MUMBAI: The US-based short seller Hindenburg Research is attempting to attack the credibility of the market watchdog Sebi and indulging in character assassination of its chairperson, Sebi chairperson Madhabi Puri Buch and her husband Dhaval have said denying any wrongdoings or suppression of facts.
In a detailed statement issued Sunday evening in response to allegations made by Hindenburg, the Buchs said their investment in a fund promoted by IIFL Wealth Management was made when they were Singapore-based private citizens and made two years before Madhabi joined Sebi as a whole-time member.
They said Dhaval, a senior advisor with American private equity major Blackstone since 2019, is not associated with the real estate side of the US-headquartered investor.
The statement also says that Madhabi's two consulting companies immediately became "dormant" upon her appointment at Sebi in 2017 as a whole-time member.
"Hindenburg has been served a show cause notice for a variety of violations in India. It is unfortunate that instead of replying to the show-cause notice, they have chosen to attack the credibility of the Sebi and attempt character assassination of the Sebi chairperson," they said, describing this statement as a private response to the allegations made against them as individuals. Sebi as an institution will address the comments made against it separately at an appropriate time, they added.
In a short statement issued soon after the short-seller came up with its latest report last night, the Buchs termed the allegations as "baseless and insinuations aimed at character assassination.”
Hindenburg has alleged that it suspects Sebi’s unwillingness to act against the Adani group may be because Madhabi Buch had stakes in offshore funds linked to the conglomerate.
The Buchs said this statement is to show “our commitment to complete transparency, we are issuing a detailed statement as below. There are certain allegations made against Sebi which would be addressed by the institution independently. We would like to address the issues pertaining to us in our personal capacity.”
Noting that Madhabi is an alumnus of IIM Ahmedabad and has had a corporate career of over two decades in banking and financial services, largely with the ICICI Group, while Dhaval, an alumnus of IIT Delhi and has had a corporate career of 35 years in Hindustan Unilever and then in Unilever globally, have accrued their savings through their salaries, bonuses and stock options.
“Insinuations about our net worth and investments referencing Madhabi’s current government salary is malicious and motivated,” the statement said.
From 2010 to 2019, Dhaval worked in London and Singapore, both with Unilever while from 2011 to March 2017, Madhabi worked from Singapore, initially as an employee of a private equity firm and subsequently as a consultant.
“The investment in the IIFL fund referred to in the Hindenburg report was made in 2015 when we were both private citizens living in Singapore and almost two years before Madhabi joined Sebi, even as a whole-time member,” the statement said.
On the reason for making this investment in this fund, they said, was because the chief investment officer of the fund Anil Ahuja, is Dhaval’s childhood friend from school and IIT Delhi and, being an ex-employee of Citibank, JP Morgan and 3i Group Plc, had many decades of an investing career.
The fact that these were the drivers of the investment decision is borne out by the fact that when in 2018, Ahuja left his position as CIO of the fund, we redeemed the investment in that fund and that at no point in time did the fund invest in any bond, equity, or derivative of any Adani group company.”
Dhaval joining Blackstone Private Equity as a senior advisor in 2019 was due to his expertise in supply chain management and his appointment pre-dates Madhabi’s appointment as the Sebi chairperson in March 2022.
They also clarified that at no time has Dhaval been associated with the real estate side of Blackstone.
They further said when Dhaval joined Blackstone, Madhabi immediately added the American group to her recusal list, which is maintained with the Sebi.
On the allegations that Sebi’s regulations on the Reits have been made to favour Blackstone, which is among the largest realty players in the country, the statement said, “Over the last two years, Sebi has issued over 300 circulars (including ease of doing business initiatives in line with the developmental mandate of SebiI) across the entire market eco-system. All regulations of Sebi are approved by its board and not by the chairperson individually, after extensive public consultation.”
“Insinuations that a handful of these matters related to the Reit industry were favours to any specific party are malicious and motivated.”
On her two consulting companies (set up by Madhabi during her stay in Singapore; one in India and the other in Singapore), the statement said that they became immediately dormant on her joining the Sebi and that these companies and her shareholding in them were explicitly part of her disclosures to Sebi.
After Dhaval retired from Unilever in 2019, he started his own consultancy practice through these companies. Dhaval’s expertise in supply chain allowed him to work with prominent clients in the domestic industry.
“Thus, linking accruals in these companies to Madhabi’s current government salary is malicious,” the Buchs said, adding when the shareholding of the Singapore entity moved to Dhaval, this was once again disclosed, not just to Sebi, but also to the Singapore authorities and the domestic tax authorities.
