Buch’s probity: Erase all doubts

The Opposition has demanded that Securities and Exchange Board of India (Sebi) chair Madhabi Puri Buch step down over alleged conflict of interest issues raised by Hindenburg Research — and that a joint parliamentary committee inquiry be launched. Over the weekend, Hindenburg released a raft of allegations against Puri Buch: that she and her husband, Dhaval Buch, held stakes in “the exact same” offshore funds “in the same complex nested structure, used by Vinod Adani”, the brother of Gautam Adani, the head of the Adani Group; that there is a conflict of issue between Puri Buch’s role at Sebi and her husband’s involvement with private equity firm Blackstone; and that Puri Buch held an active stake in a Singapore-based consultancy firm even as she occupied the post of Sebi chair, and transferred this to her husband two weeks after her appointment.

While the Buchs’ point-by-point rebuttal of the Hindenburg allegations shows that all required disclosures were made to Sebi and are available for scrutiny by the relevant authorities if needed, that Puri Buch recused herself from matters where there was even a hint of a conflict of interest, and that the Adani linkage the research firm sought to make was a bit of a stretch, a regulator should not only above suspicion but also seen to be such. Even though a probe may well reaffirm what the Buchs have said, it may still be in order, if only to shut down the politicisation of the Hindenburg reports that have roiled India Inc over the past year-and-a-half.

The Opposition’s other demand, of a joint parliamentary committee probe, will amount to little except prolonged political jousting. Meanwhile, the allegations will likely continue to be used as fodder to undermine trust in the regulator. Perhaps, the Supreme Court should consider setting up a panel of independent experts to look into the allegations, though it had decided against monitoring an investigation of the previous set of Hindenburg allegations in January, and later rejected a petition to review this decision. This will help preserve the image of the regulator as being fair and unbiased, prevent rabble-rousing by interested parties, and ensure that the Indian stock market isn’t manipulated by forces inimical to the interests of investors.

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