The head of India’s Securities and Exchange Board (SEBI), Madhabi Puri Buch, has been implicated in a potential conflict of interest after documents revealed that she continued to earn revenue from a consultancy firm during her seven-year tenure at the regulatory body. This revelation raises concerns about a possible breach of rules governing regulatory officials in India, according to a report by Reuters.
Allegations and Background
Hindenburg Research, a U.S.-based short-selling firm, has brought to light a potential conflict of interest involving Buch in relation to her oversight of investigations into the Adani Group, a conglomerate led by billionaire Gautam Adani. The allegations stem from Buch’s prior investments and connections, which Hindenburg claims may have influenced her role in the investigation. The controversy surrounding the Adani Group erupted in January last year, leading to a significant drop in the share prices of Adani Enterprises and other related companies. Although the share prices later recovered, the incident prompted an ongoing investigation by SEBI.
On August 11, Buch issued a statement denying any conflict of interest, dismissing the allegations as an “attempt at character assassination.” Despite her denial, the controversy continues to unfold, with new details emerging about her financial connections.
Consultancy Firms Under Scrutiny
Hindenburg’s latest report has focused on two consultancy firms associated with Buch and her husband: Singapore-based Agora Partners and India-based Agora Advisory. According to public documents reviewed by Reuters, Buch continued to hold a 99% shareholding in Agora Advisory Pvt Ltd during her tenure at SEBI, raising questions about her adherence to regulatory guidelines.
Buch joined SEBI in 2017 and was promoted to the top position in March 2022. During her time with the regulator, Agora Advisory reportedly earned a revenue of 37.1 million rupees ($442,025), as per records from the Registrar of Companies analyzed by Reuters. This earning potentially violates SEBI’s 2008 policy, which prohibits officials from holding an office of profit or receiving any form of salary or professional fees from external professional activities.
Disclosure and Response
In her defense, Buch stated that the consultancy firms were fully disclosed to SEBI and clarified that her husband had been using these firms for his consulting business after retiring from Unilever in 2019. However, questions remain about the extent of Buch’s involvement in the firms’ operations, particularly given her significant shareholding in Agora Advisory.
Hindenburg’s report further claims that Buch transferred her shares in Agora Partners to her husband in March 2022, shortly after assuming the top role at SEBI. However, company records for the financial year ending March 2024 indicate that Buch still holds shares in the Indian consulting firm, Agora Advisory, contradicting her earlier claims of disassociation.
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Reaction from Industry Experts
The implications of Buch’s continued financial involvement in the consultancy firms have drawn criticism from various quarters. Subhash Chandra Garg, a former high-ranking bureaucrat in the Indian government and a SEBI board member during Buch’s tenure, has described her equity in the firm and its continued operations as a “very serious” breach of conduct. Garg emphasized that there was no justification for Buch to maintain ownership of the firm after joining SEBI, even if she had disclosed her interests.
“There was no justification for her to continue to own the firm after she joined the board. She could not have been allowed even after making disclosures,” Garg said, reflecting the growing concerns about potential conflicts of interest within India’s regulatory bodies.
Ongoing Investigation and Unanswered Questions
As the investigation continues, the documents reviewed by Reuters do not provide details about the specific business activities undertaken by the consultancy firms, nor is there any information suggesting that the revenues generated had any direct link to the Adani Group. Nonetheless, the situation highlights the complexities and challenges of maintaining ethical standards within regulatory institutions, particularly when top officials have existing business interests.
Buch and SEBI’s spokesperson have not yet responded to requests for comment on the allegations. The situation remains fluid, with further developments likely to emerge as the investigation proceeds. The case underscores the importance of transparency and accountability in regulatory roles, particularly in a rapidly evolving financial landscape.
