SEBI Ex-Chief Madhabi Puri Buch Gets Lokpal Clean Chit In Hindenburg Row

Madhabi Puri Buch, the former chairperson of the Securities and Exchange Board of India, has received a clean chit from the Lokpal in connection to the complaints against her in the Hindenburg matter.

There are no material evidence to direct a probe against the former SEBI chief, the anti-corruption ombudsman said in an order issued on Wednesday.

The Lokpal examined five key allegations against Buch — including alleged investments linked to the Adani Group, quid pro quo disguised as consultancy fees and rental income, undue gains from ICICI Bank ESOPs, and a pretence of recusal from certain cases.

In its order, the Lokpal found no merit in any of these claims and dismissed them in their entirety.

According to the order, the complaints were based largely on conjecture and failed to meet the legal threshold required under the Prevention of Corruption Act, 1988.

"... We have concluded that the allegations in the Complaint(s) are more on presumptions and assumptions and not supported by any verifiable material and do not attract the ingredients of the offences in Part III of the Act of 1988, so as to direct and investigation therefor... accordingly, these complaints are disposed of," the order stated.

The Lokpal's view on the matter quashes the allegations against Buch, that were being aligned with the Adani Group.

In a descriptive order, it was further observed that the complainants had failed to make out even a prima facie case under the Prevention of Corruption Act. The bench noted that there is no foundation whatsoever for establishing any undue advantage or quid pro quo.

This raises an important question about the real motivation behind filing such baseless complaints, it was noted.

The anti-graft ombudsman pointed out that the complaints, including the one by Trinamool Congress lawmaker Mahua Moitra, filed last year were essentially founded on the report "by a known short seller trader whose focus was to expose or corner Adani Group of Companies".

In its report published on August 10, 2024, Hindenburg Research alleged that Buch and her husband had stakes in obscure offshore funds used in the alleged money-siphoning scandal involving the Adani Group.

They had 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 the allegations as malicious and manipulation of selective public information.

The Lokpal's Wednesday order pointed to several instances suggesting that the complaints were filed not out of a genuine concern for public interest, but to run a media campaign against SEBI and its former chairperson.

One complainant, it noted, was linked to an organisation that allegedly procured the Income Tax Returns of Buch, her husband, and her firm, Agora Advisory, in violation of the law. These were then used to level corruption allegations, which were widely publicised via press conferences and press releases.

The another instance, the order noted, relied on those same press reports in her affidavit and publicly discussed her complaint on social media — a direct violation of the confidentiality clause under the Lokpal Act.

Buch, who took over as the chief of the Securities and Exchange Board of India (SEBI) on March 2, 2022, demitted office on February 28, this year after the completion of her tenure.

Referring to an earlier order in this regard, the Lokpal said that the Hindenburg report by itself cannot be made the sole basis to escalate action against Buch.

"The complainant(s) being conscious of this position advisedly attempted to articulate allegations independent of the stated report but the analysis of the allegations by us, ended with a finding that the same are untenable, unsubstantiated and bordering on frivolity," the order said.

The Lokpal had on November 8, last year sought Buch's "explanation" on the complaints filed by Moitra, a Lok Sabha member, and two others.

The Lokpal had on December 19 last year decided to give an opportunity of oral hearing to both Buch and the complainants to clarify their positions taken in the complaints or the affidavit.

Hindenburg Research's founder announced its closure in January this year.

Meanwhile, the Lokpal took the matter for oral arguments on April 9, after further documents and affidavits-cum-written-submissions were filed.

"The advocate for the complainant in the second complaint made exhaustive oral submissions. The proxy counsel appearing for the complainant in the third complaint opted to file written submissions.

"Although the complainant in the third complaint has been represented by an advocate, neither the complainant nor the advocate appeared to make oral submissions," the order said.

Buch was represented by senior counsel who made elaborate oral submissions.

"At the conclusion of the oral arguments parties were given time to file written note/response as requested by them, for consideration of the bench," the order said.

It said that at the time of oral submissions, the complainants have mainly invoked sections 7 and 11 of the Act of Prevention of Corruption Act, 1988 on the allegation of Buch having taken undue advantage.

In the order, the Lokpal noted that five allegations have been emphasised during the oral arguments and in the written notes/submissions by the complainants, and dealt with them in detail in its order, before finally disposing of them.

(With PTI inputs)