SEBI chairperson Madhabi Puri Buch speaks during the Global Fintech Fest in Mumbai on August 29, 2024.
| Photo Credit: PTI

Anti-corruption ombudsman Lokpal has called SEBI chief Madhabi Puri Buch and also complainants, including Trinamool Congress MP Mahua Moitra, for an “oral hearing” next month in connection with corruption complaints being heard by it, alleging impropriety and conflict of interest on the basis of a Hindenburg Research report, according to an official order.

The Lokpal on November 8 sought Ms. Buch’s “explanation” on the complaints filed by Ms. Moitra, a Lok Sabha member, and two others.

Ms. Buch, the chairperson of capital markets regulator Securities and Exchange Board of India (SEBI), was asked to submit her response within four weeks.

Hearing the case, the Lokpal said the named RPS (respondent public servant) “has filed her response by way of affidavit sworn on 07.12.2024 in time, raising preliminary issues as well as giving explanation allegation-wise”.

“Further, we deem it appropriate that the RPS as well as the complainants can be given opportunity of oral hearing to clarify their positions taken in the complaints or the affidavit, as the case may be,” says the December 19 order signed by Lokpal chairperson Justice A.M. Khanwilkar and five other members.

Accordingly, the Lokpal has asked the registry to issue notices to the RPS as well as the complainant(s) to avail of the opportunity of oral hearing on January 28.

“It will be open to the RPS as well as the complainant to authorise an advocate to espouse their cause, if they so desire at the time of oral hearing,” the order said.

The Lokpal said “it is appropriate and in the interest of justice that the complainants are provided a copy of the affidavit and documents filed by the RPS by way of response to the respective complainants and the supplementary affidavits”.

The anti-graft ombudsman asked its registry to forward a copy of Ms. Buch’s affidavit and its accompaniments to the complainants in respective complaints.

“The complainants, however, shall ensure that confidentiality of the process and the contents of the affidavit is maintained…,” the order said.

SEBI chief Buch and the complainants, “if (they) wish to rely on any reported decisions must file compilation(s) of such decisions duly paginated, well in advance and not later than 18.01.2025”, it said and listed the matter for 11:30 am on January 28.

In an order dated September 20, the Lokpal had said the complaint by the parliamentarian, alleging impropriety and conflict of interest by the SEBI chief, “falls short” of persuading it to order any probe.

The anti-corruption ombudsman’s observation came while hearing two complaints, including one by the Trinamool MP, filed on the basis of a report by the U.S.-based “activist short-seller”.

In its report, U.S.-based Hindenburg Research alleged that Ms. Buch and her husband had stakes in obscure offshore funds used in the alleged money siphoning scandal involving the Adani Group.

They denied the allegations, saying the short-seller was attacking the capital markets regulator’s credibility and attempting a character assassination.

The Adani Group had also termed Hindenburg Research’s allegations malicious and manipulation of selective public information.

In a post on social media platform X, Trinamool MP Moitra on September 13 said she had filed a complaint against the SEBI chief with the Lokpal and asserted that the anti-graft ombudsman should forward it to the Enforcement Directorate (ED) or the Central Bureau of Investigation (CBI) for preliminary probe followed by a “full FIR enquiry”.

Without mentioning the name of the complainant, the Lokpal in its September 20 order had also sought details “regarding the efforts made by the respective complainant to verify the authenticity and credibility of the claims in the recent report of Hindenburg Research published on August 10, 2024”.

The matter was then posted for hearing on October 17 and later on November 8. A third complaint was also filed on October 14 by “yet another complainant, once again raising the same issues”, according to the Lokpal’s order of November 8.

All the ten Adani group stocks slumped in early trade on Monday (August 12, 2024), with Adani Energy tumbling 17 per cent, after the US short-seller Hindenburg Research alleged that SEBI chairperson Madhabi Puri Buch and her husband had undisclosed investments in obscure offshore funds in Bermuda and Mauritius, the same entities allegedly used by Vinod Adani to round-trip funds and inflate stock prices.

Stocks of Adani Green Energy declined 6.96 per cent, Adani Wilmar slumped 6.49 per cent, Adani Enterprises tumbled 5.43 per cent, Adani Ports dived 4.95 per cent, Ambuja Cements skidded 2.53 per cent and ACC dipped 2.42 per cent.

Hindenburg Research had on Saturday alleged that SEBI chairperson Buch and her husband had undisclosed investments in obscure offshore funds in Bermuda and Mauritius, the same entities allegedly used by Vinod Adani – the elder brother of group chairman Gautam Adani – to round-trip funds and inflate stock prices.

Buch and her husband issued a statement calling Hindenburg’s latest tirade as an attack on the credibility of SEBI and attempted “character assassination”.

In the equity market, the 30-share BSE Sensex tanked 479.78 points to 79,226.13. The NSE Nifty dropped 155.4 points to 24,212.10.

Buch and her husband Dhaval Buch in a joint statement on Sunday said the investments were made in 2015, well before her appointment as a whole-time member of SEBI in 2017 and the subsequent elevation as chairperson in March 2022, and in capacity as “private citizens living in Singapore”. These funds became “dormant” on her appointment in SEBI.

“SEBI was tasked with investigating investment funds relating to the Adani matter, which would include funds Ms Buch was personally invested in and funds by the same sponsor which were specifically highlighted in our original report. This is obviously a massive conflict of interest,” Hindenburg said.