Allegations against SEBI chairperson: Hindenburg dealt major FSC blow

The SEBI chairperson and her husband, Dhaval Buch, have rebutted the accusations, saying it is unfortunate that instead of replying to the show-cause notice, they have chosen to attack the credibility of SEBI

In a significant blow to Hindenburg Research, the Financial Services Commission (FSC) of Mauritius has said that the fund cited by the US short-seller in its allegations against SEBI chairperson Madhabi Puri Buch are neither licensees of the FSC nor ‘domiciled in Mauritius’.

In a statement, the financial regulator said that "IPE Plus Fund and IPE Plus Fund 1 are not licensees of the FSC and are not domiciled in Mauritius".

It also said it has taken cognisance of the contents of the report published by Hindenburg Research on August 10, wherein mention has been made of 'Mauritius-based shell entities' and Mauritius as a 'tax haven'.

The latest Hindenburg report had cited '"IPE Plus Fund" is a small offshore Mauritius Fund' and 'IPE Plus Fund 1', a fund registered in Mauritius'.

"The FSC wishes to highlight that the legislative framework in Mauritius does not permit creation of shell companies," the statement said. The SEBI chairperson and her husband, Dhaval Buch, have rebutted the accusations, saying it is unfortunate that instead of replying to the show-cause notice, they have chosen to attack the credibility of SEBI and indulged in character assassination of its chief. The two consulting companies set up by Madhabi Buch during her stay in Singapore, one in India and the other in Singapore, became immediately dormant on her appointment with SEBI.

These companies (and her shareholding in them) were explicitly part of her disclosures to SEBI, the Chairperson said. According to the FSC, Mauritius has a robust framework for global business companies and they have to meet substance requirements on an ongoing basis as per Section 71 of the Financial Services Act, which is strictly monitored by the FSC. "Moreover, the FSC wishes to highlight that Mauritius strictly complies with international best practices and has been rated as compliant with the standards of the Organisation for Economic Co-operation and Development (OECD)," it added. "OECD is satisfied that Mauritius does not have any harmful features in its tax regimes, thus recognising Mauritius as a well-regulated, transparent and compliant jurisdiction. Therefore, Mauritius cannot be termed as a tax haven," the FSC said.