What Sebi can learn from Pinochet case in conflict and propriety

Hindenburg in its fresh report has accused Sebi Chief Madhabi Puri Buch of conflicts of interest, saying it prevented a thorough examination of allegations of manipulation and fraud at the Adani Group. The US-based firm alleged that Madhabi Puri Buch and her husband Dhaval Buch previously held investments in offshore funds also used by the Adani Group.

The accusation against Buch is poles apart from the case of Chilean dictator Augusto Pinochet, who was accused of crimes against humanity. However, the parallels between the Pinochet case and the current controversy involving the SEBI chairperson are striking. The principles of judicial propriety that arose from Augusto Pinochet's extradition case in 1998 resonate with the current crisis engulfing Sebi.

The Pinochet Precedent

Pinochet was arrested in 1998 in the UK, on an extradition request issued by Spanish judge Baltasar Garzón. The case reached the House of Lords and resulted in a ruling against Pinochet. However, this ruling was overturned when it turned out that one of the judges, Lord Hoffmann, had undisclosed ties with Amnesty International, representing the victims of human rights violations, was a party to the case.

It was revealed that Hoffmann’s wife was connected with Amnesty International and he was also a director and chairman of Amnesty International Charity Limited. Hence, all four Law Lords on the bench held that Hoffmann should be disqualified from participating in the case due to the appearance of a conflict of interest and ordered the case to be reheard.

This highlighted that the mere appearance of bias, even without actual bias, was enough to disqualify a judge from a case. Therefore, this underscored the ethical principle that a person may not be a judge in his own cause.

Despite allegations of conflict of interest, Buch has not recused herself from the ongoing Adani investigation. This raises serious concerns about the integrity of the regulatory process. This situation mirrors the Pinochet case, where the appearance of a conflict was enough to warrant the recusal of a judge.