Financier Facing $1.67 Billion Bail Gets Indian Employee SupportBhuma Shrivastava
Sahara India Pariwar, the Indian financial-services group whose owner Subrata Roy must post a 100-billion-rupee ($1.67 billion) bail to be released from jail, said it is accepting contributions from its workers to help raise the funds.
Sahara is responding to “an emotional initiative from people in reaction to the prevailing situation,” it said in an e-mailed statement yesterday. “No instruction or request whatsoever has been made by Sahara management” to organize the campaign, it said.
The coordinators of the appeal want employees and well-wishers to consider contributions of at least 100,000 rupees ($1,670) each, according to a letter circulated within the group. In return, they would receive shares in a unit of the group, Saharan e-Multipurpose Society Ltd. About 1.2 million people work for Sahara in 4,500 offices across India.
“This method of fundraising may face further roadblocks from the markets regulator,” said Sandeep Parekh, a former executive director of enforcement at the Securities and Exchange Board of India and founder of Finsec Law Advisors. He isn’t involved in the Sahara case.
Roy has been in custody since Feb. 28 as part of a three-year proceeding over a sale of convertible bonds. Indian regulators and courts are increasingly cracking down on the $670 billion shadow-banking industry in Asia’s third-largest economy.
SEBI, country’s market regulator, in June 2011 faulted two Sahara companies for selling convertible debt without approval and ordered them to repay the funds. Sahara says it has repaid the money in full, while the regulator says it hasn’t been able to verify the refunds as documents are flawed and some depositors untraceable.
India’s Supreme Court put Roy and two directors into custody on Feb. 28 after the shadow financier failed to convince it that Sahara had fully complied with a court order to refund 240-billion rupees to 30 million depositors.
Under the terms of the bail set on March 26, Roy and Sahara would need to post 50 billion rupees in cash and another 50 billion rupees in bank guarantees for him to be released.
While Roy has said in the past that his personal wealth amounts to less than $1 million, he has built an empire over the last 35 years that at the end of 2012 was valued at $11 billion.
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 everything from detergents to diamonds and a 42.5 percent stake in India’s Formula One racing team. Sahara also owns 14,600 hectares (36,000 acres) of land, an area the size of Liechtenstein.
Sahara means “support” in Hindi.