SUCHETA DALAL | 17/02/2015

Sahara Pariwar, Sahara, Subrata Roy, Mirach Capital, properties, benami ownership, forged guarantee.

Does Sahara really own the assets it claims to own? If so, why the struggle to sell some of them?
The government has been quick to send out notices to the Aam Admi Party (AAP) and Congress on their alleged benami election funding. But consider the silence of all tax agencies on the astonishing drama being played out before the Supreme Court of India in the Sahara Pariwar (group) case, even as group chairman Subrata Roy remains in jail for almost a year.
Why is a man, who had an endless supply of money to acquire marquee properties around the world, sponsor the Indian cricket team for years, gift lavish bungalows to cricketers, claim ownership of several sports teams and stadia and throw lavish parties, not able to muster Rs10,000 crore of legitimate funding to get himself out of jail? And what does it say about a country which makes a big deal about bringing black money back from Swiss bank accounts when it has no clear idea of the source of funds of the home-grown but shadowy Sahara business empire? Why is the Sahara group struggling to sell high-profile properties, despite having unprecedented facilities (air-conditioned conference room and video-telecommunication facilities) provided in Tihar jail?
The latest twist in the jail-bail drama around Subrata Roy is that the proposed $2.05 billion buyout of Sahara’s hotels in London and New York by Mirach Capital of the US has fallen through. Sahara has alleged that a letter of guarantee from Bank of America for over $1.05 billion provided by Mirach turned out to be forged. Mirach denies the forgery and claims it is still ready for an outright purchase of Sahara’s three hotel properties.

For those who have forgotten, a path-breaking judgement of the Supreme Court, in August 2012, asked two realty companies of the Sahara group to refund Rs24,000 crore collected from investors through an unregulated, debenture-like instrument. But, after paying up just Rs5,120 crore, Sahara resorted to drama and hurled allegations against the regulator through an ill-considered advertisement campaign. It has not been able to prove the existence of even a fraction of the large investor base that it had claimed. The group’s antics angered the apex court; Subrata Roy was held in contempt and sent to jail until the Sahara group deposited Rs10,000 crore, in addition to the money already deposited with the Securities & Exchange Board of India (SEBI).
At the February hearing, the apex court was told by the amicus curiae that there was more to the failed deal than meets the eye. More shocking were reports that a letter, allegedly issued by Bank of America to Mirach, the white-knight-to-be, was forged. More interestingly, Reuters reports SEBI’s apprehension that several of the assets that Sahara claims to own (as proof of its ability to repay investors) may not entirely belong to the group. This, if true, opens a whole new can of worms and suggests benami ownership which, again, our investigation agencies have not got wind of, for decades. SEBI also seems to have discovered the ownership issues only when it seemed likely that Sahara’s assets would be sold to raise the money that has be refunded to investors as per court orders.