The troubles of the Sahara chief

The long arm of the law, as the Supreme Court called it, finally caught up with flamboyant Sahara India chief Subrata Roy after a time and money consuming court battle over four years. He was taken into police custody in Lucknow on surrendering on Friday morning on a non-bailable warrant issued by the Supreme Court after he failed to present himself before the court on Wednesday.

Mr Roy, whose Sahara Group includes the Formula 1 racing team, has assets estimated at Rs. 1.5 lakh crore and a net worth of Rs. 68,000 crore. He has been held for contempt of court for failing to refund Rs. 24,000 crore to over three crore investors.

It is confounding as to why someone with such huge assets, and so much at stake, would not refund Rs. 24,000 crore, which, for him, would amount to pocket change.
Mr Roy has denied any fraud on his shareholders and says he has returned the entire amount in cash.

Both the Securities and Exchange Board of India (Sebi) and the Supreme Court did not buy this argument and wondered how such a huge amount was refunded in cash.
If fraud is proved, he could face a jail term of six months, according to one report.

On the face of it, Mr Roy, who is neither a Tata nor an Ambani but is one of the wealthiest figures in the country, has ostensibly built his empire on what he calls inclusive para banking, an euphemism for shadow banking.
He owns the most iconic hotels in London and New York and takes great pride in saying he reaches out to the smallest and poorest Indians who are out of the official banking system.

Rickshaw-pullers and vegetable vendors save sums as little as Rs. 2 a day that is collected by a Sahara staffer daily, almost like a chit fund operation on a gigantic scale.
Mr Roy is probably only the second high profile, powerful and politically connected businessman taken into custody, after erstwhile Satyam founder B. Ramalinga Raju was arrested and jailed a few years ago for fraud.

The fact that he flirted with and overstepped the boundaries of the law where interpretations were blurred was well known, but no one could prove anything against him until the Securities and Exchange Board of India started a thorough investigation after receiving a complaint from a small investor. The investigation ran into an unending maze and was a humongous task involving tonnes of paper and the tracking of crores of investors, a sizeable number of them non-existent.

Sebi was challenged by Mr Roy every step of the way, and he was finally arrested only because he failed to present himself in Supreme Court, which had shown him tremendous patience.