Cong demands joint parliamentary committee probe into Hindenburg allegations

New Delhi: In the wake of the US short-seller Hindenburg Research's allegations against SEBI chairperson Madhabi Buch, the Congress on Sunday said the government must act immediately to eliminate all conflicts of interest in the regulator's investigation of the Adani Group and reiterated its demand for a joint parliamentary committee probe into the matter.

The opposition party also said the "seeming complicity of the highest officials of the land" can only be resolved by setting up a Joint Parliamentary Committee to investigate the full scope of the "scam".

The Hindenburg Research on Saturday launched a broadside against market regulator SEBI chairperson Madhabi Buch, alleging she and her husband had stakes in obscure offshore funds used in the Adani money siphoning scandal.

In a blogpost, Hindenburg said 18 months since its damning report on Adani, "SEBI has shown a surprising lack of interest in Adani's alleged undisclosed web of Mauritius and offshore shell entities." SEBI Chairman Buch and her husband have denied the allegations levelled against them as baseless and asserted that their finances are an open book.

In a statement issued late Saturday night and reposted on Sunday, Congress general secretary in-charge communications Jairam Ramesh said the SEBI's "strange reluctance to investigate the Adani mega scam" has been long noted, not least by the Supreme Court's Expert Committee.

The Committee, he said, had noted that SEBI in 2018 diluted and in 2019, entirely deleted the reporting requirements relating to the ultimate beneficial (i.e. actual) ownership of foreign funds. "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'," Ramesh said quoting the Expert Committee.

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

He said the Hindenburg Research's Saturday revelations show that Buch and her husband invested in the same Bermuda and Mauritius-based offshore funds in which "Vinod Adani and his close associates Chang Chung-Ling and Nasser Ali Shahban Ahli invested funds earned from the over-invoicing of power equipment".

"These funds are believed also to have been used to amass large stakes in Adani Group companies in violation of SEBI regulations. It is shocking that Buch would have a financial stake in these same funds," Ramesh said.

The Congress leader said the revelation raise fresh questions about Gautam Adani's two 2022 meetings in quick succession with Buch, shortly after she became the stock market regulator's chairperson. "The government must act immediately to eliminate all conflicts of interest in the SEBI investigation of Adani. The fact is that the seeming complicity of the highest officials of the land can only be resolved by setting up a JPC (joint parliamentary committee) to investigate the full scope of the Adani mega scam," the former Union minister said in his statement.

Earlier, tagging the Hindenburg post on the allegations on X, Ramesh had said, "Quis Custodiet Ipsos Custodes (who will guard the guards themselves)." Congress' media and publicity department head Pawan Khera said on Sunday that the shocking revelations of the Hindenburg Report do not just expose the "cozy relationship" between the SEBI chief and the Adani group, they show how appointments to watchdog institutions are made in this government.

"A simple due diligence done by the government before appointing Ms Madhabi Puri Buch as SEBI Chairperson would have brought these damning details out," he said in a post on X. It would be naive to believe that those in the government were not aware of these offshore investments of Madhabi Puri Buch and Dhaval Buch, Khera said. "The buck stops at the doorstep of the Prime Minister of India. Only a JPC can get all the answers," he asserted.

In January last year, Hindenburg Research, which in the past has shorted, or bet against, companies like electric truck maker Nikola Corp and Twitter (now X), accused Adani Group of pulling "the largest con in corporate history" by using a web of companies in tax havens to inflate its revenue and manipulate stock prices, even as debt piled up.

Though the conglomerate vehemently denied all allegations, the damning report sent the group's shares into a free fall, wiping out over USD 150 billion in market value of the 10 listed entities at their lowest point. Most of the 10 listed companies have since recouped the losses.

After the Hindenburg report, the Supreme Court asked SEBI to complete its investigation and set up a separate expert panel to look into regulatory lapses. The panel did not give any adverse report on Adani and the apex court too stated that no other probe other than the one being done by SEBI was required.

The SEBI had last year told a Supreme Court-appointed panel that it was investigating 13 opaque offshore entities that held between 14 per cent and 20 per cent across five publicly traded stocks of the conglomerate. It hasn't stated if the two incomplete probes have since been completed.