Congress criticizes SEBI over delayed investigation into Adani Group and Mauritius FPIs

In a question for the government, the Congress party has attacked the Securities and Exchange Board of India (SEBI) for its handling of the investigation into the Adani Group and two Mauritius-based foreign portfolio investors (FPIs). The controversy revolves around allegations of these FPIs violating new foreign investor norms and their involvement in the Adani Group's activities as detailed in a PTI report.

According to the report, two Mauritius-based FPIs, implicated in the January 2023 report by short-seller Hindenburg Research, have petitioned the Securities Appellate Tribunal seeking urgent relief from complying with SEBI's new foreign investor norms. These norms are set to come into effect on September 9th. Congress general secretary in-charge communications, Jairam Ramesh, highlighted that these FPIs are accused of participating in the Adani Group's attempts to bypass SEBI regulations and amass ‘benami’ stakes in its own companies.

Ramesh emphasized, "These are the very same FPIs who stand accused of participating in the Adani Group's brazen attempt to bypass SEBI's regulations and amass benami stakes in its own companies. These are the very firms that benefitted from SEBI's removal of the requirement to identify the 'ultimate beneficial owner' of offshore funds, a decision that it was forced under public pressure to reverse in June 2023 in a tacit admission of its guilt."

Delayed investigation, conflict of interest, concerns over black money

The Congress has expressed concerns that these FPIs are violating rules designed to prevent over-investment in a single stock, which could allow black money routed through tax havens to flood back into Indian capital markets. Ramesh stressed that these rules must be upheld at all costs to ensure the integrity of the capital markets.

A key point of contention is the delayed investigation by SEBI into these alleged violations. The investigation, which was supposed to be completed within two months and shared with the Supreme Court, has languished for 18 months. Ramesh pointed out, "The basic fact is that a SEBI investigation into these violations that was supposed to be completed in two months and shared with the Supreme Court is still languishing 18 months later."

Additionally, the Congress has raised questions about the multiple conflicts of interest involving SEBI's Chairperson, Madhabi Buch. Recent allegations by Hindenburg Research suggest that Buch and her husband had stakes in obscure offshore funds used in the Adani money siphoning scandal. However, Buch and her husband have denied these allegations, asserting that their finances are transparent.

Adani Group's rebuttal and ongoing controversy

The Adani Group has dismissed the allegations as malicious and manipulative, stating that it complies with all laws and disclosure requirements. The group has also denied any commercial relationship with SEBI Chairperson Madhabi Buch or her husband.

The ongoing controversy has been a focal point for the Congress party's criticism of the government, particularly since Adani Group stocks suffered significantly following Hindenburg Research's allegations of fraudulent transactions and share-price manipulation. The opposition party has been persistent in its attack, alleging financial irregularities against the Adani Group and favoritism by the government to augment the conglomerate's profits.

Hence, the Congress's criticism of SEBI highlights the need for transparency and swift action in regulatory investigations. The delayed investigation and alleged conflicts of interest have raised significant concerns about the integrity of India's capital markets and the role of regulatory bodies in ensuring compliance with financial regulations.