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Informist, Friday, Sep 13, 2024

 

--SEBI Buch: Not dealt with files involving ICICI group, Wockhardt

--CONTEXT: SEBI Buch, husband Dhaval's statement in personal capacity

--SEBI Buch: Not dealt with files involving Pidilite, other named cos

--SEBI Buch: Not dealt with files involving Agora, Mahindra Group

--SEBI Buch: Payments by ICICI Bk to Agora were interest on deposits

--SEBI Buch:M&M fees 94% of Agora Advisory operating income since 2019

--SEBI Buch: No investigation files go to chairperson

--Buch: Complied with disclosure, recusal rules of SEBI

--SEBI Buch: Allegations of conflict of interest false, defamatory

 

MUMBAI – Securities and Exchange Board of India Chairperson Madhabi Puri Buch said today in a joint personal statement with her husband Dhaval Buch that she had complied with all disclosure and recusal rules within SEBI. According to the statement, she maintained a proactive continuing recusal list with SEBI.

 

In the joint statement, the Buchs said it was unfortunate that questions have been raised about the consulting assignments of Dhaval Buch and the firms Agora Advisory in India and Agora Partners in Singapore. "There seems to be an assumption that when a spouse of a senior government official is appointed as an adviser, it must be attributed to factors beyond professional merit. Such assumptions overlook the strength of qualifications and expertise and reach conclusions that are most unfortunate," they said.

 

On Tuesday, the opposition Congress party alleged that Dhaval Buch received 47.8 mln rupees as income in a personal capacity from the Mahindra & Mahindra group. The party, which has made serious allegations of conflict of interest on the part of SEBI Chairperson Buch in the past one week, also said Agora Advisory, in which she holds 99% stake and which has been actively providing advisory and consultancy services, received payments of 29.5 mln rupees from six companies from 2016-17 (Apr-Mar) to 2023-24, except in 2017-18 and 2018-19.

 

In their joint statement today, the Buchs clarified that following Dhaval Buch's retirement in 2019 as global head of procurement for Unilever, he began working with Mahindra & Mahindra "based on his merits and experience". The company accounted for 94% of the operating income of Agora Advisory after 2019, while Pidilite Industries Ltd accounted for 4%, and the balance came from Wockhardt Ltd, according to the joint statement.

 

With regard to the Singapore-based consulting company Agora Partners, the Buchs said the firm Alvarez & Marsal accounted for 100% of the operating income of the company and that Dhaval Buch is a senior adviser with it because of his 30 years of experience in supply chain management and procurement. Further, they said that claims that ICICI Bank paid Agora Advisory were misleading and defamatory since the payments were interest paid on deposits held with the bank. "Ascribing motive to it is unfortunate and defamatory," the Buchs said.

 

Dhaval Buch's consulting practice under the two companies, Agora Advisory and Agora Partners, were through "a company structure so as to transparently isolate the income so generated and report accruals and expenses related to these assignments, as separate from his personal income and expenses", according to the statement. "It is unfortunate that a process that actually facilitates greater transparency is being sought to be projected as suspicious," the Buchs said.

 

Madhabi Puri Buch disclosed her shareholding in Agora Advisory as well as in Agora Partners in 2017 when she joined SEBI as a whole-time member, according to today's joint statement. The day after US short-seller activist firm Hindenburg Research released its report on Aug 10 alleging egregious conflicts of interest on the SEBI chairperson's part, the Buchs issued a joint statement in which they said, among other things, that the two consulting companies set up by Madhabi Puri Buch "became immediately dormant on her appointment with SEBI". Following that Aug 11 statement by the Buchs, Hindenburg posted on X that Agora Advisory was active and generating consulting revenue.

 

The Buchs today said that while in SEBI, Madhabi Puri Buch has "never dealt with any file involving Agora Advisory, the Mahindra Group, Pidilite, Dr Reddy’s, Alvarez and Marsal, Sembcorp, Visu Leasing, or ICICI Bank at any stage". The Buchs said the facts are evident and therefore the allegations of conflicts of interest "are completely false, malicious, and defamatory".

 

The Buchs also clarified the allegations that they received rental income from their jointly owned property. They said the property was leased out in the normal course and an associate of Wockhardt happened to be the lessee. Madhabi Puri Buch said that at SEBI she has not dealt with any files related to Wockhardt.

 

The Buchs said the claim that the rental rates were off market was "patently false", and a simple internet search and analysis would show that the rental income from the property was in line with market rates.

 

"Given the all-India remit of SEBI’s responsibilities, which encompass hundreds of investigations, thousands of surveillance alerts, hundreds of approvals, and hundreds of orders annually, the Chairperson is usually not even aware of specific cases, as they are handled in the normal course by other designated officials as per delegation of powers which have always been in place," the Buchs said in their statement.

 

They further said that in SEBI's investigations, the powers are vested in senior officials such as chief general managers, executive directors, and whole-time members. "No investigation files go to the Chairperson," the Buchs said.

 

In this connection, a report published on Aug 30 by online news outlet Scroll.in quoted an unnamed SEBI board member saying that Buch did not recuse herself from the Adani group probe, nor were her disclosures on past investments in an offshore fund, alleged by Hindenburg Research to be linked to the Adanis, known to everyone on the board or the investigating team. The unnamed board member was also quoted as saying that the Adani group investigation was done by "certain departments" at SEBI but "like any corporate, the chairperson would know what is going on in the departments".

 

Buch also issued a clarification on the allegations regarding her employee stock options from ICICI Bank where she was an executive director. As per ICICI Bank's annual report of 2008-09, Madhabi Puri Buch resigned from the bank's board with effect from Feb 1, 2009, on her appointment as managing director and chief executive officer of ICICI Securities. She worked at ICICI Securities till around 2011.

 

Buch said that because she retired from ICICI Bank as a senior employee, she got up to 10 years to exercise the vested stock options. "With respect to the baseless allegation concerning the uneven nature of pension amounts with gaps in between... they were related to exercise of ESOPs (Employee Stock Ownership Plan) at various stages over the ten years," according to the joint statement. Depending on when Madhabi Puri Buch exercised her options, prevailing market prices at the relevant time, and the quantity of stock options exercised, "the perquisite value is bound to vary each year", the Buchs said.

 

The Buchs claimed that SEBI's guidelines permitted board members to hold and transact in employee stock options after making the requisite disclosures and recusals. In SEBI, Buch has disclosed her employee stock option holdings since 2017 and with each subsequent operation. "Madhabi has never dealt with any files related to the ICICI Group of Companies during her tenure," the Buchs' joint statement said.

 

The couple also dismissed allegations that Madhabi Puri Buch had moonlighted while employed with ICICI Bank. "The fact is that... in 2011, she was granted long leave (unpaid) by the Bank to join her husband who was working in Singapore at that point of time. During her time there, in Singapore, with ICICI Bank's full and prior approval, she took up a position with a Private Equity Firm in Singapore," the Buchs said.

 

Further, according to the Buchs, when it became clear in 2013 that Madhabi Puri Buch would remain in Singapore, she superannuated from ICICI Bank as per the bank’s rules. The private equity firm was also fully aware that she was on long leave from ICICI Bank, according to the statement. "The arrangement was completely legal, transparent, and equally transparently was displayed on the LinkedIn profile of Madhabi," the Buchs said.

 

Earlier today, at 0959 IST, before the Buchs issued their joint statement, Pawan Khera, chairman of the media and publicity department of the Congress party, said in a post on social media platform X that the party would be coming out with new revelations in the "SEBI scandal".  End

 

IST, or Indian Standard Time, is five-and-a-half hours ahead of GMT

 

Reported by Rajesh Gajra

Edited by Rajeev Pai

 

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