By Abhishek Gupta
The Rs 682 billion Sahara parivar is one of the biggest corporate houses in India. From finance, housing, manufacturing, aviation, media to cricket, hockey and F1, it has given sahara to all. Its well connected chief managing worker, Subroto Roy, has a penchant for unparalled luxuries- private jets, helicopters, mansions (one of them imitating the White House and another, the Buckingham Palace), company of A-listers, and a grand, colossal wedding of his sons that only the Mittals can compete with. Rising from a base of Rs 2000 in 1978, it has been too rapid a progress for the company. And with the troubles it has been facing of late, one hardly needs further hints as to how the empire was established.
Despite strong connections, if Sahara has been held to account, it is only because of the diligent work by Dr. KM Abraham. After RBI had asked Sahara to stop its para-banking operations (through which it raised money), it started issuing OFCDs via SHICL (Sahara Housing India Corporation Ltd) and SIRECL (Sahara India Real Estate Corporation Ltd) to its 29.6 million friends and associates, and therefore claimed it wasnt a public issue. However, according to Companies Act, 1956 provisions, it was clearly a public offer, which KM Abraham pointed out. As a SEBI board member, he ordered Sahara to refund the money collected by OFCDs to the investors. He also questioned the number of investors Sahara had claimed, for the total investor base in India was of the order of 15 million. Most investors were not traceable, and Saharas list of investors showed same names with same addresses being repeated thousands of times. Sahara challenged this order of SEBI in the SC, where it received another shock when the SC upheld the regulators order, and asked it to refund the amount of 24000 crores. Sahara could not do so, and after a series of events and excuses, finally Mr Roy had to cool his heels in the Tihar jail.
Unfortunately though not surprising, KM Abraham faced the wrath for his actions when he started investigating and complaining to higher authorities. The Income Tax department, under instructions from Ministry of Finance (FinMin), started an enquiry against him, while the Corporate Affairs Ministry claimed its jurisdiction (against SEBI) over unlisted entities like Sahara. Abraham was under intense pressure to budge from his position, but he decided to seek the PMs as a last resort. Here are some valuable excerpts taken from his letter to the PM, written in June 2011 (courtesy- http://www.outlookindia.com/article.aspx?289774 )-
“I am submitting the following with considerable anguish and pain….But such is the gravity of the situation that I make myself bold to do so, and entreat your kind indulgence.”
”The frightening realization that dawned on me from all this was that at the highest levels in government, there seemed to be an awareness of misuse of power by the office of the finance minister. But there was a clear unwillingness or reluctance to prevent it or take any remedial action. It was then I decided to address (the Prime Minister) because I knew that I had nowhere else to go..
“I have attempted to place before the honourable prime minister only those facts that I myself know with certitude, which are first hand and not hearsay in nature. I am willing to testify to the above facts, under oath in any appropriate judicial or administrative forum, should I called to do so”
PMO worsened matters for him, as he was advised to meet the very officer of FinMin against whom he had complained. Maintaining his cool, he diligently built up a strong case in his 99 page order against Sahara (June 2011), which crushed the combined defence of Sahara, Corporate Affairs Ministry, Law Ministry, BSE and was upheld by the SC. Abraham was however sent back to his home cadre, Kerala soon after his order, which was expected in such a high-profile case .
Given the political patronage he enjoys, which will increase manifold if BJP comes to power, it is possible that Roy may find a way out of this mess, and go back to displaying his love for the nation and Goddess Durga on the front pages of newspapers. Those concerned about judicial over-activism and the damage it may do to Indias business friendly image, should first give suggestions on how to hold such unlisted entities accountable, especially when it is all muddy in the executive. If it dents business image, so be it, for we can do much better without such ill-gotten wealth that exchanges hands only of a corrupt few. We do not need crony capitalists who use aam aadmis extorted money to build mansions to insulate themselves from the same aam aadmi. The Stockholm syndrome that we in India have developed towards such rich parivars needs to be shrugged off if we want to see true national prosperity. SEBI and the SC have done a great job to show such men their right place, and highlight the scale of manipulations at higher levels. Sahara now needs more than just a Mulayam sahara to save it this time.
Abhishek Gupta is a final year undergraduate student at IIT Delhi. He is an ardent cricket and tennis fan who also likes to deliberate upon issues that shape the world around us, ranging from politics to economics to international developments. You are invited to comment on his views at abhishekgupta92@yahoo.co.in.