Funds named in Hindenburg report against SEBI chief not domiciled in Mauritius

Hindenburg vs SEBI: The Financial Services Commission (FSC) of Mauritius announced on Tuesday, August 13 that the offshore funds mentioned in the latest Hindenburg investigative report against the SEBI chairperson, are not domiciled in the Island nation. The Mauritious regulator also clarified that it does not permit the creation of shell companies.

In a statement, FSC said it had taken cognizance of the contents of the report published by Hindenburg Research on August 10, 2024, wherein mention has been made of ‘Mauritius-based shell entities’ and Mauritius as a ‘tax haven’.

Also Read: Hindenburg’s new report alleges Sebi chief, husband owned stakes in offshore firms linked to Adanis

“The report of Hindenburg has further cited ‘IPE Plus Fund’ is a small offshore Mauritius Fund, and ‘IPE Plus Fund 1, a fund registered in Mauritius’. We wish to clarify that IPE Plus Fund and IPE Plus Fund 1 are not licensees of the FSC and are not domiciled in Mauritius,” said FSC in its statement.

On August 10, the US-based short seller Hindenburg Research had alleged that Madhabi Puri Buch, chairpperson of capital markets regulator Securities and Exchnage Board of India (SEBI), and her husband opened an account in 2015 with a wealth management firm in Singapore to invest an undisclosed sum of money in a Mauritius-registered offshoot of a Bermuda-based fund.

The Mauritian fund was run by an Adani Group director, and its ultimate parent was the vehicle used by two Adani associates to round-trip funds and inflate the conglomerate’s stock prices. Today, the FSC – which is the integrated regulator for the non-bank financial services sector and global business, denied the fund being registered in Mauritius.

Also Read: Hindenburg’s latest charges spark fresh plea in Supreme Court on Sebi’s Adani Group investigation
 

Hindenburg vs SEBI: Mauritius FSC’s clarification

FSC said the legislative framework in Mauritius does not permit the creation of shell companies. “Mauritius has a robust framework for global business companies. All global business companies licensed by the FSC have to meet substance requirements on an ongoing basis as per section 71 of the Financial Services Act, which the FSC strictly monitors,” said FSC.

FSC also stated that Mauritius strictly complies with international best practices and has been rated as completely compliant with the Organisation for Economic Co-operation and Development (OECD) standards.

“As per the peer review conducted by the OECD Forum on Harmful Tax Practices, the OECD is satisfied that Mauritius has no harmful features in its tax regimes, thus recognising Mauritius as a well-regulated, transparent and compliant jurisdiction. Therefore, Mauritius cannot be termed a tax haven,” it added.
 

Also Read: Adani-Hindenburg case: Congress announces nation wide protest on August 22, to gherao ED offices; demands JPC probe
 

Hindenburg vs SEBI

Shortly after the Hindenburg report released on Saturday, SEBI chief and her husband Dhaval Buch denied the allegations, terming them ‘baseless’ and an attempted ‘character assassination’.  In its report, Hindenburg alleged that Madhabi Puri Buch and Dhaval Buch had invested in IPE Plus Fund 1, registered in Mauritius, and Global Dynamic Opportunities Fund, based in Bermuda.

It added that a company controlled by Vinod Adani had invested in the Global Dynamic Opportunities Fund which then invested in IPE Plus Fund 1, a fund whose founder and chief investment officer was Anil Ahuja, who had served as a director of Adani’s flagship company, Adani Enterprises. 

Vinod is the elder brother of billionaire Gautam Adani – chairman of the ports-to-power conglomerate. “We suspect SEBI’s unwillingness to take meaningful action against suspect offshore shareholders in the Adani Group may stem from Madhabi Buch’s complicity in using the exact same funds used by Vinod Adani, brother of Gautam Adani,” wrote Hindenburg.

Also Read: Hindenburg-Adani Case: SEBI chief Madhabi Puri Buch, husband’s 15-point rebuttal to allegations, ‘attempting to attack’

The short seller made these claims citing documents received from a whistleblower including a funds declaration statement for IPE Plus Fund 1, signed by a principal at IIFL, which manages these schemes. The statement said that the source of the investment is “salary” and the couple´s net worth was estimated at $10 million, back in 2015.

In their joint statement, Madhabi Puri Buch and Dhaval Buch said, “In the context of allegations made in the Hindenburg Report dated 10 August 2024 against us, we would like to state that we strongly deny the baseless allegations and insinuations made in the report. The same are devoid of any truth. Our life and finances are an open book. All disclosures as required have already been furnished to SEBI over the years,” they added.

Hindenburg’s latest allegations come 18 months after it accused billionaire Gautam Adani of ‘pulling the largest con in corporate history’. The Adani group vehemently denied all the allegations. Hindenburg’s January 2023 report had led to a significant drop in Adani Group stock prices causing losses of over $100 billion.