Sahara for whom

It is tempting to think that the long arm of the law has finally caught up with the Sahara Group chief Subrata Roy. The issue of a non-bailable warrant and the remand to judicial custody may seem, on the face of it, like important milestones in a case that everyone seems to pretend is about returning ₹20,000 crore to some three crore investors. But as this high-profile case continues to hog media headlines and occupy reams of newsprint, it seems relevant to ask the question that should stare SEBI and the Supreme Court in the face — is this really about settling investor grievances? Sahara may be guilty of many things, but it is misplaced to equate this ‘scam’ with Saradha or the other chit fund rackets that have emerged from time to time. Leave alone three crore people, there have been no instances of even small groups of investors taking to the streets alleging they have been cheated — which is routine in Saradha-type scams. SEBI has taken up this case on behalf of three crore investors, but it has been able to disburse barely ₹1 crore of the ₹5,120 crore that Sahara has deposited with it. This raises the question — what exactly will SEBI do with the additional ₹20,000 crore in case Sahara is forced to cough up. Who is it going to give it to?

The question highlights a fundamental contradiction in the manner in which the case has being pursued against Sahara from the very beginning. Why is it being treated as an investor grievance issue if, as seems very likely given the available evidence, the investors simply don’t exist, are fictitious creatures used to dress up Sahara’s account books? Even the Supreme Court has raised the possibility of these investors being mere phantoms. If this is true, then shouldn’t we be addressing this case as an elaborate money-laundering scheme? In turn, shouldn’t the prosecution be led by the Enforcement Directorate (which has registered a couple of cases against Sahara) rather than SEBI, which is mandated to invest protectors but hardly equipped to investigate the source of ill-gotten money?

If one is going to get to the bottom of the Sahara story, then this case cannot be handled only as if it were one in which two group companies violated capital market regulations. Quite clearly, it goes well beyond technicalities such as whether or not they issued bonds in violation of the Companies Act and without the approval of the regulator. The Supreme Court and SEBI may have put the screws on Subrata Roy, but only a final turn will reveal the big fish that funded Sahara’s para-banking activity. This is something that must be pursued, and with the utmost seriousness, under the Prevention of Money Laundering Act.

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