Subrata Roy, owner of the financial services group Sahara India Pariwar, surrendered to police after the nation’s top court issued a warrant in a probe into whether he failed to refund $3.9 billion to his depositors.
Roy, 65, submitted to police and is cooperating with the Supreme Court’s directive, his son Seemanto Roy said at a press conference in New Delhi today. The financier defied summons and failed to appear in court on Feb. 26, prompting a non-bailable arrest warrant. In a statement issued earlier today, Roy cited the need to be at his ailing mother’s bedside for his absence.
Roy, who began operations in 1978 by going door to door to collect small amounts of cash, is seeking to convince the top court that Sahara has complied with an order to refund 240 billion rupees ($3.9 billion) to 30 million depositors. India’s market regulator in June 2011 faulted two of his companies for selling convertible debt without approval.
“This is going to be a landmark case,” said Mumbai-based Jitendra Nath Gupta, a former executive director at Securities and Exchange Board of India, or SEBI. “It will serve as a deterrent for the next generation of legal cases on shadow financing.”
The financier, who calls himself “Sahara Sri,” is part of the $670 billion shadow banking industry in Asia’s third-largest economy. Roy earlier dismissed reports in newspapers including the Times of India that he was evading arrest after police, seeking to serve the warrant, couldn’t find him at his house.
“I am not that human being who will abscond,” Roy said in today’s media statement, explaining he had left his house in Lucknow to consult doctors on his mother’s medical reports when the police were looking for him. “I’ve started hating myself. Now, I can’t handle this level of agony and humiliation. They are bullying and indulging in character assassination.”
Sahara says the 31,675 cartons of documents in 128 truckloads it had sent to the SEBI proved it had repaid the money. Lawyers for the market watchdog have told the court the math is muddled and the paper trails often lead nowhere.
“We went to his house last night with a warrant,” Vidya Sagar Misra, Additional Superintendent of Police in the Gomti Nagar district of Uttar Pradesh, said by telephone. “He wasn’t there, so we came back.”
In today’s statement, Roy had sought house arrest until March 3. Sahara’s lawyers have again requested the Supreme Court “with a plea and a personal appeal” from Roy to withdraw the arrest warrant as he has voluntarily surrendered to the police, his son told reporters. Roy had assured the court that he will attend the next hearing on March 4, he said.
Over the past 35 years, Roy has built an empire that at the end of 2012 was valued at $11 billion by collecting amounts as small as 32 cents every day from rickshaw pullers, laundry washers and tire repairmen.
Sahara owns properties such as New York’s Plaza Hotel, London’s Grosvenor House and at least 120 companies, including television stations, a hospital, a dairy farm, retail shops selling products from detergents to diamonds and a stake in India’s only Formula One racing team. It also owns 14,600 hectares (36,000 acres) of land, an area the size of Liechtenstein.
“If someone is insistent to take me away from my mother before she attains at least some recovery, what should a son do?” Roy said in full-page advertisements in Indian newspapers today. “My earnest request to the administration is to help me on humanitarian grounds.”
Shares of Sahara Housingfina Corp., a listed group company, fell 3 percent to 37.55 rupees in Mumbai, compared with a 0.6 percent gain in the benchmark S&P BSE Sensex. Sahara One Media & Entertainment Ltd. fell 3 percent to 60.10 rupees.
“The advertisement in newspapers might also seem like a challenge to the courts,” SEBI’s Gupta said. “The court has tolerated this behavior from Sahara for nearly two years now. It has tested their patience.”