In an unprecedented move, the public accounts committee (PAC) of Parliament has asked for a detailed review of the Securities and Exchange Board of India (SEBI)'s accounts for financial years (FY)22-23 and FY23-24, says
a report from Moneycontrol.com.
This is the first time that the PAC, which is chaired by Congress leader KC Venugopal and comprises members from both the ruling NDA and the opposition INDIA bloc, has called for a scrutiny of SEBI's financial performance, the report says quoting a government official.
The official told Moneycontrol that "The PAC has never called SEBI earlier. It has asked for the data and the last date is 27th September by which the Union ministry of finance (FinMin) has to submit the information to the parliament secretariat."
The requested documents include SEBI's receipts and payments, its audit report by comptroller and auditor general (CAG) and the regulator's internal audit committee observations. These materials are likely to be submitted to the FinMin on 27th September, the official says.
According to Moneycontrol, this investigation comes as part of the PAC's review of regulatory bodies established by Acts of Parliament, introduced as an agenda item during its meeting on 29 August 2024.
"PAC is likely to summon SEBI chairperson Madhabi Puri Buch in its next meeting. It will be a performance review of the regulator," the official told the news portal.
On 10 August 2024, US-based short-seller Hindenburg Research alleged that the SEBI chairperson had a stake in obscure offshore entities used in the Adani money siphoning scandal.
Quoting
whistle-blower documents, Hindenburg says, "We had previously noted Adani's total confidence in continuing to operate without the risk of serious regulatory intervention, suggesting that this may be explained through Adani's relationship with SEBI chairperson, Madhabi Buch. Whistle-blower documents show that Ms Buch, the current chairperson of SEBI, and her husband had stakes in both obscure offshore funds used in the Adani money siphoning scandal."
Quoting media reports about Adani group chief Gautam Adani's meeting with the SEBI chief, Hindenburg says, "What we had not realised: the current SEBI chairperson and her husband, Dhaval Buch, had hidden stakes in the exact same obscure offshore Bermuda and Mauritius funds, found in the same complex nested structure, used by Vinod Adani."
It alleges that Ms Buch and her husband first appeared to have opened their account with IPE Plus Fund 1 on 5 June 2015 in Singapore, per whistle-blower documents. "A declaration of funds, signed by a principal at IIFL, states that the source of the investment is 'salary' and the couple's net worth is estimated at US$10mn (million)," Hindenburg says.
On 24 January 2023, the short-seller accused the Adani group of engaging in long-term stock manipulation and accounting fraud through a network of offshore entities.
SEBI says the allegations (made by Hindenburg), ranging from using offshore investment funds to inflate stock price and non-disclosure of related party interest that Hindenburg first levied in its damning report against the Adani group in January 2023, have been 'duly investigated'.
Earlier this month, the Buchs issued a second statement refuting allegations made by Indian National Congress (INC). "...all the allegations made are false, incorrect, malicious and motivated. The allegations themselves are based on our ITRs. In other words, all these matters are a part of our ITRs, in which all these matters have been fully disclosed and taxes have been duly paid. Shockingly, our ITRs clearly have been obtained by adopting fraudulent means and illegally. This is a clear breach of not only our right to privacy (which is a fundamental right) but also a violation of the Income Tax Act. The facts, transparently reflected in our ITRs, have been twisted deliberately to create a false narrative," they say in the statement.
