timing of the Hindenburg report
Trivedi has noted that many such critical reports from foreign entities are often released just ahead of or during Parliament sessions, suggesting that the opposition was aware of the Hindenburg report’s timing when Parliament was in session. He claimed that the opposition’s goal is to “destabilize and discredit one of the world’s strongest financial systems and create chaos in the world’s fastest-growing economy.”
BJP’s allegations of a “Congress Dynasty” conspiracy
BJP leader and former Union minister Rajeev Chandrasekhar has echoed these sentiments, stating that Hindenburg had attacked SEBI in an “obvious partnership” with Congress and had an “ominous motive” to “destabilize and discredit one of the world’s strongest financial systems and create chaos in the world’s fastest-growing economy.” Chandrasekhar has also asserted that “many global forces with the help of the Congress dynasty want to slow down or trip up India’s rise.”
Rahul Gandhi questions SEBI
Rahul Gandhi took to Twitter (nee X) to air his concerns, stating, “The integrity of Sebi, the securities regulator entrusted with safeguarding the wealth of small retail investors, has been gravely compromised by the allegations against its chairperson”.
He also questioned why SEBI chairperson Buch has not resigned yet, calling on the government for an explanation and joining the opposition in demanded an impartial probe. “If investors lose their hard-earned money, who will be held accountable—PM Modi, the SEBI Chairperson, or Gautam Adani?”
SEBI’s defense of its handling of the Adani-Hindenburg matter
SEBI has defended its handling of the Adani-Hindenburg matter, stating that 23 out of 24 investigations are complete, with one nearing closure. The regulator has blamed the lengthy process on cumbersome enforcement procedures and has also initiated its own proceedings against Hindenburg Research, accusing the firm of misleading disclosures to profit from short selling.
The ongoing battle and its implications
The clash between Hindenburg, SEBI, and the BJP has far-reaching implications for India’s financial markets and the country’s political landscape. As the battle continues to unfold, with both sides trading accusations and defending their positions, the question remains: who will emerge victorious in this high-stakes game of allegations and counter-allegations?
Last word
The Hindenburg-SEBI-BJP saga has once again highlighted the complex interplay between financial regulation, corporate governance, and political maneuvering. As the dust settles, it will be crucial for all stakeholders to prioritize transparency, accountability, and the integrity of India’s financial system. Only then can we ensure that the country’s economic progress is not derailed by such allegations cropping up.
