Dr. Swamy expresses objections to Madhabi Puri Buch’s previous role as Director of Max Healthcare Group as a conflict of interest
BJP leader Subramanian Swamy raised objections on the previous role of SEBI Chairperson Madhabi Puri Buch as Director in Max Healthcare Group company as a conflict of interest. Swamy recently filed a petition to the Delhi High Court for a probe into Rs.5,100 crore scam in Axis Bank – Max Life deal. Madhabi Puri Buch is the first person selected to lead the Securities Exchange Board of India (SEBI) from the private sector. Earlier senior government officers are selected to head SEBI, the Regulator of Indian Stock Exchanges.
Madhabi Puri Buch was the Director at Max Healthcare Institute Limited from 2015 to 2017. She was also a Director in many big companies like ICICI Prudential, ICICI Securities, and Vodafone Idea becoming the head of SEBI. “From 04/02/15 to 03/04/17 SEBI Chairperson SEBI India was director & Addl. Director in Max HIL. Is it possible, NO action has been taken against the Axis-Max Deal because of this conflict? I am evaluating legal action on this,” said Swamy in a post in X.
From 04/02/15 to 03/04/17 SEBI Chairperson @SEBI_India was director & Addl. Director in Max HIL.
Is it possible, NO action has been taken against the Axis-Max Deal because of this conflict?
I am evaluating legal action on this. pic.twitter.com/uy0koqtVAK
— Subramanian Swamy (@Swamy39) February 26, 2024
BJP leader Subramanian Swamy petitioned the Delhi High Court alleging a scam of nearly Rs.5,100 crore in the way Axis Bank sold and purchased shares of insurer Max Life Insurance Company. Demanding an expert probe, the public interest litigation (PIL) alleged that Rs.5,100 crore was the total profit made by Axis Bank through these transactions between February 2016 and April 2021.
Swamy said that, for instance, Axis Bank sold its stake of 0.998% in Max Life in March 2021 to Max Financial Services Ltd and Mitsui Sumitomo International at Rs.166 per share. Then, between March and April 2021, Axis Bank and its group entities acquired a 12.002% stake from Max Financial Services at Rs.31.51-32.12 per share.
“Meaning, thereby, Axis Bank has gained substantially while selling shares as the selling price has been exponentially more than the purchasing price,” said the petition by Subramanian Swamy, demanding a probe by an expert panel.
Max Life Insurance is a joint venture between Max Financial Services and private lender Axis Bank. On 6 February, the Insurance Regulatory and Development Authority of India (IRDAI) approved Axis Bank’s proposal to purchase another 7% in Max Life for ₹1,612 crore. After this, the Axis group entities will collectively own 19.02% of the insurer, up from less than 13% currently.
The regulators including the Securities and Exchange Board of India (SEBI), Reserve Bank of India (RBI), and IRDAI have been made a party in the matter along with Axis Bank, its group companies, and Max Life. The petition said that Max Financial Services Ltd (MFSL) and Mitsui Sumitomo International (MSI) have been engaging in the transfer of shares of Max Life to Axis Bank at a price, that is substantially lower than the fair market value and subsequently buying them from Axis Bank at a substantially higher price.
Swamy alleged “blatant fraud” by Max Life Insurance and Max Financial Services in allowing shareholder Axis Bank Ltd and its group companies to make “undue profits/ gains from the purchase and sale of equity shares of Max Life in a non-transparent manner”. He added that the transactions were in violation of the directions of IRDAI. Therefore, the petition said these transactions should be investigated by a committee of experts.
A division bench of acting Chief Justice Manmohan and Justice Manmeet Pritam Singh Arora have agreed to hear the matter on 13 March. Senior counsel Mukul Rohatgi represented the Axis group. Advocates Rajshekhar Rao and Satya Paul Sabharwal appeared for Swamy.
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