A file photo of Sahara chief Subrata Roy
New York/Mumbai: Subrata Roy, the boss of the Sahara conglomerate, who has been in a Delhi prison on contempt-of-court charges since March last year needs to post $1.6 billion (Rs 10,000 crore) in bail to get out. To help raise the money, Sahara is in talks to refinance its overseas hotels, including New York’s Plaza.
The only problem: It’s unclear if the man who’s orchestrating the deal, a 34-year-old former broker named Saransh Sharma, has the money to pull it off.
Sahara’s head of corporate finance, Sandeep Wadhwa, said Sahara’s lawyers had verified with Bank of America that Mr Sharma has deposited just over $1 billion (Rs 6,250 crore) in an account at the bank that is “earmarked for the said transaction.”
That account, however, doesn’t appear to exist. A manager at the bank told Reuters that he didn’t write a crucial document attributed to him: an email, sent in his name to Sahara, which purported to verify the account’s existence. After Reuters asked the bank to look into the account, spokeswoman Jumana Bauwens issued a statement saying: “Bank of America isn’t involved in the transaction.”
What’s more, Mr Sharma, who lives in San Jose, California, has admitted to stealing a database from a former employer. There are also two pending lawsuits against him, alleging he forged a letter and produced fake documents to obtain a loan.
Bank of America’s assertion that it has nothing to do with the deal, as well as details about Mr Sharma’s past, could throw a wrench into Sahara’s efforts to free Mr Roy, who is at Tihar jail, the largest in India, on contempt charges for failing to comply with a court order to repay investors in a bond scheme later ruled to be illegal.
The bail amount, the largest ever in India, reflects the cost of the illegal scheme, estimated by Indian regulators to be as much as $7 billion or Rs 43,750 crore.
Mr Sharma told Reuters he is backed by a group of U.S. and U.K. investors for the refinancing and that the funds in the account have come from them. Both he and Sahara declined to identify the investors.
Sahara’s businesses range from financial services to media, retail and real estate. The company used to sponsor the Indian cricket team, which helped to make it a household name in the country. During his heyday, Mr Roy, 66, socialized with presidents and film stars.
Sahara’s troubles started in 2011 when it was found by the Securities and Exchange Board of India (SEBI), the market regulator, to have illegally sold billions of dollars of bonds to investors. After a legal battle that reached the Supreme Court, Sahara was ordered to refund investors the money.
The Supreme Court threw Mr Roy in jail last March after he failed to appear at a contempt hearing related to the dispute with the regulator. Sahara has said that it has repaid most investors, a claim SEBI has disputed.
Since Mr Roy’s imprisonment, Sahara has been trying to raise cash. It has been reporting its progress to the court and regulators, and needs approvals from them to do these transactions. ($1 = Rs 62.50)
(Reuters)