By Sujit Bhar
There are two sayings in the world of business. The first—and this is common to other arenas beyond business as well—is “what goes around, comes around”. The second is “be kind to people you meet on your way up, because they are the ones you’ll meet again on your way down”. Both sayings have now come true for Securities and Exchange Board of India (SEBI) Chairperson Madhabi Puri Buch.
Buch, under the scanner for having not disclosed alleged multiple large sources of income despite being a full-time employee of SEBI (hence presenting a serious conflict of interest), has now been pummelled by organisations that she, as head of the market watchdog, had once fairly or unfairly (this has to be probed, as well) censored and punished. Her actions are now coming back to bite her, and she would be at pains to explain her way out of such serious allegations.
Open accusation
On September 2, Subhash Chandra, chairman emeritus of Zee Entertainment Enterprises Ltd (ZEEL), called a press conference and openly accused Buch of scuttling the Sony-ZEEL merger.
The proposed merger was big news for the embattled ZEEL. This emanated from the approval received from NCLT on August 10, 2023. The approval was for a merger of Zee Entertainment with Sony Pictures Networks India. That would not only have saved Zee from its current predicament, but would have also created a $10-billion Indian media behemoth.
However, this extraordinary deal fell through this January, because of a number of critical misunderstandings and hurdles. The disagreement centred on more than 20 compliance issues, including Zee’s failure to dispose of certain Russian assets, plus its $1.4 billion cricket rights deal with Disney.
However, the real heartburn for Subhash Chandra seems to be regarding his right hand man and Zee MD and CEO Punit Goenka. As the deal matured through the narrow financial lanes, it was agreed that Goenka would head the huge merged entity. However, what came as a major hurdle was an existing SEBI probe against Goenka. Sony objected to this.
At the press conference, Chandra openly said Buch was “corrupt” and “vindictive” and alleged that Zee’s issues with SEBI was the “main reason” behind the merger’s failure. According to Chandra, Buch ignored his repeated requests for more time. This act, according to Chandra, was a deliberate attempt to scuttle the merger and strike a blow at Zee.
Congress’ claim
Earlier, Congress had alleged that Buch drew Rs 16.80 crore salary from ICICI Bank despite being a full-time SEBI member. Buch has refused to respond to these accusations. On the other hand, ICICI Bank has refuted the party’s allegations of Buch receiving salary and ESOPs from the bank as SEBI chief.
These, of course, would have left a really solid paper trail and can be easily proven.
Within this predicament of Buch, comes the Zee chairman’s allegation.
At the press meet (as well as in a press release issued by him), Chandra said: “SEBI has not been acting in the interest of investors of ZEE Entertainment. The ZEE Sony merger was progressing well and they had got SEBI/stock exchange approval. Despite the same, SEBI instructed BSE/NSE to intervene in NCLT proceedings and scuttle the merger by spooking Sony. Ultimately the merger was terminated by Sony which resulted in erosion of huge wealth of minority shareholders.
“I am convinced that the SEBI chairperson is corrupt since she and her husband, whose combined income was around Rs 1 crore per annum before she assumed the position at SEBI, has now gone up to Rs 40-50 crore per annum. This needs to be investigated by the media and investigating agencies, including an analysis of the settled and compounded cases and the consultation fees paid by such corporates (sic) and received by the SEBI chairperson and her connected persons. These are many ways she and her husband extort money from corporates and stock market corrupt operators and fund managers,” Chandra said.
As of June 2024, the promoters held a 3.99 percent stake in Zee Entertainment Enterprises, FIIs held 18.91 percent, DIIs held 22.51 percent and the public shareholding stood at 54.59 percent. That means that retail investors have a great stake in this company, and they are the ones who would get quickly spooked if the official market regulator goes against the merger.
Zee’s plight
While explaining the situation, and on how he arrived at the conclusion that Buch was “corrupt”, Chandra said: “On 25th January 2019 on the day when ZEE shares plunged by 33% and we could not pay the margin call, I issued an open letter which alluded to the fact that:
- “All operating companies of the group were performing exceptionally well and were under no stress whatsoever.
- “The letter also explained the reasons for increased debt exposure at group level. For instance, investments made in Essel Infra, Acquisition of D2H, etc.
- “The letter further stated that from May/June 2018, negative forces have been acting against the group. We wrote a number of complaints to SEBI, other concerned authorities to investigate, however all our efforts did not result in any action.
- “In this letter, I urged the lenders to maintain patience and assured them that I will positively be able to pay the lenders dues; once the process of ZEE stake sale is complete.”
Serious allegation
Chandra went on to add: “I have been informed that if one gets access to the communications and messages between connected persons like Chanda Kochhar and Madhabi Puri Buch, their modus operandi will be out in the open. It was Chanda Kochhar and her husband; and Madhabi Puri Buch and her husband; working in tandem, hence Madhabi Puri Buch was paid hefty sums of money by ICICI while she was the whole time member at SEBI,” he added.
That is a serious allegation, especially with Chanda Kochhar and her husband currently facing serious fraud allegations from the time she was chief of ICICI Bank. As of now, there is little evidence that could make the allegation sound convincing, but this will surely gain currency quickly.
As of writing this, no reaction has been made at any level.
More allegations
Chandra pulled no punches. He said: “Today, I have called the press conference to reveal one of the negative forces involved in the above. And the name is none other than the Chairperson of SEBI, Madhabi Puri Buch.”
Then he went to make allegations that, in the absence of credible proof, could prove very serious. He said: “I was approached by a person named Manjit Singh on 17th February 2024, through reference of a known person to assist/resolve the issue at SEBI. I generally avoid such meetings, but I did meet him since he had a reference of a known person.
“The said person promised that the work will be done through Madhabi Puri Buch and her husband and all issues of SEBI will be resolved for a price. I did not believe the same but he said that ‘Since you have resolved debt repayments of more than Rs 30,000 crore, a three digit payment won’t hurt you’.
“I still did not believe the same. However, on looking at the latest Hindenburg and ICICI Bank revelations against Madhabi Puri Buch and her connected persons, it seems that the person who approached me may have been right. Maybe this was the modus operandi in various cases, which have got settled/adjudicated through compounding with light touch…
“I have been informed that if one gets access to the communications and messages between connected persons like Chanda Kochhar and Madhabi Puri Buch, their modus operandi will be out in the open. It was Chanda Kochhar and her husband; and Madhabi Puri Buch and her husband; working in tandem, hence Madhabi Puri Buch was paid hefty sums of money by ICICI while she was the Whole Time Member at SEBI.”
That is the basic premise of Chandra’s allegations and it is essential that if any such financial underhand dealings did exist, they should be investigated forthright. These are bad times for Buch.