Brenin Group

Whistleblower Docs Show SEBI Chief Linked to Offshore Entities in Adani Scandal

Adani Group Corporate Fraud Allegations: The Adani Group was accused of orchestrating one of the largest corporate frauds ever, involving offshore shell entities and the manipulation of its stock prices, along with undisclosed related-party transactions.
Report Origin: The report, released by a third party nearly 18 months ago, documented a massive web of financial misconduct and sparked extensive media attention and independent investigations.
Shell Companies in Mauritius: The fraud allegedly relied on a network of offshore shell companies based primarily in Mauritius, which were used to funnel billions of dollars to boost Adani’s stock and engage in undisclosed business dealings.
Media Investigations: More than 40 media outlets, including reputable organizations, corroborated the findings of the original report, affirming the existence of fraudulent activities and the involvement of these offshore entities.
Lack of Regulatory Action: Despite this overwhelming evidence, SEBI, India’s securities regulator, has not taken any substantial legal or regulatory action to address the fraud. The apparent inaction has raised serious concerns about regulatory integrity.
SEBI’s Investigation Outcomes: Reports suggest that SEBI may only pursue minor infractions related to technical violations, which are seen as insufficient, especially given the scope of the fraud outlined in the original report.
Legal Inaction: No legal action has been initiated by Indian authorities or regulatory bodies against the Adani Group, in spite of consistent findings that support the original allegations.
June 2024 Show Cause Notice: SEBI issued a notice to the authors of the report on June 27, 2024, accusing them of not adequately disclosing their short positions, even though they made multiple disclosures regarding their position.
Accusation of Recklessness: SEBI’s notice accused the authors of being reckless for quoting a broker who was previously banned. This broker claimed SEBI had knowledge of Adani’s misconduct but failed to take action.
Focusing on Disclosure: SEBI’s notice did not dispute the factual content of the report, focusing instead on the adequacy of the report authors’ disclosures, diverting attention from the core issues raised in the report itself.
Supreme Court’s Criticism of SEBI: India’s Supreme Court critiqued SEBI’s investigation, noting that the regulator had “drawn a blank” when examining Adani’s offshore shareholders and failed to provide substantial findings on Adani’s alleged fraud.
Adani’s Dismissal of Regulatory Concerns: Adani CFO Jugeshinder Singh downplayed the seriousness of SEBI’s scrutiny, implying that any penalties would be trivial. This statement was made even before SEBI completed its review, highlighting the group’s confidence in escaping serious consequences.
IPE Plus Fund: The report uncovered that IPE Plus, a Mauritius-based offshore fund set up by an Adani director, was used as a vehicle for funneling funds into Indian markets through a complex structure orchestrated by India Infoline (IIFL).
Vinod Adani’s Role: Vinod Adani, the brother of Gautam Adani, allegedly utilized offshore structures to move money into India, including capital siphoned through over-invoicing schemes involving power equipment imported by the Adani Group.
Over-Invoicing Scheme: Evidence from the Directorate of Revenue Intelligence (DRI) revealed that the Adani Group systematically inflated the prices of imported power equipment. These funds were then funneled into offshore accounts and laundered back into India through a network of shell companies.
Global Dynamic Opportunities Fund (GDOF): Vinod Adani reportedly invested in GDOF, a Bermuda-based fund, as part of this money-laundering operation. The fund later transferred capital to the IPE Plus Fund in Mauritius, reinforcing the offshore web linked to the Adani Group’s financial misconduct.
India Infoline’s (IIFL) Involvement: IIFL, a wealth management firm connected to setting up these offshore structures, was previously tied to Germany’s Wirecard scandal, raising concerns about its role in helping to facilitate fraudulent financial activities.
Madhabi Buch’s Offshore Ties: Whistleblower documents revealed that SEBI Chairperson Madhabi Buch, along with her husband, had personal investments in offshore funds linked to Adani’s fraudulent activities.
Investments in Mauritius: In June 2015, Buch and her husband invested over $870,000 in the IPE Plus Fund in Singapore. This same fund was implicated in Vinod Adani’s offshore laundering schemes, further complicating SEBI’s position.
Transfer of Investments: Just weeks before being appointed as SEBI’s Whole Time Member in 2017, Madhabi Buch transferred her investments in the offshore fund out of her name, likely to avoid potential conflicts of interest as SEBI began investigating Adani.
SEBI Chairperson’s Ongoing Ties: Even after being appointed SEBI Chairperson in March 2022, Buch and her husband maintained connections to Agora Partners, a Singapore-based consulting firm that was 100% owned by her until the shares were transferred to her husband to avoid further conflicts of interest.
Blackstone Appointment: In 2019, while Buch was serving as a SEBI member, her husband was appointed as a Senior Advisor to Blackstone, raising more concerns about conflicts of interest due to his lack of experience in capital markets or real estate.
Failure to Investigate Key Entities: Despite the report’s identification of specific offshore entities, including EM Resurgent Fund and Emerging India Focus Funds, SEBI has failed to take meaningful action against them or investigate their ties to the Adani Group.
Adani’s Use of Front Men: A Financial Times investigation uncovered a secret paper trail suggesting that Adani used business associates as proxies to manipulate stock prices and circumvent Indian regulations that prevent market manipulation.
Supreme Court’s Rebuke: The Indian Supreme Court criticized SEBI for its inability to produce meaningful results during its investigation into Adani’s offshore holdings. The court implied that SEBI’s lack of action might be linked to its leadership’s conflicts of interest.
SEBI’s Reluctance: SEBI’s reluctance to fully investigate the Adani Group, despite the ample evidence available, is seen as an attempt to protect its leadership, who are financially tied to the same offshore structures that enabled Adani’s fraud.
Failure to Hold Adani Accountable: Despite the mounting evidence and whistleblower revelations, neither SEBI nor the Indian authorities have taken meaningful steps to hold the Adani Group accountable for its actions.
Calls for Regulatory Transparency: The findings underscore the need for greater transparency within regulatory bodies like SEBI, and a renewed push for accountability in the face of corporate fraud and regulatory complicity.