Hindenburg report: Oppn demands SEBI chief’s resignation, JPC probe; BJP calls it ‘conspiracy to create chaos’

PTI, Aug 12, 2024, 8:37 AM IST

SEBI chief Madhabi Buch (credit: PTI / File)

New Delhi: The US-based short seller Hindenburg Research’s allegations against SEBI chief Madhabi Buch triggered a political slugfest on Sunday with the Congress and other INDIA bloc parties demanding her removal and a joint parliamentary committee (JPC) probe, and the ruling BJP accusing the opposition of being a part of a conspiracy to create financial instability and chaos in India.

The opposition parties also urged the Supreme Court to step in after Hindenburg Research on Saturday alleged that the the Securities and Exchange Board of India (SEBI) chairperson and her husband had stakes in obscure offshore funds used in the alleged Adani money siphoning scandal.

Madhabi Buch and her husband Dhaval dismissed the charges as baseless and alleged that Hindenburg Research is attacking capital markets regulator SEBI’s credibility and attempting a character assassination of its chief instead of replying to a show cause notice served to it for “violations in India”.

The Adani group said it has no commercial relationship with the Buchs

In the wake of the allegations, the Congress said the government must act immediately to eliminate conflicts of interest in SEBI’s investigation of the Adani Group and renewed the demand for a JPC probe into the entire matter.

The principal opposition party also said the Supreme Court should take suo motu cognisance of the “entire scam” and get it probed under its aegis as the investigating agency SEBI is itself accused of being involved in it.

It asserted that in the wake of such “serious allegations”, Buch cannot remain in her position.

Leader of Opposition in Lok Sabha Rahul Gandhi said the integrity of SEBI has been “gravely compromised” by the allegations against its chairperson and asked whether the Supreme Court would look into this matter suo motu once again following the revelations.

“Honest investors across the country have pressing questions for the government: Why hasn’t SEBI Chairperson Madhabi Puri Buch resigned yet?

“If investors lose their hard-earned money, who will be held accountable — PM Modi, the SEBI Chairperson, or Gautam Adani?” the former Congress chief said.

“It is now abundantly clear why Prime Minister (Narendra) Modi is so afraid of a JPC probe and what it might reveal,” he said.

The TMC demanded that SEBI chairperson Buch should immediately be suspended.

“This situation is extraordinary. BJP is clearly on the backfoot in Parliament. We need both – a JPC as well as an SC monitored probe,” TMC leader Derek O’Brien said.

TMC MP Mahua Moitra alleged that this is both a “conflict and capture of SEBI”.

“Chairperson of SEBI is an opaque investor in Adani Group. Samdhi Cyril Shroff is on Corporate Governance Committee. No wonder all complaints to SEBI fall on deaf ears,” she alleged on X.

“One simple point – Chairperson who has invested in (& interacted personally with) very same funds that need investigating, is leading organization entrusted with fiduciary responsibility of finding out other owners of the fund tells Supreme Court & its 6 member committee that it had drawn a blank & was a chicken and egg situation in its investigation into the ownership of 13 entities.

“What greater conflict of interest and mockery of justice is there?” she said in another post on X.

“We cannot trust SEBI under this Chairperson to do any inquiry into Adani. The Supreme Court will HAVE to revisit its decision post this information becoming public (sic),” she said.

Demanding a JPC probe, the Aam Aadmi Party alleged that it was a “BJP scam” and said Prime Minister Narendra Modi should step down on moral grounds.

The RJD, Shiv Sena (UBT) and the Samajwadi Party (SP) also questioned the role of SEBI.

“The history of SEBI has been such that it has never been a true protector and support for investors. Only an impartial investigation can restore SEBI’s reputation,” SP chief Akhilesh Yadav said, adding a thorough investigation into the episode is imperative for India’s economy.

The BJP alleged that the Congress and other opposition parties are part of a conspiracy to create financial instability and chaos in India and rejected Hindenburg’s charge against the SEBI chairperson as an attempt to discredit the financial watchdog.

BJP spokesperson Sudhanshu Trivedi said the short-selling firm, which last year levelled serious allegations against the Adani group, is facing scrutiny from Indian probe agencies.

Opposition parties are echoing its allegation, and the conspiracy is now clearly visible that they want to create chaos and instability, especially in the financial sector, he told PTI.

Noting that many such critical reports emanating from foreign soil are released just ahead of or during Parliament sessions, he said opposition leaders were aware that the report was coming when Parliament was scheduled to meet.

BJP leader and former Union minister Rajeev Chandrasekhar said the short-selling firm has clearly attacked market regulator SEBI in an “obvious partnership” with the Congress and has an ominous motive and goal.

It is to destabilise and discredit one of the world’s strongest financial systems and create chaos in the world’s fastest-growing economy, he said on X.

Congress president Mallikarjun Kharge said SEBI previously cleared Adani before the Supreme Court following the January 2023 Hindenburg Report revelations but new allegations have surfaced regarding a “quid-pro-quo” involving the SEBI chief.

A Joint Parliamentary Committee (JPC) inquiry “is imperative to investigate this massive scandal”, he said.

“Until then, concerns persist that PM Modi will continue to shield his ally, compromising India’s Constitutional institutions, painstakingly built over seven decades,” Kharge said in a post on X.

In a statement issued late Saturday night and reposted on X on Sunday, Congress general secretary Jairam Ramesh said, “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 to investigate the full scope of the Adani mega scam,” the former Union minister said in his statement.

The Left parties also demanded that a JPC should be constituted to probe the allegations.

In a statement, the Communist Party of India (Marxist) said, “Given these serious charges against the head of the regulatory authority, it is necessary that the Chairperson step aside till a proper investigation is conducted.”

CPI(M) general secretary Sitaram Yechury, in a post on X, said, “The latest Hindenburg revelations have accused the regulator, SEBI, and that its chairperson herself is part of the manipulation. She must immediately quit and a Joint Parliamentary Committee to be constituted for the investigation.”

CPI general secretary D Raja said whether a JPC is constituted or not, Prime Minister Modi and Finance Minister Nirmala Sitharaman should speak on the issue.

Communist Party of India (Marxist-Leninist) Liberation general secretary Dipankar Bhattacharya also demanded a JPC probe.

On similar lines, Rashtriya Janata Dal leader Manoj Jha said it shows the level of corruption.

“This shows how our financial systems have been hijacked. This is the level of corruption and there are attempts to cover it up. You complain to SEBI about financial mismanagement, and now SEBI is tainted,” he said and backed the demand for a JPC probe.

In a detailed statement issued this evening, the Buchs clarified on the raft of allegations.

The statement reminded that Hindenburg has been served a show cause notice for violations in India, and called it “unfortunate” that instead of replying to it, the entity has chosen to attack Sebi’s credibility and is an attempt of character assassination of its chief.

On its part, SEBI said allegations against the Adani Group have been “duly investigated”, and its chairperson disclosed and recused herself from time to time when dealing with matters.

The Adani Group also termed the allegations malicious and based on manipulation of select public information. The company said it has no commercial relationship with SEBI chairperson or her husband.