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Back to square zero! - Snehangshu Adhikari - The Sunday Indian
An IIPM Initiative
Tuesday, October 6, 2015

Back to square zero!


As big skeletons threaten to tumble out of the Saradha closet and Bengal’s feckless political parties blame each other for the mess, the defrauded are being left to count their losses, reports Snehangshu Adhikari
SNEHANGSHU ADHIKARI | Issue Dated: May 12, 2013, New Delhi
Tags : Saradha scam | West Bengal | Mamta Banerjee | CPM | CFAI |

The Bengal Post closure notice was issued on the first day of April. It was a ‘joke’ all right, but for 28-year-old Supriti Gupta (name changed), it wasn’t funny at all. A month on, the young sub-editor hasn’t got over the shock. She had quit an established Kolkata-based English language newspaper with a history of over a hundred years to join The Bengal Post. The leap into the unknown ended in disaster for her and 1400 other employees of Saradha Group’s bloated and directionless media division.

These people worked for a wide array of publications and television channels: Sakalbela, Azad Hind, Tara News, Tara Muzic, Kalam, Tara Bangla, Prabhat Barta, Paroma (magazine) and the Seven Sisters Post. They were rendered jobless overnight because the man who ran the show, Sudipto Sen, realising that time was running out on his chit fund scam – and quite fast on all fronts– decided to post-haste close shop of 'group' companies, if one may use the term. Freelance journo and former Bengal Post staffer Sandhya Sutodia gave vent to her despair in a blog post. “The focus right now is to get our dues,” she said. “We have become the butt of ridicule. Media houses do not take us seriously. I am back to square one.” Square zero seems to be a more befitting term for almost all those affected by this mammoth financial crisis.

The present crisis has affected the employees of ten media products – newspapers and television channels – that Saradha had launched or acquired since 2010. But the worst hit are the about 2.5 to 3.5 lakh people who worked as collection agents for Saradha, and almost double that was the number of investors.

The suicide toll has already reached five since the news of the scam broke. Meanwhile, a second FIR has been filed against Kunal Ghosh (ex-CEO of Saradha’s media wing whose monthly salary was Rs 15 lakh) by employees of a closed Bengali daily, Sakalbela, for non-payment of salaries.

The case took a new twist when Sudipta Sen sent an 18-page letter to the CBI, naming 22 politicians (from Bengal, Assam, Odisha and Jharkhand), including two influential MPs of the ruling TMC, Kunal Ghosh and Srinjoy Bose. Not surprisingly, both the MPs denied the allegation.

Sen has said that getting into the media business was his greatest mistake. He has claimed that Kunal Ghosh (who allegedly forced him to take the media plunge) and Srinjoy Bose assured him that his business interests would be protected "as they have a very close connection" with Chief Minister Mamata Banerjee. CPM has dismissed Sen’s confession as an eyewash and an attempt to shield the state’s topmost politicians. During his interrogation, Sen is reported to have revealed the names of at least four key TMC ministers, besides a former minister in the Left Front government.

Established in 2006, Saradha Group expanded quickly. “I started my business not to become a rich man but to establish the ideals and ideologies of Maa Saradha, to help poor and needy people of rural and semi-urban areas of India,” Sen wrote in his letter to CBI.

However, the reality was just the opposite. He promised huge returns to the investors ranging from 15 to 50 per cent, and lured agents by committing to pay commissions ranging from 15 to 40 per cent. The group allegedly collected hundreds of crores of rupees particularly from people in villages and small towns, not only in Bengal, but also in Odisha, Jharkhand, Tripura and Assam.

Talking to the media, Saradha agents from East Midnapore alleged, “From our district alone, the Saradha Group collected more than Rs 100 crore by exploiting the post-Nandigram situation.”

“He would come to our agent meets quite regularly and motivate us to enhance our collection,” Ramapati Gayen, a duped investor told TSI. “He used to talk a lot about several future development projects in Nandigram. To win our trust, he would take us to his various ongoing projects. They were fake.”

It has been reported that in Chinsurah, Sen faked a full motorcycle factory to mislead thousands of depositors into believing that he had a running factory and they could trust him with their money. Reportedly, the downfall of the Saradha empire started in 2010, the year Sen launched his media business. That year, SEBI initiated an investigation into Saradha Realty after it received a reference from the director of Economic Offences Investigation Cell of the West Bengal government. The group, however, managed to delay the process by either submitting voluminous documents or by avoiding SEBI’s call.

Soon after Saradha went bust, Mamata Banerjee, blamed the 34 years of Left Front rule for the mess. At the same time, the involvement of TMC leaders has also come to the fore. During interrogation, Sen claimed that even CMO staff was paid monthly salaries by Saradha. Allegedly, the topmost leader of TMCP (TMC’s student wing) Shanku Deb Panda was also on Saradha’s payrolls. Former Chief Minister Buddhadeb Bhattacharya claimed, “I was in power for ten consecutive years, but never allowed such elements. But now the present government has become synonymous with chit funds.”

That begs the question: how then did Saradha start its business in 2006? Way back in 1994, the then state finance minister had confirmed that 64 chit fund companies were collecting money unethically In Bengal. Mamata (then a Congress MP; TMC was yet to be formed) wrote a letter to the then Union finance minister Manmohan Singh seeking a CBI investigation to the matter. Presently, she does not seem to be in favour of a CBI inquiry. And the Left Front government, which passed a Bill in 2003 but dragged its feet on giving it teeth, is equally to blame.

With its ministers under a cloud, the Bengal Government seems all set to pass a new Protection of Interest of Depositors in Financial Establishments Bill, 2013, replacing the earlier one. Sources say that this new bill will take retrospective effect and also allow confiscation of properties. However, CPM has already expressed its misgivings, particularly on the provision for retrospective action.

“It’s the apathy of the Union government that has directly or indirectly paved the way for such Ponzi schemes,” says Prof. Partho Ghosh of Jadavpur University. “The commissions paid to agents by these chit funds are nothing compared to what agents of government-run small savings schemes get.” He adds: “Kisan Vikas Patra used to be the most popular for small investors as savings used to double in only 113 months. But it suddenly vanished. Now the people have mere options like National Saving Schemes, but here they forced to block their money for at least five years. Through such Saradha and Rose Valley (also being watched by SEBI), people could apply for loans at any time.” With each passing day, the Saradha case is getting murkier. Arpita Ghosh, claiming to be a cousin of co-accused Debjani Mukherjee, has claimed that her sister resigned as Saradha executive director in January and that she has not been paid any salary since November 2012. Arpita, who joined Saradha’s Siliguri office in 2011, has said: “I am in the same boat. I have not been paid any salary for the last six months.” She has blamed Debjani’s “tragic fate” on Sen’s unscrupulous machinations.

The industry body CFAI (Chit Fund Association of India) has meanwhile objected to the use of the term ‘chit fund’ in relation to the Saradha financial fraud. It has asserted that none of the entities of the Kolkata-based group was operating as a registered chit fund agency. CFAI has said that a chit fund has to carry the word ‘chit’ as part of their name and as per the law, a chit fund company is not allowed to accept deposits from the public and can only take subscription amounts from the members. However, Saradha Group accepted deposits from investors and worked as a multi-level marketing outfit.

Notwithstanding that, the fact is that the worst affected are the investors. “Did we ask them to deposit their money there?” says Mamata Banerjee. While that may sound an untempered statement – what will be Mamata if not for these? – she has also gone the mile in attempting to provide some respite for the duped investors by creating a Rs.500 crore relief fund and concurrently raise taxes on cigarettes and petrol. "Smoke a little more to help the investors," said Mamata, while announcing the tax. Well, that's trademark Mamata for you... And the only group smoking more right now seems to be the CPM coterie, with a lot of smoke coming out of their years.

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Posted By: Pranab Kanti Datta | Agartala | May 5th 2013 | 23:05
Your special report on Chit fund scam in West Bengal is presented with real facts from the past. Grounds for mushrooming of elements like Sudipto-Debjani has been made during the last 35-40 years of poor infrastructure for sustenance. Employment opportunity in Bengal was marginalized by the labour friendly, anti- establishment forces that ruined Bengal in the name of ruling. Today Bengal is the state with highest number cases in Debts Recovery Tribunal. The unending material greed with minimum earnings, unemployed confused youths, unscrupulous leadership and ill defined financial regulations concocted for numerous chit funds not in Bengal but throughout the country. The politicians are playing their unique game of passing the buck. The investors need more wisdom to identify the Cheat fund companies and keep away from them.

Issue Dated: Apr 27, 2014