The owner of New York’s fabled Plaza Hotel has hawked it like the world’s biggest pinky ring to bail himself out of an Indian jail.
To make the situation all the more remarkable, he hawked the house of Eloise along with two other hotels to an investment group that includes a Grammy-winning hip-hop artist and a noted New York sports agent.
Who would have guessed that Pras Michel of the Fugees would go on to become a record-breaking bail bondsman and help spring an Indian billionaire from a New Delhi hoosegow?
The Plaza owner, 66-year-old Subrata Roy, made the tentative deal from Tihar jail, where he has been held for nearly a year in lieu of $3 billion bail for allegedly defying a court order to refund investors in financial schemes that Indian regulatory authorities nixed.
Roy has been described by a biographer as “a larger-than-life image where the dividing line between myth and reality disappears.” He started out with $32 and his father’s Lambretta scooter in 1978 and used deposits as small as a rupee from members of India’s working poor to build a bank that was not exactly a bank.
The multibillion-dollar Sahara Group now employs more than 1 million people. Roy has insisted that he already complied with the reimbursement order.
When the Securities and Exchange Board of India (SEBI) demanded proof, Sahara said there were no banking records, as the reimbursements had all been made with cash raised inside the company. The authorities insisted on some kind of documentation, and Sahara dispatched 127 trucks crammed with what were purported to be the proceeds of 30 million investors.
But after authorities mailed out inquiries to 20,000 of the supposed investors, some 8,000 envelopes came back stamped “addressee unknown.” Sahara said this was hardly surprising, as many investors were rickshaw men and food peddlers and the like. The courts said the company’s records in fact “falsify their refund theory and cast serious doubts about the existence of the so-called investors.”
“All the fact-finding authorities have opined that the majority of investors do not exist,” court papers say.
Some regulators suggested that Sahara was a huge laundry for “black money” from crooked politicians. Sahara insisted that SEBI was a creature of the rich and failed to “understand, recognize poor investors.”
With all the bad publicity, worried investors might have been expected to flood the courts, clamoring for the return of their money. Not one of the supposed 30 million did so.
One possibility is that there were no investors willing to make themselves known, a concern that would seemingly apply more to a politician than a rickshaw puller.
Another possibility is that Roy’s mastery of mass psychology is so complete that all the investors are content, no matter what the regulators and the courts say.
With the investment of as little as a single rupee, the humblest Indian could become associated with a firm that calls itself “the world’s biggest family,” headed by a fabulous figure who hobnobs with Bollywood stars and has had his picture taken with everybody from President Obama to Mother Teresa to Bill Clinton to Prince Charles. Roy sponsored the national cricket team, bankrolled a Formula One car racing team, and resides on a 270-acre wonderland that includes a huge statue of his father, a sugar mill worker now described as “a noted sugar technologist.”
All of India was mesmerized when Roy’s two sons were married on the family estate before 11,000 guests. Roy arranged for 101 “underprivileged girls” of various faiths to be married there that same day. More than 140,000 beggars throughout India were given food as a kind of extension of the wedding feast.
Another 101 couples “who cannot bear the cost of marriage by themselves” have been wed there every year since then. Gifts to the newlyweds include a color TV, a refrigerator, a double bed, a dressing table, jewelry, clothing, and his-and-hers wristwatches, all delivered to their new home.
With so much popular goodwill banked along with the billions, Roy may well have felt beyond the reach of the law. Sahara reportedly submitted to SEBI encrypted computer discs that it said contained all the necessary information on the investors, but it neglected to furnish a password necessary to read them.
Roy—who is known as Saharasri, or Mr. Sahara—failed to appear when summoned before the court at one point, later explaining that his mother had been ill. He continued to insist that the fuss was about nothing, because the investors had been reimbursed.
In March of last year, the court finally ordered Roy jailed, setting bail that was as big as his persona and apparently beyond his immediate means. He went from the 270-acre wonderland to a cell on Ward 4 at Jail No. 3 at Tihar.
In August, Roy announced plans to sell Sahara’s majority share in the Plaza and two other recently acquired hotels, the Grosvenor House in London and the Dream Downtown in New York. He argued that he could hardly make the multibillion-dollar transaction from a 5-foot-by-12-foot cell, and the authorities allowed him to use a meeting room equipped with an Internet connection and video conferencing.
For a time, the interested parties were said to include the sultan of Brunei and vaccine billionaire Cyrus Poonawalla. There was also Mirach Capital, which is led by a rich Indian family, with the other investors including New York sports agent David Sugarman and Pras Michel, who describes himself on Twitter as “founder of a little band called the Fugees.”
But by October, Roy had failed the make a deal and he again was consigned to the tiny cell. He set to work on a new plan in which Mirach would provide Sahara with $2 billion in financing, including a $650 million loan for a year at 11 percent interest, all of it secured by the hotels. Mirach would apparently be just as happy if Sahara defaulted.
“The Plaza is a major trophy asset, and we want to own it,” Sugarman was quoted as saying when his group was attempting an outright buy.
Roy has been allowed back into the prison conference room to work out the particulars. He may soon make bail and return to his palace, where he keeps that Lambretta scooter as a measure of how far he has come.
But the questions about Sahara and the identity of its investors remain.
Back before he was jailed, Roy journeyed to Macedonia and declared he had come to the end of a long quest for a land without corruption.
“This idea was growing in me for a long time, I was looking for a city, a country in the world that is full of love, and respect, a country without corruption, and that I found in Macedonia,” Roy said in a big speech preceded by fireworks in the capital city of Skopje.
Prime Minister Nikola Gruevski was present and certainly was not going to contradict Roy. The U.S. State Department took a somewhat different view that same year.
“Although most of the necessary laws are in place, legal enforcement is weak and the public is skeptical of the government’s willingness to prosecute corrupt officials within its ranks,” a report said in part. “The public generally views the police, courts, higher education, and health-care sectors as the most corrupt public sectors. Instances of selective prosecution have compounded public mistrust of government institutions. Investors and businesspeople have reported being solicited for bribes.”
Roy announced a multibillion-dollar plan to invest in Macedonia. He would build a luxury resort and a dairy product factory. He pledged to erect a 32-foot statue of Mother Teresa in the center of the capital.
In recent months, one of Roy’s sons became a Macedonian citizen. The father may well do the same if persisting questions lead to answers that result in him needing a safe haven.
If he does end up leaving India, he may well be attentive enough to his dramatic self-narrative to ride that scooter to the Lucknow airport.
Meanwhile, the Plaza Hotel of Eloise and legend might as well be a pawned pinky ring.