SEBI chief’s alleged conflicts of interest and offshore funds tied to Adani probe

The report explained that in one complex structure, a Vinod Adani-controlled company invested in the “Global Dynamic Opportunities Fund” (GDOF) in Bermuda, a British overseas territory and tax haven, which then invested in IPE Plus Fund 1, a fund registered in Mauritius, another tax haven.

A separate investigation by a financial daily revealed that the parent fund of GDOF—the Bermuda-based Global Opportunities Fund (GOF)—was used by two Adani associates “to amass and trade large positions in shares of the Adani Group.”

These nested funds are managed by IIFL.

“In brief, despite the existence of thousands of mainstream, reputable onshore Indian mutual fund products, an industry she now regulates, documents show SEBI Chairperson Madhabi Buch and her husband had stakes in a multi-layered offshore fund structure with minuscule assets, traversing known high-risk jurisdictions, overseen by a company with reported ties to the Wirecard scandal, in the same entity run by an Adani director and significantly used by Vinod Adani in the alleged Adani cash siphoning scandal,” said Hindenburg.

Conflict of interest?

Hindenburg also raised concerns about potential conflicts of interest, stating that Madhabi Buch, while serving as SEBI Chairperson, maintained a 99% stake in an Indian consulting business, which reported significant revenue.

“From April 2017 to March 2022, while Madhabi Buch was a Whole Time Member and Chairperson at SEBI, she had a 100% interest in an offshore Singaporean consulting firm called Agora Partners. On March 16, 2022, two weeks after her appointment as SEBI Chairperson, she quietly transferred the shares to her husband,” Hindenburg’s report added.

The short-seller claims that Madhabi Buch currently holds a 99% stake in an Indian consulting business called Agora Advisory, where her husband is a director. In 2022, this entity reported $261,000 in revenue from consulting, 4.4 times her disclosed salary at SEBI.

Hindenburg also noted that during Madhabi Buch’s tenure as a whole-time member at SEBI, her husband was appointed as a senior advisor to Blackstone in 2019. He had not worked in funds, real estate, or capital markets before, according to his LinkedIn profile.

“Blackstone has been one of the largest investors and sponsors of REITs, a nascent asset class in India. During Dhaval Buch’s time as Senior Advisor, while his wife was a SEBI official, Blackstone sponsored Mindspace and Nexus Select Trust, India’s second and fourth REITs to receive SEBI approval for a public IPO.”

“During Dhaval Buch’s tenure as Advisor to Blackstone, SEBI proposed, approved, and facilitated major REIT regulatory changes, including seven consultation papers, three consolidated updates, two new regulatory frameworks, and nomination rights for units, specifically benefiting private equity firms like Blackstone,” the report concluded.