Govt must act to eliminate conflicts of interest in SEBI's Adani probe: Cong

Jairam Ramesh. File Pic

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".

Congress president Mallikarjun Kharge said SEBI had previously cleared "Adani, a close associate of PM Modi, before the Supreme Court following the January 2023 Hindenburg Report revelations".

However, new allegations have surfaced regarding a "quid-pro-quo" involving the SEBI chief, he said.

"The small & medium investors belonging to the Middle Class who invest their hard-earned money in the stock market need to be protected, as they believe in the SEBI. 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.

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 blog post, Hindenburg said 18 months after 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.

Adani Group on Sunday termed Hindenburg Research's latest allegations as malicious and manipulative of select public information, saying it has no commercial relationship with the SEBI chairperson or her husband.

The Congress also raised questions over the SEBI account being locked in Twitter.

In a post on X, Congress general secretary Jairam Ramesh said the SEBI account on Twitter is "locked", and therefore inaccessible to the general public.

"Some reports suggest it may have been locked for a while, but this continued inaccessibility - at a time when evidence of conflict of interest by its top leadership has come out - is puzzling. The Modani scandal has been brewing for many months now, and the SEBI's inaction has been a recurring disappointment," Ramesh said.

He said questions emerge such as why was the account locked.

"This opacity leads to questions about whether the platform has been quietly deleting past advisories/press releases which may be incriminating the organisation/its leadership on the Modani scam," Ramesh said.

The platform is national property and authorities should not be withholding public access, he said.

"This non-accessibility to the public in the time of crisis is not a sign of a mature, professional, independent market regulator," the Congress leader said.

In a statement issued late Saturday night and reposted on Sunday, 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 to investigate the full scope of the Adani mega scam," the former Union minister said in his statement.

Congress' media and publicity department head Pawan Khera said on Sunday that the shocking revelations 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 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.

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