US-based short seller Hindenburg Research has released another report. The earlier one in January 2023, exposed the extensive financial manipulations by the Adani group. This one though related to the earlier one focuses on the possible nexus between the Securities and Exchange Board of India’s (SEBI’s) chairperson, Madhabi Puri Buch, and the Adani group. It points out that while SEBI has issued it a show cause notice in June 2024, it has not investigated the wrongdoings of Adani group. https://thewire.in/political-economy/the-indian-economy-is-being-destabilised-by-cronyism-not-hindenburg-or-soros
The latest report gives a plausible reason for why this may be so, with whistleblower documentary evidence presented in the report to prove its point.
The suggestion of a possible link between Buch and the Adani group, however weak, points to a conflict of interest. This undermines the credibility of SEBI’s actions in the Adani matter. The Supreme Court-appointed expert committee based its observations largely on the basis of SEBI’s observations. Since they have come under doubt, the credibility of the expert committee’s report also gets undermined.
Buch should have revealed her link with the Adani group to the Supreme Court as well as the public and recused herself from the case. Even if the link was in the past and in her personal capacity, before she joined SEBI, it was a reason for recusal.
The opposition has demanded both, an impartial enquiry and a Joint Parliamentary Committee probe into the matter. The Bharatiya Janata Party (BJP) has strongly opposed these demands. The opposition has even said that the Supreme Court should take suo motu note cognisance of the new exposés since the SEBI report may not have been fair if Buch had (even weak) links in the past with the Adani group. She neither mentioned this to the Supreme Court nor recused herself. Any number of judges recuse themselves from hearing cases if they had a link with one of the parties before they became a judge.
The Hindenburg report pointed out that short selling in Adani stocks was due to cronyism and stock market manipulations. That is what is spoiling the investment climate, not the exposés by Hindenburg reports. The reports pointing to the illegalities are offering a chance to clean up and put the market on a healthy footing. This requires a clean slate and for that the SEBI chairperson should step aside, at least, for now.
by Arun Kumar
19/08/2024