Lokpal seeks SEBI chief’s response on conflict of interest charges

SEBI chairperson Madhabi Puri Buch. File
| Photo Credit: PTI

Anti-corruption watchdog Lokpal on Friday (November 8, 2024) sought an explanation from the chief of India’s stock market regulator, Madhabi Puri Buch, on the conflict of interest charges levelled against her in three separate complaints that cited a recent report from the U.S.-based shortseller firm, Hindenburg Research.

The order, issued by a Bench led by Lokpal chairperson Justice A.M. Khanwilkar, stressed that this was only a procedural direction and does not explicitly name Ms. Buch. However, it implies that Ms. Buch is required to file an affidavit within four weeks from the receipt of the order, and the Lokpal Bench will take up the mater for further consideration on December 19.

Also Read: SEBI chief Madhabi Puri Buch skips Parliament’s PAC summons, citing personal reasons

Hindenburg Research, which had alleged malfeasance and stock price manipulation by the Adani group of companies in early 2023, published a report this August stating that the Securities and Exchange Board of India (SEBI) had drawn a blank in its probe into the Adani group due to a reluctance “to follow a trail that may have led to its own chairperson”; apart from regulatory “conflict or capture”.

Following the research firm’s report, SEBI, as well as Ms. Buch and her spouse Dhaval Buch, who was also named in the report, had issued separate statements in a bid to clarify those charges.

Complaint filed in Aug.

A complaint was filed in the matter with the Lokpal on August 13, 2024, naming the public servant [Ms. Buch] against whom action was sought under the Lokpal and Lokayuktas Act for allegedly having committed an offence punishable under the Prevention of Corruption Act. Another plaint was submitted with similar charges on September 11, followed by a third one on October 14.

Having gone through the complaints, the Lokpal issued an order on Friday, stating: “For the present, without expressing any opinion on the relevance and admissibility of the allegations/contents of the complaint (s) and the explanatory affidavit (s), including about the correctness of the plea taken therein by the respective complainant, we deem it appropriate to call upon the said RPS (respondent public servant) to offer explanation qua the allegations made against her in the respective complaint and elaborated in the concerned explanatory affidavit.”

“We also make it amply clear that since the allegations are primarily against the named RPS being a public servant and implicit reference is made to other persons, coupled with the fact that the complainant (s) themselves have primarily prayed for action under the Act against the named RPS, the opportunity to offer explanation is being limited to the named RPS in the respective complaint at this stage,” it said.

Earlier, the Lokpal had asked the first two complainants in the matter to clarify certain issues in an order dated September 20, following which they had filed explanatory affidavits. “In other words, we are now called upon to consider not only the allegations noted in the original complaints but also the contents of the explanatory affidavit (s) filed to delineate justification as to why action against the public servant ought to proceed,” Friday’s Lokpal diktat noted.

In its September order, the Lokpal noted that the complainants had pointed to “certain extremely serious personal allegations” against the public servant made by Hindenburg Research. Trinamool Congress MP Mahua Moitra was one of three complainants against the SEBI chief, and had alleged “quid pro quo arrangements, which potentially threaten national interests”.