The Congress has levelled a series of explosive allegations levelled against the chairperson of the Securities and Exchange Board of India (SEBI), Madhabi Puri Buch. The main opposition party, the Indian National Congress, has come out swinging, accusing Buch of a glaring conflict of interest and potential violations of SEBI’s own code of conduct.
The Agora Advisory Controversy
At the heart of the controversy lies Buch’s alleged involvement with a consulting firm called Agora Advisory Private Limited. According to the Congress party, Agora Advisory has received a staggering Rs 2.95 crores in consultancy fees, with a whopping 88% of that amount, or Rs 2.59 crores, coming from a single entity – the Mahindra & Mahindra Group.
But the plot thickens even further. The Congress party has also alleged that Buch’s husband, Dhaval Buch, has personally received a mind-boggling Rs 4.78 crores in income from the Mahindra Group. This is in addition to the money that Agora Advisory, the firm in which Buch has a 99% shareholding, has earned from the conglomerate.
The Mahindra Group was quick to respond, saying, “We categorically state that we have not, at any point, requested SEBI for any preferential treatment. We maintain the highest standards of corporate governance…Three out of the five approvals or orders of SEBI do not pertain to the Company or any of its subsidiaries. One was a fast-track rights issue, which did not require any approval from SEBI. One was an order issued in March 2018, well before Dhaval Buch started working with the Mahindra Group.”
Conflict of Interest Concerns
The Congress party has rightly pointed out that this arrangement raises serious concerns about a potential conflict of interest. After all, as the chairperson of SEBI, Buch has been tasked with adjudicating cases involving the very same Mahindra Group that has been showering her family with lucrative consultancy fees. This, according to the opposition, is a clear violation of SEBI’s own code of conduct.
Agora Partners and the Shareholding Shuffle
The plot thickens even further when we consider the revelations made by the US-based short-seller Hindenburg Research. According to Hindenburg, Buch had previously held shares in another consulting firm, Agora Partners, based in Singapore. However, she reportedly transferred all of these shares to her husband in March 2022, just as she was being appointed to the top position at SEBI.
Subhash Chandra Garg’s Scathing Critique
The former top bureaucrat in the Indian government and a SEBI board member during Buch’s tenure, Subhash Chandra Garg, has described Buch’s continued equity in the Indian consulting firm and its ongoing business operations as a “very serious” breach of conduct. Garg minced no words, stating that there was “no justification” for Buch to continue owning the firm after joining the SEBI board, and that she “could not have been allowed” to do so even after making disclosures.
Buch’s Response and the Lingering Questions
In response to the allegations, Buch has stated that the consulting firms had been disclosed to SEBI and that her husband used these firms for his consulting business after retiring from Unilever in 2019. However, the Congress party and other critics have pointed out that this arrangement still poses a clear conflict of interest, given Buch’s position as the regulator’s chairperson.
The Potential Consequences
The implications of these allegations are far-reaching. If proven true, Buch’s position as the chairperson of SEBI could become untenable, as Garg has suggested. The credibility of India’s financial markets and the integrity of the regulatory body could be called into question, undermining investor confidence and the country’s economic stability.
The Ongoing Investigations
As the controversy continues to unfold, it remains to be seen how the relevant authorities, including SEBI and the government, will respond to these serious allegations. The public and the financial community will be closely watching to see if a thorough, impartial investigation is conducted, and if appropriate actions are taken to address the concerns raised, including those levelled against her by SEBI employees.
Calls for Accountability and Transparency
Beyond the specific case of Madhabi Puri Buch, this episode highlights the importance of robust corporate governance and the need for strict adherence to ethical standards, particularly among those entrusted with the responsibility of overseeing the financial markets. The public’s trust in the regulatory system is at stake, and any perceived breaches of that trust could have far-reaching consequences for India’s economic growth and development.
As the dust settles on this controversy, there will undoubtedly be renewed calls for greater accountability and transparency within SEBI and other regulatory bodies. The public will demand assurances that the highest standards of integrity are being upheld, and that any conflicts of interest, real or perceived, are swiftly and decisively addressed.
This episode may also serve as a wake-up call for the need to strengthen the regulatory framework and governance structures that oversee India’s financial markets. Policymakers and lawmakers will need to carefully examine the existing systems and implement robust safeguards to prevent such conflicts of interest from arising in the future.
Navigating the Path Forward
The allegations of corruption against Madhabi Puri Buch have cast a long shadow over the credibility of India’s financial markets and the regulatory bodies tasked with overseeing them. As the country navigates this challenging situation, it will be crucial for all stakeholders, from the government to the investing public, to come together and work towards restoring trust and confidence in the system. Only then can India’s financial markets truly thrive and fulfill their role as engines of economic growth and prosperity.
