Sebi finds many mismatches in Sahara papers

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Sebi has come across serious anomalies and a huge number of possibly fictitious investors after analysing truckloads of documents submitted by Sahara to substantiate its claim of over Rs 20,000 crore refunds.

To locate genuine investors who may have deposited money with Sahara, the regulator also wants to issue public notices in regional language newspapers and through other avenues, especially in the northern and eastern states.

Sahara group had deposited Rs 5,120 crore with Sebi after court orders. It claims to have already refunded all but Rs 2,000 crore in cash directly to investors. The court had ordered refund of over Rs 24,000 crore in August 2012.

Sebi has contested Sahara’s direct refund claims.

Sahara claims that there was no payment demand from investors and there would have been “at least one complaint” if there were dues pending. “Had there been non-payment situation there would have been bloodbaths and suicides,” the group claimed.

However, Sebi’s analysis of documents submitted by Sahara has thrown up large-scale mismatch — in dates on application forms and redemption vouchers, addresses, names, bond details, among others — in these papers, sources said.

There are numerous instances of one person having hundreds of accounts, one account having multiple beneficiaries, one person with multiple addresses and one address having tens of individuals. There are some people whose claimed dues spread over multiple accounts run into crores of rupees.

Besides, there are thousands of cases where addresses are untraceable, as also cases having innocuous addresses like national highways, and just names of villages, towns or roads, sources said on condition of anonymity.

As majority of investor accounts, from about 3 crore listed out by Sahara, are not turning out to be genuine, there is a growing suspicion about possible money laundering, a senior official said, adding that other regulatory agencies would need to play a more active role in such a scenario.

An initial pilot study for ascertaining the genuineness of investor documents submitted by Sahara had found that close to 99 per cent of the bondholders were untraceable. The ratio has not improved much since then.

Under the pilot programme, Sebi sent out redemption notices inviting claims to more than 21,000 bondholders but it received less than 300 claims. While more than 7,000 notices returned undelivered, there was no response in respect of over 13,000 notices.

A large chunk of these details have also been presented before the Supreme Court through written and oral submissions, they said, adding that there are also cases of payment dates being shown earlier than the voucher dates.

The months-long analysis, which was conducted with the help of hundreds of scanners, computers and a robotic system installed at a huge warehouse in the suburbs of Mumbai by hundreds of people, began early last year soon after Sahara delivered more than 100 trucks full of cartons containing documents.

To get rid of existing pest and other harmful objects, documents received at the warehouse are first put inside fumigating chambers and then placed inside its sophisticated automated systems, which have a temperature, humidity and pest-controlled environment.

Sebi has finally managed to sort over three crore application forms of investors, who were issued optionally fully convertible debentures, as per claims of Sahara, and close to 2.4 crore redemption vouchers through which the group claimed to have refunded the investors.

The analysis has thrown up shocking results in terms of genuineness of the claimed investors. Sebi is separately handling the investor claims that it is getting directly from the public after its earlier public notice last year, wherein those having invested in Sahara OFCDs were asked to send appropriate documents for refund.

The details of these investors are then being matched with those provided by Sahara, although a large number of these direct claims are coming without necessary documents.

Sahara has accused Sebi of being slow on refund and investor verification, but the regulator’s lawyer Arvind Datar rejected these charges in Supreme Court on Tuesday.

Sebi began the process of refund to individual genuine investors in May last year after verifying their credentials, while it is waiting for a go-ahead from the court to start refund to genuine investors with multiple accounts.

In multiple account cases, the regulator first wants to refund investors having outstanding amount worth Rs 1 or 2 lakh, while cases involving larger amounts would be investigated further before payments, if any.

The ongoing refunds are being made from Rs 5,120 crore deposited by Sahara so far.

Sahara claims Sebi has been given all original payment vouchers, receipts and all other documents containing details of investors in more than 100 truckloads. It said that 20-30 truckload documents were still in a Mumbai godown, but Sebi has refused to receive them.

Sebi has earlier said that the group had failed to submit the documents within a deadline set by the Supreme Court.

Reuters adds: With its jet-setting boss in jail, the Sahara conglomerate is scrambling for a way to satisfy a court order to repay billions of dollars in an outlawed bond scheme. The Supreme Court on Tuesday ordered that Subrata Roy, 65, remain in custody until a March 11 hearing, a dramatic turn for a man accustomed to hobnobbing with sports stars, Bollywood actors and politicians. The court said it is open to an earlier hearing if Sahara has a satisfactory payment plan.

“We are now considering what we can do,” Satish Kishanchandani, a lawyer representing Sahara told Reuters, declining to give further details. “It was urgent even before and it is urgent even today to find a solution.”

Jail spokesman Sunil Gupta said Roy was receiving the same treatment as other inmates, the only privilege being that he gets a bed as he is over 60 years of age. “He slept well. He had his breakfast today,” Gupta said on Wednesday.

In court on Tuesday, Sahara lawyers offered to give bank guarantees for Rs 22,500 crore within three to six months, but the court rejected the proposal and asked Sahara to come up with a "concrete" plan, according to two lawyers who were at the hearing.

Sahara also proposed that Sebi begin selling Sahara properties to which it holds title until it comes up with the bank guarantee. Sebi has argued that it does not have the needed paperwork for some Sahara properties and disputed the valuation of some of them.

Sebi had brought contempt proceedings against Roy and Sahara for failure to comply with a 2012 Supreme Court order to repay billions of dollars to investors. Sahara has said it repaid most investors and that its remaining liability was less than the Rs 5,120 crore it deposited with Sebi.

Sebi declined to comment on Wednesday.

A source at the regulator said it would consider taking steps to seize some of Sahara's foreign assets, although it had not yet begun to do so. “As of now we have attached some of their domestic assets but we are waiting for directions from the court before proceeding with any auction,” said a Sebi official involved in the matter, who declined to be identified.

“The original court order did not distinguish between their Indian and foreign assets, so I don’t see any reason for us to not go for the international assets,” the official said.

In India, Sahara’s highest-profile assets include the Aamby Valley City resort in Maharashtra and the Sahara Star hotel near Mumbai's airport.


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