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Ex-SEBI chief Madhabi Puri Buch gets Lokpal clean chit on Hindenburg allegations
The former SEBI chief, Madhabi Puri Buch, has been cleared of charges of corruption levelled against her on the basis of an Hindenburg report.
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NEW DELHI: Lokpal, the anti-corruption watchdog, has given a clean chit to former Securities and Exchange Board of India (Sebi) chairperson Madhabi Puri Buch and her husband, Dhaval Buch, in complaints that accused her of misconduct, impropriety and conflict of interest.
In a 116-page order, a six-member bench led by Lokpal chairperson justice AM Khanwilkar concluded that there was no need for a formal probe since the accusations were based on presumptions and assumptions and were not supported by any verifiable material.
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The three complaints were filed after US-based Hindenburg Research levelled allegations that the SEBI chief and her husband had investments in offshore funds which are linked to the Adani group of companies; SEBI was probing the complaints against the conglomerate. Among the three, one was filed by a Trinamool Congress member of parliament, Mahua Moitra.
The order said the allegations were essentially based on Hindenburg Research’s allegations that sought to expose or corner the Adani group.
The Lokpal said it focused on five key allegations ranging from investment in a fund linked to Adani group of companies and not disclosing the same; quid pro quo with companies such as Mahindra and Mahindra and Blackstone Inc in the garb of consultancy services by a company in which she had 99% ownership; quid pro quo from Wockhardt Limited in the garb of rental income from a company - Carol Info Services Private Limited, which was under investigation by Sebi for insider trading; gaining undue advantage by selling ESOPs from ICICI Bank over five years between 2017 and 2024 at a time when ICICI had regulatory issues with Sebi; and making a pretence of recusal from matters of M&M Group and Blackstone Inc but influencing the other wholetime members and board of Sebi for a a favourable outcome.
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“...we have concluded that the allegations in the complaint (s) are more on presumptions and assumptions and not supported by any verifiable material and do not attract the ingredients of the offences (under Prevention of Corruption Act), so as to direct an investigation,” the Lokpal said in the order.
“Accordingly, these complaints are disposed of,” the order added.
HT has reviewed the document.
Buch, who took over as the chief of the Securities and Exchange Board of India (SEBI) on March 2, 2022, demitted office on February 28 this year after the completion of her tenure.
Last year, US-based Hindenburg Research accused her of a conflict of interest and favouring the Adani Group. The Buchs and the Adani Group had denied the allegations.
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Following a notice from the Lokpal on November 8, Buch filed a detailed 31-page affidavit before the Lokpal on December 7, 2024, terming the allegations as politically motivated.
On the allegation related to Adani Group, investment in a fund linked to it and Sebi favouring the conglomerate in investigations, Lokpal said Buch’s stand is “fully vindicated from the contemporaneous official records relied upon by her” in this matter and “has not been countered” by the complainant.
“Concededly, in our view, neither the incorporation of two consultancy companies because of the initiative of Buch after her retirement from ICICI Bank; nor the substantial investment made by Buch and her husband in a Fund in 2015, has any relevance to bring home how it is a case of taking or obtaining undue advantage or one of quid pro quo,” the Lokpal order said.
Lokpal underscored that Buch had already redeemed the investments from the fund much before the investigations into the allegation of manipulations of stocks against Adani Group of companies had begun by Sebi.
“Thus, we hold that the allegation that the RPS intentionally provided heavily redacted documents to the expert committee of the Hon'ble Supreme Court is devoid of merit, truly a veiled attempt to reopen and question the findings of the Supreme Court. We cannot be party to such an attempt. More so, these complaints are chiefly based on a report authored by Hindenburg Research, whose credibility has already been seriously doubted by the Supreme Court in respect of its report dated 24.01.2023,” the order added.
“Pertinently, the investigations by Sebi have been put seal of approval by the Hon'ble Supreme Court of India as being just and proper, which has attained finality,” it said.
With regards to allegations related to Wockhardt, the Lokpal noted that there was an attempt to politicise the matter.
“The complainant (s) by making such unverified and flimsy or fragile allegations, only to sensationalize or so to say politicize the matter, has inevitably trivialised the process before the Lokpal,” the order stated.
With regard to enchashment of ESOPs, Lokpal said that as justly argued by Buch, “ESOP is not in the form of salary payment by ICICI Bank but a prerequisite enuring to the employees while in employment, to be cashable as per his/her discretion at a later point of time including after superannuation”.
“This is a common practice followed by many leading companies and a well-known concept in business environment. This is a package of service and recognition of long services rendered by concerned including in senior positions,” Lokpal said while adding that there was no merit in allegations.
It rather underlined that “no credible material is forthcoming or has been placed before us (Lokpal) by the complainant (s) to demonstrate as to what undue advantage has been given to ICICI Bank owing to the settlement orders passed by the high-powered committee”.
On allegations pertaining to enriching herself, which attracts Prevention of Corruption Act, Lokpal said: “From the detailed analysis hitherto, of relevant facts and our findings in that regard, we have no hesitation in concluding that even with a liberal approach to be adopted, in favour of the complainant (s), none of the ingredients of Section 13 (of PC Act) would be attracted in the fact situation of the present case”.
“While parting, we need to record that the complaint (s) under consideration were essentially founded on the Hindenburg report dated 10.08.2024, by a known short seller trader whose focus was to expose or corner Adani Group of Companies,” it said.
Citing its previous order dated September 20, 2024, (related to accepting the complaints and initiating an enquiry), Lokpal said, “that report (Hindenburg report) by itself cannot be made the sole basis to escalate action against Buch.”
“The complainant (s) being conscious of this position advisedly attempted to articulate allegations independent of the stated report but the analysis of the allegations by us, ended with a finding that the same are untenable, unsubstantiated and bordering on frivolity,” the Lokpal added.
During the Lokpal proceedings, the complainants were allowed to give oral submissions on Buch’s affidavit, and the matter was taken up on January 20 this year.
Lokpal said that the analysis (in its order) “will not be to verify the veracity or otherwise of the information presented before us, but only to ascertain whether the narrative set forth reveals commission of any cognizable offence deserving investigation”.
The Hindenburg founder announced the closure of the company in January this year.
