The government refused to act despite advance financial intelligence warnings
Fresh evidence reveals that the government may have failed to act against the Sahara group for duping small investors in fraudulent schemes despite intelligence gathered early last year of large fund movements in overseas accounts valued at well over GBP 203 million (at current exchange rates), connected to companies associated with its Managing Director and Chairman Subrata Roy.
Mr. Roy was charged by the SEBI in June 2011 and by the RBI in August 2011 for unauthorised raising of funds from the public.
A classified note originated by the Financial Intelligence Unit (FIU), Department of Revenue, Ministry of Finance on March 30, 2012, documenting “spontaneous information” shared by a foreign FIU, says that “Intelligence indicates that Subrata Roy Sahara, DOB 15/06/1948, has control over a financial account with a U.K. financial institution in the name of Aamby Valley (Mauritius) Ltd, account number 539469 and the account holder intends to transfer GBP 8 million from this account to SG Hambros Bank (Chanel Islands) Ltd, number 0464163 in the name of Aamby Valley (Mauritius) Ltd and a further GBP 190 million to Bank of China, London Branch account number 781505-0220-000 in the name of Aamby Valley (Mauritius) Ltd.”
The note further states, “Intelligence indicates that Aamby Valley (Mauritius) Ltd transferred GBP 50,00,000.00 to Force India Formula One Team Ltd as a sponsorship advance for the Sahara Force India Team… Aamby Valley (Mauritius) Ltd received substantial funds from Sahara Grosvenor House Hospitality Ltd held at Bank of China on the 21/10/2011 and 28/11/2011.”
Mr. Roy also “recently purchased Grosvenor House Hotel on Park Lane, London.”
Despite this evidence of a colossal fund base, used generously to buy hotels and fund Formula One racing, two Sahara Group firms, Sahara India Real Estate Corporation Ltd and Sahara Housing Investment Corporation Ltd, have been pleading for more time from the Supreme Court to refund Rs. 24,000 crore to their investors with 15 per cent interest.
“It is surprising that this FIU note of suspicious transactions, originated after SEBI had passed an order against Sahara and a pending case in the Supreme Court, did not set off any alarm bells or trigger any investigation or freezing of accounts, especially since Sahara had no other source of funds other than what was fraudulently gathered from small investors,” advocate and social activist Prashant Bhushan told The Hindu.
The note also states that “companies associated to Subrata Roy Sahara are being investigated by Indian authorities in connection with the issue of 2G mobile phones licences.”
According to the note, “Intelligence indicates that Subrata Roy Sahara is linked to the Samajwadi Party and the party’s chairman Mulayam Singh.
Mr. Roy, MD and Chairman, Sahara India Pariwar, founded in 1978, have been found “linked as 100 per cent beneficial owner to Aamby Valley (Mauritius) Ltd, registered on 05/10/2010, Aamby Hospitality Services Ltd, registered in the U.K. on 22/11/2010 and Sahara Grosvenor House Hospitality Ltd, also registered in the U.K. on 15/04/2001.”
The note goes on to list details of 12 bank accounts held in the names of linked companies in different banks in Mauritius, U.K., Singapore, London and Jersey. A UBS AG bank account AC 539469 in the name of Aamby Valley (Mauritius) Ltd was opened on 04/02/2012; UBS AG bank account AC 539500 in the name of Aamby Hospitality Services (U.K.) Ltd was opened on 11/02/2011; UBS AG bank account AC 539516 in the name of Sahara Grovenor House Hospitality Ltd was opened on 15/02/2011; UBS AG bank account AC 540321 in the name of Sahara Grovenor House Hospitality Ltd No. 2 was opened on 23/08/2011; Sahara Hospitality Support Services Ltd, held with Barclays Bank AC 91189300 in Singapore; Force India Formula One held at BNP Paribas Bank in London AC 40832801; Fidelity National Title Company held at Bank of America AC 1257033414; Aamby Valley (Mauritius) Ltd held at SG Hambros Bank (Channel Islands) in Jersey AC 0464163; OT Global Holdings Ltd held at Barclays Bank in Singapore AC 91189500; Millbank Tweed Hadley & McCloy clients account 25005103 held at Natwest Bank in UK; GH Hotel Operating Company Ltd AC 26558130 held at Natwest in the UK; Sahara Worldwide Ltd AC 7365856 held at Barclays Bank in London; and Sahara Worldwide Ltd AC 7365836 held at Barclays Bank in London.
The note further reveals that Millbank Tweed Hadley & McCloy provides legal services for Mr. Roy in the U.K. and Fidelity National Title Company holds funds in connection to the acquisition of a hotel in New York.