Head of India's Sahara group in remand for failure to repay small investors

India's Sahara group chairman Subrata Roy's face is covered in black ink after a protester attacked him as he arrives at the Supreme Court in New Delhi on March 4, 2014. The court issued the order after Roy's lawyers said he could not appear in
India's Sahara group chairman Subrata Roy's face is covered in black ink after a protester attacked him as he arrives at the Supreme Court in New Delhi on March 4, 2014. The court issued the order after Roy's lawyers said he could not appear in person at a hearing last week because his elderly mother was ill, frustrating the judges and further delaying the 18-month-old case. -- PHOTO: AFP

NEW DELHI (AFP) - India’s top court jailed the head of Sahara business group on Tuesday after he apologised to the judges for failing to show up for a hearing over repaying billions of dollars to small investors.

Flamboyant billionaire Subrata Roy, who was remanded in custody for a week, said he was sorry for not personally attending a hearing last week, which had prompted the frustrated top court to order his arrest over the 18-month old case.

“I sent an unconditional apology. My reasons for not appearing before the court were genuine,” Roy told the court in New Delhi during a hearing on Tuesday, referring to his sick, elderly mother.

The court remanded Roy to Tihar, India’s largest jail, until he could present a “concrete proposal” on repayment to investors.

Roy is often photographed with Bollywood stars and his Sahara group says it’s worth US$11 billion (S$14 billion).

Surrounded by media on Tuesday, Roy was attacked by a protester who threw ink in his face as he arrived at the court for the hearing over delays in returning money collected through an illegal bond scheme.

As guards whisked Roy away, the shirtless protester yelled “thief” before lawyers and Sahara supporters started beating him up, as police dragged him away from the court.

During the hearing, the 65-year-old tycoon reassured the court that Sahara would pay back money, collected from rural savers through the bond sales, within three to four months.

Roy told the court that he had already given more than US$800 million to the Securities and Exchange Board of India (Sebi), the securities regulator, which is overseeing the repayment process.

A two-judge bench remanded Roy and two other directors in custody until March 11 when it wanted to hear the more detailed repayment plan.

Judge K.S. Radhakrishnan said he was “not happy” with proposals so far.

Roy was arrested on Friday and held at a forest department guest house in the northern city of Lucknow before travelling to Delhi for the hearing.

Sahara, a famous name in India through its former sponsorship of the national cricket team, raised about 200 billion rupees (S$4.09 billion) from savers in a process judged by authorities in 2012 to be against the law.

Sahara maintains that the company was only helping small investors outside the banking system and that it has never defaulted on them.

The Sahara empire extends from a stake in a Formula One racing team to a sprawling Indian luxury township, the iconic New York Plaza Hotel and Grosvenor Hotel in London.

Sahara’s woes began in 2008 when it shut operations as India’s biggest non-bank deposit-taking firm on orders of the court, which was worried about whether the investments in which money was being parked were sound.

Observers say much of Sahara’s fundraising success rested on the fact that vast numbers of rural Indians have no access to banks and no other place to put their money, other than in poorly regulated non-bank institutions.

There was no immediate comment from Sahara or Roy on the court’s order.

 

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