The head of India’s market regulator, Securities and Exchange Board of India (SEBI), Madhabi Puri Buch, has found herself embroiled in a controversy regarding a potential conflict of interest. Public documents reviewed by Reuters have revealed that Buch continued to earn revenue from a consultancy firm, Agora Advisory Pvt Ltd, during her seven-year tenure at SEBI, potentially violating regulatory rules.
This revelation has fueled further scrutiny surrounding the ongoing investigation into the Adani Group, an Indian conglomerate led by Gautam Adani. In January 2023, Hindenburg Research, a U.S. short-seller, accused the Adani Group of fraudulent activities, leading to a significant decline in the company’s share prices. SEBI initiated an investigation into the allegations, and Buch’s continued involvement with her consultancy firm has raised concerns about potential bias in the probe.
Buch, in a statement on August 11, 2023, vehemently denied any conflict of interest, dismissing the allegations as an attempt to tarnish her reputation. She explained that her husband, who retired from Unilever in 2019, operates Agora Advisory and Agora Partners, a Singapore-based consultancy firm, and that she had disclosed her business interests to SEBI.
However, public records reveal that Buch holds a 99% stake in Agora Advisory, which earned a revenue of 37.1 million rupees ($442,025) between 2017 and 2024, the period during which Buch served at SEBI. This appears to contradict SEBI’s 2008 policy, which prohibits officials from holding an office of profit or receiving professional fees from other ventures.
Hindenburg, in its latest report, highlighted the involvement of these consultancy firms, pointing out that Buch transferred all her shares in Agora Partners to her husband in March 2022. Nevertheless, records indicate that Buch still retains shares in the Indian consulting firm, Agora Advisory. While the documents reviewed by Reuters do not elaborate on the nature of the consultancy firm’s business, there is no evidence suggesting any direct connection to the Adani Group.
Subhash Chandra Garg, a former top bureaucrat and a member of SEBI’s board during Buch’s tenure, expressed grave concern about her continued ownership of the firm and its ongoing operations, deeming it a serious breach of conduct. He argued that Buch should have relinquished her stake in the company upon joining SEBI, even after disclosures. He believes her position at the regulator is now untenable.
Buch has not clarified whether she received a waiver to retain her shareholding in the Indian consulting firm. Despite specific inquiries, she has not provided an explanation.
The allegations against Buch have sparked calls for her resignation, including from opposition leaders. While a spokesperson for the ruling Bharatiya Janata Party (BJP) dismissed the allegations as baseless, concerns about transparency and accountability continue to persist.
Further adding to the controversy, both Garg and a SEBI board member revealed that Buch did not disclose her business interests to the board, despite a requirement for annual disclosures. While disclosures may have been made to the then chairperson, Ajay Tyagi, the board members were not privy to this information.
This incident has highlighted the need for greater transparency and stricter regulations regarding business interests of regulatory officials. The ongoing investigation into the Adani Group and the controversy surrounding Buch’s consultancy firm will be closely watched by investors and stakeholders alike.
