Hindenburg Report – It looks like Adani troubles are getting worse after the second report.
Hindenburg Report – It creates a bustle in the Indian stock market. The Adani group is in the center of it. Hindenburg Research Corporation is a U.S.-based investment and financial research organization whose primary focus is to showcase mischievous and financial scandals. It was founded by Nathan Aderson in 2017.
A fresh report is published by Hindenburg on August 10th, 2024. In this report, SEBI chairperson Madhavi Puri Buch and her husband, Dhaval Buch got involved in it. In the report, both people have a stake in Adani’s obscure offshore funds.
Madhavi Puri Buch in the press said the investments were made before she became the chairperson of SEBI. Adani’s group and the Central government claim it is mischievous work done by Hindenburg to disturb the Indian Stock market.
Ten major points from the report –
Adani Group Allegations: The Adani Group, a prominent Indian conglomerate, has been accused of engaging in undisclosed related-party transactions and stock manipulation through a network of offshore shell entities, primarily based in Mauritius. This was initially exposed in a report claiming the conglomerate operated “the largest con in corporate history.”
SEBI’s Inaction: Despite extensive evidence and over 40 independent media investigations supporting the allegations against Adani, SEBI has not taken significant public action against the group. The regulator has been criticized for considering only minor technical violations, despite the gravity of the allegations.
SEBI’s Focus on Short Sellers: Instead of pursuing the Adani Group, SEBI issued a “show cause” notice to the authors of the original report, questioning the disclosure of their short position in Adani. SEBI did not challenge the factual content of the report but argued that disclosure requirements were not adequately met.
Offshore Fund Structures: Investigations have uncovered complex offshore fund structures allegedly used by the Adani Group for financial manipulation. These include funds like the IPE Plus Fund and Global Dynamic Opportunities Fund, linked to Adani’s brother, Vinod Adani, through convoluted financial arrangements involving Mauritius and Bermuda.
Conflict of Interest Allegations: Allegations have been made against SEBI Chairperson Madhabi Buch and her husband, Dhaval Buch, for having stakes in the same offshore funds used by Adani. Whistleblower documents suggest that Madhabi Buch and her husband had financial interests in these funds, raising concerns about potential conflicts of interest.
Supreme Court Criticism: The Indian Supreme Court has criticized SEBI for failing to uncover the identities of Adani’s offshore shareholders. Despite agreeing with concerns about the offshore entities, SEBI’s investigation has reportedly reached a dead end.
Ineffectiveness Against Other Funds: SEBI has also not acted against other suspect funds associated with Adani, such as EM Resurgent Fund and Emerging India Focus Funds, which were linked to potential stock price manipulation.
Madhabi Buch’s External Interests: During her tenure as a whole-time member and later Chairperson of SEBI, Madhabi Buch reportedly had a 100% interest in an offshore consulting firm, Agora Partners, in Singapore. She transferred her stake to her husband shortly after becoming SEBI Chairperson, raising questions about transparency and potential conflicts.
Blackstone Connections: Dhaval Buch, Madhabi Buch’s husband, became a senior advisor to Blackstone, a global private equity firm with significant investments in Indian REITs (Real Estate Investment Trusts), during her tenure at SEBI. SEBI has introduced several regulatory changes benefiting REITs, potentially favoring Blackstone.
Promoting REITs: Madhabi Buch has publicly promoted REITs as a promising asset class without disclosing her husband’s advisory role with Blackstone, a major REIT sponsor. This has raised questions about impartiality and transparency.
