After SEBI made submissions in the Supreme Court in the Adani-Hindenburg matter on Monday, the Congress said on Tuesday that the market regulator “failed” to file a case that could trigger an Enforcement Directorate (ED) investigation, as it reiterated its demand that only a Joint Parliamentary Committee (JPC) probe could bring out the truth.
In a statement issued on Tuesday, Congress General secretary Jairam Ramesh said, “The Supreme Court’s Expert Committee, claimed by some interested parties to have issued some sort of ‘clean chit’, gave damning revelations about SEBI’s inability to fully investigate the Adani Scam.”
He said that it pointed out in its report that SEBI had in 2018 diluted and subsequently, in 2019, entirely deleted the reporting requirements relating to the ultimate beneficial (i.e. actual) ownership of foreign funds.
“This had tied its hands to the extent that ‘the securities market regulator suspects wrongdoing, but also finds compliance with various stipulations in attendant regulations… It is this dichotomy that has led to SEBI drawing a blank worldwide,” he said, quoting the Expert Committee report.
The Rajya Sabha MP said that in other words, “SEBI suspects that the Adani Group has violated the rules regarding minimum public shareholding using opaque overseas funds, including the widely-reported Rs 20,000 crore of benami funds, but has failed to do anything about it. All of which has been rather convenient for Prime Minister Narendra Modi and his cronies”.
In an affidavit submitted in the Supreme Court, SEBI has reportedly defended itself, saying that amendments to the Prevention of Money Laundering Act (PMLA) regarding disclosure of beneficial owners made its own rules redundant, Ramesh said.
“However it is ‘piquant’ that despite its well-documented suspicions since at least 2020, SEBI has failed to file any case that would spark an ED investigation under the PMLA. Usually hyperactive when it comes to prosecuting opposition leaders, the Modi government has been noticeably reluctant to use the ED to investigate the Adani scam. PM Modi is hardly likely to wish to investigate himself or his cronies,” the Congress leader said.
Taking a swipe, he also said the fact that the SEBI board introduced stricter reporting rules on foreign ownership for certain classes of foreign portfolio investors on June 28, 2023 is a clear admission of guilt by the securities regulator.
“Pressure from many media revelations, the Expert Committee’s report and the Congress party’s ‘Hum Adanike Hain Kaun’ (HAHK) campaign seem to have forced SEBI’s hand. But the main question remains this: PM Modi made a commitment before G20 world leaders in 2016 to lead efforts to ‘eliminate safe havens for economic offenders’ and ‘remove the excessive banking secrecy that hide the corrupt and their deeds’,” he said.
“Instead, the Prime Minister has neutered India’s investigative agencies and facilitated the expansion of his cronies into every strategic sector of the economy, at the cost of competitors and taxpayers. He is also seeking to create new opportunities for money laundering, such as anonymous participatory notes (P-notes) in the Gujarat International Finance Tec-City (GIFT), which regulators spent years trying to phase out,” Ramesh alleged.
“We await SEBI’s August 14 report and clarity on questions such as the origins of the Rs 20,000 crore of opaque foreign funds that have flowed into Adani companies. But SEBI’s investigation is limited in its scope. Only a JPC can fully investigate PM Modi’s crony links with the Adani Group and how he has personally facilitated their business in India and abroad by changing laws, rules and regulations to help his close friends,” Ramesh added.
His remarks came a day after the SEBI filed an application in the Supreme Court containing its views on various recommendations made by the court-appointed Expert Committee in connection with the Adani-Hindenburg case.
It told the Supreme Court that its 2019 rule changes do not make it tougher to identify the beneficiaries of offshore funds, and action will be taken if any violation is found or established.
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