Sahara and the Super Cops

The real scandal is the erosion of regulatory independence, which leaves the door open for fix-all solutions.

Sahara India chief Subrata Roy arrives at the Supreme Court on Wednesday. (IE Photo: Ravi Kanojia) Sahara India chief Subrata Roy arrives at the Supreme Court on Wednesday. (IE Photo: Ravi Kanojia)
Updated: March 6, 2014 11:06 am

Growing up as I did reading The Hindu’s sports pages, I was taken by the phrase “pyrrhic victory”. Clearly, the paper’s sports desk was too: it made the headlines an impressive number of times, usually to describe dead rubber Ranji matches. Since then, it has been among my unstated goals as a writer to ­deploy the phrase without sounding a cliché. This has been an unfulfilling enterprise in these minimalist times, where victories are hard to come by, let alone those laced with failure.

Until now. Last week, when Seemanto Roy, scion of the Sahara Parivar, read out a message from his father Subrata describing his recent arrest as “the Best ­Honour My Country Could Give Me”, I knew I had my phrase.

At the end of a long, and in the words of the Supreme Court, “outrageously ridiculous” cat-and-mouse game with Sahara, the Securities and Exchange Board of India (Sebi) has won a pyrrhic victory. Between 2009 — when it first sensed something fishy about Sahara’s fund-raising methods for its Prime City project — and now, Sebi has been thrown under the bus by the government and courts alike.

Each time it emerged, bruised but relentless in its pursuit of wrongdoing by the group. When it finally managed to get Roy arrested, the Sahara chief simply turned the tables on the watchdog, suggesting he had surrendered ­“wilfully”, having been made a scapegoat despite his stellar contribution to the Indian economy. In its victorious battle to haul up a major conglomerate for twisting the law, Sebi had lost the plot.

Sebi’s uphill struggle against Sahara underlines why it has been difficult for institutionalists to defend regulatory regimes from the usurpatory and activist tendencies of the “India Against Corruption” movement. Watchdogs statutorily designated to tackle malpractice have been unable to function effectively on account of political interference, not because they need a super-cop to assist them. It is inconceivable Roy would have had the gumption to pooh-pooh the most recent SC directive had he not been guaranteed political support.

Indeed, Sahara built its entire case on the premise that it was the ministry of corporate affairs (MCA) and not Sebi that had jurisdiction over his unlisted companies. The government’s current top solicitor previously lent a veneer of legitimacy to Sahara’s claim, in response to a request fr­om the MCA. The law ministry endorsed this opinion. Even the SC, after its landmark ruling of August 2012 asking Sahara to refund Rs 24,000 crore to investors, slackened off, extending the deadline for payments.

When Sebi’s lawyer argued that the same bench that asked Sahara to refund investors should also decide extensions, none other than the chief justice of In­­dia intervened, refusing to place the la­w­yer’s objection on record. The SC later witnessed the unprecedented spectacle of its …continued »

First Published on: March 6, 2014 12:02 amSingle Page Format
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