2024-08-15 03:54:04
Author: Sugata Ghosh
SEBI had investigated the allegations made by Hindenburg against the Adani Group and did not find any truth in the allegations made by the American short seller. However, many people believe that SEBI did not do a great job in this case. But Hindenburg is also not innocent. He has been saying that his aim is to make money by taking advantage of the shortcomings of companies. After the allegations made against SEBI Chairman Madhabi Puri Buch, it seems that Hindenburg is licking his wounds.
uproar is the motive
The American short seller has said that Madhabi and her husband Dhawal Buch had earlier had an ‘association’ with the Adani Group, so SEBI did not investigate properly against him. This is Hindenburg’s impatience and haste. In fact, Dhawal Buch has been a veteran of the Indian corporate world. Hindenburg has made allegations about the ‘association’ of these two with the Adani Group on the basis of the reports of whistleblowers. These allegations will not stand before the law, but once again everyone’s attention has definitely turned towards the Adani Group and SEBI.
what is the allegation
Hindenburg alleges that the Buch couple invested in foreign funds that Adani allegedly used to increase the share prices of his companies listed in India. The Buch couple had withdrawn money from these funds in early 2018. These are public funds and the Buch couple had withdrawn the money before SEBI’s investigation of Adani Group. By the way, if the Buch family had been living abroad at the time when they invested in these funds, this question would not have arisen. The reason for this is that NRIs keep investing in such foreign funds, which specifically invest in Indian shares.
the law was not broken
15 days before becoming SEBI chairman, Madhabi Puri Buch transferred her investment in a Singapore consulting company to her husband, but she kept the investment in an unlisted advisory company in Mumbai. It is worth noting here that there is nothing wrong in investing in a legitimate consulting company abroad, while holding a stake in an unlisted company of the country is also not a violation of law. Keep in mind that unlisted companies are not under the purview of SEBI.
Aspect of Blackstone
Madhabi Puri Buch is a full-time member of SEBI. Her husband Dhaval has joined the giant private equity company Blackstone and is a senior advisor in the company. Hindenburg alleges that Dhaval’s joining Blackstone benefited the company because SEBI changed the rules for Real Estate Investment Trusts (REITS).
Appointment Normal
But this allegation also has no meaning. In fact, the real estate sector and the financial market have been demanding for a long time to ease the rules of REIT. On the other hand, it is also normal for a private equity company to appoint a person like Dhaval who is an expert in his field. Dhaval is an engineer, who has been an executive director and chief procurement officer in the world-renowned company Unilever. Therefore, there is no substance in these allegations of Hindenburg. Here it is only a matter of honesty.
The issue of disclosure
Did the SEBI chairman tell the Supreme Court and the committee appointed by it to investigate the Adani case that his family had earlier invested in funds that were alleged to have links with the group that the committee was investigating? Did the same thing happen in this case as lawyers or judges do when they talk about conflict of interest?
Political Angle
If this did not happen, the reason for this could be that when the investment was already withdrawn, then this matter did not matter and disclosing this would complicate the matter further. Perhaps this also happened due to the political sensitivity of the matter. But if the SEBI chief had given the information about the investment then, then he cannot be questioned on these matters.
what will the government do
Given the kind of political equations in the country right now, it seems that the government will not give much importance to Hindenburg’s allegations. If the government takes these allegations seriously, then in a way the authenticity of Hindenburg’s January 2023 report against the Adani Group will increase. In that report, the Adani Group was accused of manipulating the share prices of its companies.
spirits are strong
By the way, the opposition has been emboldened by the allegations leveled against Hindenburg’s Madhabi Puri Buch. It will give more fuel to Hindenburg’s allegations. In fact, the leaders know that even if these allegations do not have any legal basis, they can be used to create an anti-government atmosphere.
Hindenburg has retaliated using the excuse of Madhabi Puri Buch. Perhaps he wants to maintain his image of a courageous short seller and defend the Adani report of 2023, but this strategy will not work. It is possible that from time to time he will do more such acts to prove himself right, but this will only trouble the country’s agencies, they may get embarrassed, while the opposition will be thrilled. It will be another spice for the media. But the truth will not come out. Yes, Hindenburg’s recent allegations and the uproar of the opposition parties can definitely make a complicated case die before reaching its conclusion.
Disclaimer: The views expressed above are the author’s own