Gossip & Tales: Madhabi Puri Buch In Delhi Today
Govt. contemplating if it should ask Buch to step down, sources say
Incumbent SEBI chief Madhabi Puri Buch was summoned to New Delhi today in the wake of the recent report by US short seller Hindenburg. She would be meeting Prime Minister Modi's Principal Secretary PK Mishra and the Finance Minister. On August 11, Hindenburg published its second report on India, where it made several allegations against the SEBI chief. The grapevine in New Delhi is that before the matter reaches the Supreme Court (SC) and the SC sets up a committee to probe the allegations, like it did in January 2023 after the first Hindenburg report on Adani Group, Buch may be asked to step down from her post as the SEBI chief in the interim.
In the past 10 years, it has seldom happened that the Narendra Modi led government has sacked any regulatory chief before the expiry of their tenure. The three year tenure of Buch ends in March 2025 but the view within the government is that it would be too long a time to tolerate the daily "negative" news cycle with allegations of conflict of interest against the SEBI chief now turning into a raging controversy. More so, if the probable SC probe panel gives a damning report while Buch is still on the post, it would mean bad publicity for the government as well, if it decided to support her.
Blackstone: Key Concern
It is the Blackstone related allegation by Hindenburg that has the government worried.
According to Hindenburg, the SEBI chief was promoting REIT (Real Estate Investment Trusts) and had openly declared that it was one of her favourite products. This, while her husband was appointed as an advisor by one of USA's largest fund managers Blackstone that had a major interest in REITs. As per Hindenburg, SEBI policies during the tenure of Buch were so supportive of Blackstone's REIT products that the fund managed to cashed out with more than Rs 7100 crores, while Dhaval Buch the husband of SEBI chief was employed with it. Interestingly, Dhaval Buch had no prior experience in fund management or real-estate, since he had worked with Hindustan Lever in the supply chain and procurement department, something which Blackstone seems to have had no interest in. Yet, Blackstone appointed Buch as an advisor only to sway the SEBI chief, Hindenburg has alleged.
On Adani Issue
The SEBI chief claims to have given up the ownership of her investments (approximately Rs 7 crores) in the Mauritius based Global Dynamic Opportunities Fund run by IIFL Wealth on March 22, 2017, before her appointment as the Whole Time Member at SEBI in April 2017. Also, the fund has clarified that it had not invested any money from the scheme in any instrument of Adani companies. Hindenburg says (quoting private email correspondence) that Dhaval Buch was holding these investments up to February 2018. Buch was appointed as SEBI chief in April 2022, which is when she took the reins of SEBI fully in her hands. Hindenburg has claimed that the same structure, which was created by IIFL Wealth in which Buch and her husband invested, was used by Gautam Adani's brother Vinod Adani to move funds in tax havens and invest the same in Indian stock markets. Therefore, says Hindenburg, there was a conflict of interest since the SEBI chief did not recuse herself when the regulator was probing the Adani Group for various violations.
Other allegations so far do not cut much ice, since Hindenburg has failed to show any criminal intent or any other money laundering or bribery or any such acts involving the SEBI chief. Also, Hindenburg itself is facing a show cause notice from SEBI for violating rules of the Indian market by indulging in short selling activities and front running ahead of the publication of its previous report in January 2023.
