NEW DELHI: The Sahara business group, charged with illegally raising $4.5bn from millions of small rural savers, took out huge ads yesterday declaring it never does anything “against the law”.
The two-page newspaper adverts appeared before a Supreme Court hearing set for tomorrow on the case which has put the practices and finances of the conglomerate, headed by flamboyant billionaire Subrata Roy, in the public spotlight.
Sahara, a household name in India through its sponsorship of the national cricket team, “is never against the law or the spirit behind the law”, the ads stated.
Late in August, the court said Sahara, whose interests run from real estate to entertainment to financial services, had “no right to collect” funds from 29.6 million investors “without complying with any regulatory provisions”.
Stating “an iron hand” must be used to deal with “economic offences”, it told Sahara to deposit Rs240bn ($4.5bn) with market regulator the Securities and Exchange Board of India (SEBI) by November 30 or risk having its assets seized. The Sahara empire embraces the iconic New York Plaza Hotel, purchased just last month for $575m, a stake in a Formula 1 racing team and a sprawling Indian luxury township.
Sahara said it had already refunded a large chunk of the money, collected through bond schemes, directly to savers.
But SEBI has filed a contempt petition accusing Sahara of “non-compliance” with the refund order that stated the funds should be deposited with regulators to ensure the money went back to the savers. The dispute is the latest in a string of run-ins between regulators and Roy, a hero to millions of poor Indians for his rags-to-riches story and who lives in a mansion modelled on the White House — only bigger.
In 2008, Sahara shut its operations as India’s biggest non-bank deposit-taking firm on the orders of the Supreme Court which was worried about the soundness of the investments in which the money was being parked.
Observers say much of Sahara’s fundraising success rests on the fact that vast numbers of Indians in rural areas have no access to banks and no other place to put their money than in poorly regulated non-bank institutions.