Modi govt steeped in corruption...: Indian opposition reacts to Hindenburg's report on SEBI chief, Adani Group

Opposition parties in India have strongly reacted to the US-based short-seller Hindenburg's allegations on Securities and Exchange Board of India (SEBI) chairpersonMadhabi Puri Buch and the Adani group. In its report, Hindenburg alleged, on Saturday (Aug 10), that Buch previously held investments in certain offshore funds that were also used by Adani Group.

Citing whistleblower documents,Hindenburgsaid Buch and her husband held stakes in an offshore fund where a substantial amount of money was invested by associates of Vinod Adani, brother of Gautam Adani, who is chairman of the Adani Group.

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This report by Hindenburg comes more than a year after the short-selleralleged improper use of tax havens and stock manipulation by Adani Group, setting off a $150 billion sell-off in the conglomerate's stocks despite its denials of wrongdoing.

Opposition reacts

In a post on X, senior Congress leader Jairam Ramesh issued a statement on the report's findings. "SEBI's strange reluctance to investigate the Adani mega scam has been long noted, by the Supreme Court's expert committee. The committee pointed out in its report that SEBI had in 2018 diluted and in 2019, entirely deleted the reporting requirements relating to the ultimate beneficial ownership of foreign funds," the statement said.

"This had tied its hands to the extent that the securities market regulator suspects wrongdoing, but also finds compliance with various stipulations in attendant regulations...It is this dichotomy that has led to SEBI drawing a blank worldwide," it said, citing the expert committee.

"Under public pressure, after the Adani horse had bolted, SEBI's board reintroduced stricter reporting rules on June 28, 2023. It told the expert committee on August 25, 2023, that it was investigating 13 suspicious transactions. Yet the investigations never bore fruit," Ramesh added.

He pointed out that Hindenburg's report on Saturday showed that SEBI chairperson Madhabi Buch and her husband invested in the same Bermuda and Mauritius-based offshore funds in which Vinod Adani and his close associates invested funds from the over-invoicing of power equipment. "These funds are also believed to have been used to amass large stakes in the Adani Group companies in violation of SEBI regulations," Ramesh added.

The senior Congress leader urged the central government to act immediately to eliminate all conflicts of interest in the SEBI investigation of Adani.

The Aam Aadmi Party (AAP), meanwhile, said that theHindenburg revelations were hinted at three days before the Parliament session ended.

"Modi Government is steeped in corruption from head to toe. To save his friend Adani, Modi Ji got the investigation done by the same SEBI Chairman who had committed the scam in connivance with Adani," AAP said in a post on X.

SEBI chief hits out at Hindenburg

Reacting to Hindenburg's allegations, Madhabi Puch and her husband accused the American short-sellerof attempting to assassinate their character.

"Our life and finances are an open book. All disclosures as required have already been furnished to SEBI over the years. We have no hesitation in disclosing any and all financial documents, including those that relate to the period when we were strictly private citizens, to any and every authority that may seek them," the couple said in a statement.

"Further, in the interest of complete transparency, we would be issuing a detailed statement in due course," they added.

Adani Group's reaction

"The latest allegations by Hindenburg are malicious, mischievous and manipulative selections of publicly available information to arrive at pre-determined conclusions for personal profiteering with wanton disregard for facts and the law," the Adani Group said in a statement.

"We completely reject these allegations against the Adani Group, which are a recycling of discredited claims that have been thoroughly investigated, proven to be baseless and already dismissed by the Hon'ble Supreme Court in January 2024. It is reiterated that our overseas holding structure is fully transparent, with all relevant details disclosed regularly in numerous public documents," it added.

What happens next?

According to reliable sources, there might be a big fallout due to the report within the upper hierarchy of SEBI. Reports indicate that Adani Group has already begun lobbying for the next SEBI chairperson, and the name of Dinesh Khara, the recently retired State Bank of India (SBI) chief, is doing the rounds.

As for confidence in the Indian market and economy -- the opposition has started pressuring the Narendra Modi government to act quickly and remove Buch from the top position in SEBI.