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Foxed by ghost investors, Sebi seeks foreign help in Sahara case
The market regulator is seeking help from its peers in Mauritius, the UK and the US to solve the high-profile money laundering case involving Sahara chief Subrata Roy.
As the Securities and Exchange Board of India (Sebi) sifts through “hopelessly mixed up” documents submitted by Sahara, chances remain very low of finding genuine investors.
The market regulator suspects it to have provided details of mostly “ghost or fictitious” investors.
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Foxed by ghost investors, Sebi seeks foreign help in Sahara case
Making things worse, there has been a considerable delay in response from central agencies and state governments from whom Sebi has been seeking assistance for attaching Sahara group properties for almost a year, sources said.
Notwithstanding these hiccups in such a high-profile case in which Sahara chief Subrata Roy has been taken into police custody for being produced before the Supreme Court on Tuesday, Sebi is seeking help from its peers in foreign countries such as Mauritius, the UK and the US.
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Foxed by ghost investors, Sebi seeks foreign help in Sahara case
It is also seeking the help of some other jurisdictions, where Sahara is said to have presence through business ventures or shell companies.
Besides help in administrative matters, the overseas regulators may also be tapped for sharing intelligence on the ventures set up by Sahara in various jurisdictions.
As majority of investor accounts, from about 30 million listed out by Sahara, not turning out to be genuine, there is a suspicion about possible money laundering activities, a senior official said, adding that other regulatory agencies would need to play a more active role in such a scenario.
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Foxed by ghost investors, Sebi seeks foreign help in Sahara case
Even among those who so far appear to be genuine investors and whose numbers could reach a few lakhs at most, a majority are in the “multiple investor” category. Refunds have been made as yet only for “individual genuine investor” accounts.
While Sahara has accused Sebi of going slow on the repayment process despite Rs 5,120 crore having been deposited with it, senior officials said that the refund task is too complex and the group has not been very forthcoming when asked to cooperate in investor verification.
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Foxed by ghost investors, Sebi seeks foreign help in Sahara case
The group claims that Sebi has not sought its help in verifying investors. While genuine investors not finding multiple mentions and those not listed against multiple accounts are being repaid their investments, Sebi will soon ask the Supreme Court about the “genuine multiple investors” or those having multiple deposits.
These investors would begin getting their refunds after the Supreme Court go-ahead in this regard. While Sebi has not disclosed any official figure for the refunds made so far, Sahara group claims that the total refund so far is just about Rs 1 crore (Rs 10 million).
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Foxed by ghost investors, Sebi seeks foreign help in Sahara case
Sebi has also set up a special team of officers to deal with refunds. An officer on special duty and other dedicated officers may deal with the objections and claims relating to the Sahara properties to be sold and for conducting the sale of the property to garner funds for refunding the investors’ money.
An initial pilot study conducted by Sebi for ascertaining the genuineness of investor documents submitted by Sahara had found that close to 99 per cent of the bond-holders were untraceable. The ratio has not improved much since then, sources said.
Under the pilot programme, Sebi sent out redemption notices inviting claims to more than 21,000 bond-holders but it received less than 300 claims.
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Foxed by ghost investors, Sebi seeks foreign help in Sahara case
While more than 7,000 notices returned undelivered, there was no response in respect of over 13,000 notices.
Sebi had referred these cases and many others at a later stage to Sahara for further verification, but not much headway could be made.
With regard to the pending payment of about Rs 20,000 crore (Rs 200 billion) from Sahara firms, Sebi is of the view that the group has not been able to establish its claims of having repaid this amount directly in cash to investors.
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Foxed by ghost investors, Sebi seeks foreign help in Sahara case
Among others, Sebi had asked Sahara firms to explain payments made by Sahara Credit Cooperative Society (Rs 13,366 crore), Sahara India Commercial Corp Ltd (Rs 4,384 crore), Sahara Q Shop (Rs 2,258 crore), Ketak City Homes (Rs 19 crore) and Kirit City Homes (Rs 44 crore) on behalf of Sahara India Real Estate Corp Ltd.
Similarly, the group has been asked to explain payments of Rs 2,479 crore (Rs 24.79 billion) by SICCL and Rs 2,412 crore (Rs 24.12 billion) by Sahara Q Shop on behalf of Sahara Housing Investment Corp Ltd.
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Foxed by ghost investors, Sebi seeks foreign help in Sahara case
The group was also asked to provide bank statements of these companies to verify the payment claims, but they later said that all payments were made in cash.
It also claimed that such large-scale dealings were possible with its vast network of branches.
Sahara has said Sebi “does not want to understand the spread of our network into 4,700 centres” and the average daily payment at each branch of about Rs 2.5 lakh.