The Lokpal has disposed of all three complaints against former Chairperson of the Securities and Exchange Board of India (SEBI), Madhabi Puri Buch, filed in connection with the Hindenburg report.
The full Bench of the Lokpal, headed by Chairperson Justice AM Khanwilkar, observed on Wednesday that all the allegations against Buch were found to be false, motivated and malicious, based more on presumptions & assumptions, rather than evidences.
The Bench said the charges were not supported by any verifiable material and did not attract the ingredients of offences under the Prevention of Corruption Act, 1988. The complaints were essentially founded based on a report by a known short seller trader (Hindenburg), whose focus was to expose or corner the Adani Group of companies, it added.
Citing its order passed on September 20, 2024, the Lokpal said the report by itself could not be made the sole basis to escalate action against the RPS (Madhabi Buch). The complainants, being conscious of this position, attempted to articulate allegations independent of the stated report, however, the analysis by the Lokpal found that the charges were unsubstantiated, untenable and bordering on frivolity, it added.
Regarding the conflicts of interest allegations against the former SEBI Chairperson, the Lokpal said the scope of inquiry at this stage was not to verify the veracity or otherwise of the information received but only to ascertain whether the information reveals any cognizable offence.
Since the case involved allegations of corruption against a public servant, the Bench said it had to reckon the plea or the comments offered by the concerned public servant with care and circumspection.
As per the order, the subject matter of these complaints was identical, though filed by separate complainants, noted the Lokpal.
The complainants alleged that Madhabi Buch and her husband invested a substantial amount in a fund linked to investments in Adani Group of companies, the group facing scrutiny before SEBI for stock price manipulations. She failed to disclose the investments in obscure funds to the Board of SEBI and the Supreme Court-appointed Expert Committee.
The petitioners contended that when Buch was a whole-time member or Chairperson of SEBI, she allegedly gained quid pro quo in the garb of consultancy services fees by AAPL, a firm in which she had 99 percent ownership, through her husband Dhaval Buch, from entities such as the Mahindra & Mahindra Group and Blackstone Inc., firms having regulatory cases pending before SEBI.
She further gained quid pro quo in the garb of rental income from Carol Info Services Private Limited, allegedly linked to Wockhardt Limited, a firm under investigation by SEBI for insider trading, as per the complainants.
They said Buch gained undue advantage by selling her ESOPs (employee stock ownership plans) from ICICI Bank over a period of five years from 2017. However, the same had been vested in RPS in 2013. During that period, the ICICI Bank had regulatory issues pending before SEBI and any adverse action against it would have influenced the market price of the ESOPs of Madhabi Buch.
The petitions further accused the former SEBI Chairperson of making a pretence of recusal from matters of M&M Group and Blackstone Inc. Nothing prevented Buch from influencing the other whole-time members and the Board of SEBI for a favourable outcome of cases pending and under investigation by the regulator against the entities, and which she did owing to her official position, the complainants alleged.
Buch had denied all the allegations.
The Lokpal said in its order that for the findings reached in this decision on relevant facts, it was unnecessary to dwell upon the purport of Sections 50 and 51 of the Lokpal and Lokayuktas Act, 2013, for action taken in good faith. That aspect had already been implicitly answered in favour of the RPS.
Noting that the parties relied upon reported decisions, the Bench said the factual matters have been analysed and dealt with in this order, keeping in mind the ingredients of the offences under the 1988 Act invoked by the complainants.