In a startling new development, the Indian National Congress has levelled fresh allegations against Madhabi Puri Buch, the chairperson of the Securities and Exchange Board of India (SEBI), on 14 September 2024. These new claims add another layer to the ongoing controversy surrounding Buch's financial dealings and potential conflicts of interest.
The Congress party, through its spokesperson Pawan Khera, has accused Buch of trading in listed securities worth Rs36.9 crores between 2017 and 2023, a period during which she served as a whole-time member and later as the SEBI Chairperson. The party provided a yearly breakdown of these trades, with the highest value recorded in 2018-19 at Rs19.54 crores.
This action, if proven true, would be in direct violation of section 6 of SEBI's code on conflict of interest for Members of Board (2008) which outlines stringent guidelines for board members regarding their financial dealings, according to Congress.
It mandates that upon taking office, members must promptly disclose their own and their family's shareholdings within a fortnight. This transparency is further enforced through annual disclosures, requiring members to report their holdings within 15 days of each financial year's end.
For Whole Time Members (WTMs), the code imposes additional vigilance, necessitating the disclosure of any significant transactions made by themselves or their family members within 15 days of occurrence. Perhaps the most critical stipulation is the prohibition on members exploiting their privileged position: they are expressly forbidden from trading in securities of any listed company based on insider information they may have acquired through their role.
These provisions collectively aim to maintain the integrity of SEBI's leadership and prevent any misuse of sensitive market information. Congress party's allegations presumes that given her position first as a Whole Time Member and then as Chairperson of SEBI, Buch would have had access to sensitive market information, making any trading activity potentially problematic under this code.
Furthermore, if the allegations about undisclosed foreign assets are true, this could also constitute a violation of the disclosure requirements outlined in the same section of the code. These potential breaches, if proven, would represent a serious conflict of interest and a violation of the ethical standards expected of SEBI's top officials, according to Congress.
The opposition party has raised questions about Buch's foreign investments. It claims that between 2017 and 2021, Buch held foreign assets, the details of which remain unclear. Of particular concern are alleged investments in Chinese funds between 2021 and 2024, including holdings in Global X MSCI China Consumer and Invesco China Technology ETF. The Congress has pointedly asked when these foreign assets were first declared and to which government agency, suggesting a lack of transparency in Buch's financial disclosures.
The Congress questioned Buch's involvement with Agora Partners PTE in Singapore, alleging that she was a signatory to the company's bank account. This claim adds another layer of complexity to the international dimensions of Buch's financial activities while holding a crucial regulatory position in India.
These new allegations come on the heels of previous claims made by the Congress party since 2 September 2024. On 2 September 2024, it accused Buch of receiving Rs16.8 crores from the ICICI group (in the form of salary, ESOPs, and TDS on ESOPs) between 2017 and 2024, while simultaneously drawing a salary from SEBI and adjudicating complaints against ICICI and its affiliates.
On 6 September 2024, it revealed that Buch had rented her property to Carol Info Services Limited, an affiliate of Wockhardt Limited, between 2018 and 2024. Notably, Wockhardt was under SEBI investigation during this period for various cases, including insider trading. On 10 September 2024, the Congress accused Buch of “lying” about the dormancy of Agora Advisory Pvt Ltd, a company in which she holds a 99% stake. They alleged that the company actively provided consultancy services, receiving Rs 2.95 crores from six SEBI-regulated entities between 2016 and 2024.
In response to the mounting accusations, Buch and her husband, Dhaval Buch, issued a joint statement on 13 September 2024, vehemently denying all allegations. They characterized the claims as "false, incorrect, malicious and motivated." The couple asserted that all matters in question were fully disclosed in their income tax returns and appropriate taxes were duly paid.
Buch and her husband further alleged that their income tax returns had been obtained through fraudulent means, constituting a breach of their right to privacy and a violation of the Income Tax Act. They maintained that the facts reflected in their tax returns had been deliberately twisted to create a false narrative.
Addressing specific allegations, the Buchs clarified that Madhabi Puri Buch had never dealt with any files involving the companies mentioned in the allegations including Agora Advisory, the Mahindra Group, Pidilite, Dr. Reddy's, Alvarez and Marsal, Sembcorp, Visu Leasing, or ICICI Bank since joining SEBI. They explained that her ESOP holdings from ICICI Bank were part of standard retirement benefits, and the exercise of these options over a ten-year period accounted for the varying amounts received. On the issue of rental income from Carol Info Services, they explained that the property was leased out in the normal course of business, and they were unaware of the lessee's affiliation with Wockhardt at the time.
The Congress party has called upon Prime Minister Narendra Modi to address the situation, questioning his awareness of Buch's alleged trading activities and foreign investments.
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