Now Mumbai police probes Sahara. But will it crack the empire?

One more investigation into the Sahara group. This time it is by the the Economic Offences Wing (EOW) of the Mumbai Crime Branch Police.

According to a report in the Mumbai Mirror, the Securities and Exchange Board of India (Sebi) has complained to the Economic Offences Wing (EOW) of the Mumbai Crime Branch Police that Sahara is intimidating its investors. The EOW has started investigations into the matter, the report said.

 Now Mumbai police probes Sahara. But will it crack the empire?

The summons were issued to examine them for ascertaining details of their personal assets. AFP

"We have been asked by the Government of India to investigate the case. We have initiated a preliminary investigation. No complaint has been filed yet," Additional Commissioner of Police Rajvardhan has been quoted as saying in the report.

As per a Supreme Court order, two Sahara companies were to return about Rs 24,000 crore to 3 million investors of the optionally fully convertible debentures (OFCDs) issued by them. The refund was to be overseen by the capital market regulator.

The companies did not complete the refund even after the court extended the deadline twice. This prompted Sebi in February to issue attachment orders against the two firms and their top executives, including Subrata Roy.

According to a report in the Business Standard in November, Sahara agents were collecting consent letters from investors showing that their money has been returned. The agents were being threatened that their commissions will be stopped if they fail to extract these letters from the investors, the report said.

There were also reports that the group is asking the OFCD investors to switch their investment to its retail venture, Q Shop. Sebi had cautioned investors against this.

Meanwhile, according to a PTI report Sahara group's chief Subrata Roy and other top executives have been summoned for personal appearance today before the market regulator Sebi.

The summons were issued to examine them for ascertaining details of their personal assets, as also the investments and assets of the companies, to move ahead with sale of immovable assets for realisation of money to be refunded to the investors.

The assets that are under the threat of attachment include properties related to the group's Aambey Valley resort town near Pune, other real estate assets in Delhi, Mumbai and at other places across the country, shares, mutual funds and various other investments.

In the same order that came on 26 March, the two Sahara firms and their four top executives were also asked to provide details of their assets and investments to the market regulator by April 8. It could not be ascertained whether these details have been furnished before Sebi as per the orders, the PTI report said.

If they fail to appear before Sebi as ordered, the regulator has said it would ex-parte settle the terms of proclamation of sale of their and the companies' assets.

The group on various occasions, including through newspaper advertisements, has accused Sebi and its top officials of not providing an opportunity to meet Sahara chief Subrata Roy and others for presenting their points of view.

During their personal appearance today, Roy and other three top executives have also been asked to produce original title deeds of all assets and investments of the two firms, Sahara India Real Estate Corp Ltd (SIRECL) and Sahara Housing Investment Corp Ltd (SHICL), the two companies that issued the OFCDs.

Besides, they have been asked to furnish details of their bank accounts (in India and abroad), and the complete books of accounts along with income tax returns and wealth tax returns filed by the two companies from fiscal 2007-08 onwards.

Meanwhile, Sahara's appeal against Sebi's attachment orders will be heard by SAT on 13 April.

Later this month, the Supreme Court would also hear a plea by Sebi seeking orders for Roy's arrest and barring him from leaving the country.

Will these moves crumble the veil of secrecy surrounding the Sahara citadel? Very unlikely.

But there have been developments that indicate cracks. Ahead of the SAT hearing, which is likely to be the final one, three independent directors of various Sahara firms have quit.

But these are just minor cracks which might not have a huge impact as there is a huge wall of celebrities who impart credibility to its many operations.

As Firstpost earlier argued (read here), if the government is serious about probing Sahara, which has interests in real estate, finance, retail, hotels, sports and Formula 1 racing, it should institute an investigation by a Supreme Court-appointed Special Investigation Team, and/or a joint team of forensic experts appointed jointly by the RBI, Sebi, the Registrar of Companies, and the Special Frauds Investigation Office (SFIO) of the Company Affairs Ministry.

With inputs from PTI

Updated Date: Dec 20, 2014 18:44:45 IST