Deprecated (16384): The ArrayAccess methods will be removed in 4.0.0.Use getParam(), getData() and getQuery() instead. - /home/brlfuser/public_html/src/Controller/ArtileDetailController.php, line: 150
 You can disable deprecation warnings by setting `Error.errorLevel` to `E_ALL & ~E_USER_DEPRECATED` in your config/app.php. [CORE/src/Core/functions.php, line 311]
Deprecated (16384): The ArrayAccess methods will be removed in 4.0.0.Use getParam(), getData() and getQuery() instead. - /home/brlfuser/public_html/src/Controller/ArtileDetailController.php, line: 151
 You can disable deprecation warnings by setting `Error.errorLevel` to `E_ALL & ~E_USER_DEPRECATED` in your config/app.php. [CORE/src/Core/functions.php, line 311]
Warning (512): Unable to emit headers. Headers sent in file=/home/brlfuser/public_html/vendor/cakephp/cakephp/src/Error/Debugger.php line=853 [CORE/src/Http/ResponseEmitter.php, line 48]
Warning (2): Cannot modify header information - headers already sent by (output started at /home/brlfuser/public_html/vendor/cakephp/cakephp/src/Error/Debugger.php:853) [CORE/src/Http/ResponseEmitter.php, line 148]
Warning (2): Cannot modify header information - headers already sent by (output started at /home/brlfuser/public_html/vendor/cakephp/cakephp/src/Error/Debugger.php:853) [CORE/src/Http/ResponseEmitter.php, line 181]
LATEST NEWS UPDATES | In story of Saradha's crores, Bengal's forgotten hundreds -Madhuparna Das

In story of Saradha's crores, Bengal's forgotten hundreds -Madhuparna Das

Share this article Share this article
published Published on Apr 28, 2013   modified Modified on Apr 28, 2013
-The Indian Express


West Bengal is not new to chit fund scams. What is unique to the Saradha Group scandal is how it targeted the poorest and the most marginalised, leaving them on the verge of devastation. From 17-year-old agents who raised money from depositors to 50-year-old widows who invested money, the Saradha Group didn't discriminate in roping them in. Since the house of cards started collapsing, two agents and two investors have committed suicide, while two investors have tried to kill themselves.

***

Kazi Saifuddin is to appear for his Class XI final examinations soon. But the 17-year-old student of a private school in Howrah has had little time to study as he has been running around all week as part of protest demonstrations against Saradha.

He is among the hundreds of agents who worked for the company raising money from thousands of small depositors. On April 20, he joined 5,000 others in a demonstration outside the Trinamool Congress headquarters in Tiljala, seeking relief and return of the money he had collected from the depositors.

With him were small traders, farmers, housewives, those belonging to lower middle class families and other minors-all of whom comprise the largest chunk of Saradha Group's victims.

The investor profile of this financial disaster differs significantly from a similar chit fund scam and collapse of the early '80s in West Bengal, involving Sanchayita Investments. While Saradha's deposit base is largely the interiors of Bengal, Sanchayita's was largely the urban middle class, including salaried people, government officials as well as many others who were reasonably well off.

***

The selection of agents, a crucial link in the chain, was done very carefully by Saradha. Those picked were generally ones who wielded influence in their locality and in whom people had confidence.

Saifuddin was 15 when he was brought into the company by his father Kazi Rizaul Karim, a Saradha agent who had been working for the company for the past three years. Karim encouraged his son, saying Saradha paid "handsome commission and lucrative gifts".

Since the news of the company going bust spread, his father has fallen ill. "He is critical now. The investors have gheraoed our house and also stormed in, breaking doors and windows and damaging furniture. They want their capital amount back," says Saifuddin. He has taken to returning home late in the night and leaving before daybreak to escape their wrath.

Calculating their loss, Saifuddin says, "Investments to the tune of Rs 50 lakh by our investors are due for maturity. We could only pay Rs 80,000 by selling some jewellery. We don't know where the rest of the amount will come from."

A 'team leader' of the Dhakuria branch of the Saradha Group in Kolkata, Prabhash Roy, says age was never a bar in hiring an agent. "A minor or a major, anybody could be appointed as an agent. We had several minor agents under us," he says.

***

Roy, who started out as an investor and turned an agent in 2010, had trained Saifuddin for a few months. "I invested Rs 15 lakh in the company, which was nearing maturity. But who knew this disaster was going to happen? I am now penniless and I am not able to return home. I am spending sleepless nights at railway platforms," he says, breaking down. "We could not assess the impending doom." The money he owes to investors in maturity totals nearly Rs 1 crore.

There were two main ways investors were drawn in, says Roy-through holiday packages to foreign countries (the money, it was promised, would be returned if the depositor didn't travel); and allotment of flats or land. Money was collected through recurring deposits, starting from Rs 100, and the interest rate promised ranged from 16 per cent to 35 per cent (double and triple the interest offered by banks). The tour and travel route was a clever way of escaping SEBI attention.

Rahim Dhali, another investor turned agent, operating in Magrahat in South 24 Parganas, says, "We never analysed the model in which they operated. The company initially instructed us to invite deposits in short-term schemes and later launched long-term schemes of nine to 15 years, with unrealistic returns up to 50 per cent. All of us were cheated." Dhali, who used to report to Baruipur branch in South 24 Parganas, owes Rs 80 lakh to depositors.

***

What precipitated the current crisis was the sudden closure of a number of Bengali audio-visual channels owned by the Saradha Group. On April 15, Bengali New Year's day, viewers who tuned into Bengali music channel Tara Muzik witnessed an unprecedented spectacle. Anchors of the channel and artistes called in to present a new year programme shed tears live on camera, announcing a "crisis of survival".

On April 16, the first FIR was lodged against the group by Arpita Ghosh, a close aide of Chief Minister Mamata Banerjee. Ghosh was reportedly hired by the Saradha Group for a new media venture and complained that she had not been paid for three months. Soon, the number of complaints swelled to seven, and CMD & CEO Sudipta Sen went on the run. On April 23, he was held from Sonmarg, on the Srinagar-Leh highway.

***

The Saradha Group hasn't been the only chit fund to invest in the media-seen as a means to acquire clout and to get close to power centres, essential to operate in the grey zone these chit fund firms function in. Till they all shut down dramatically and in quick succession, Saradha owned 18 media organisations, most of them located in Kolkata, some in the Northeast.

Another popular route for diversification of funds was the Tollywood film industry, with celebrities brought in to patronise companies and its events. The Income Tax Department estimates that at least 20 to 30 per cent of the money collected by chit funds is diverted to the Bengal film industry.

***

One important reason for chit funds mushrooming in West Bengal is the absence of easy access to banks and other financial institutions. According to an estimate of the state Finance Department, of the 37,000 villages in the state, nearly 27,767 have no bank branch. As per official records, the credit-deposit ratio of banks in the state had fallen 100 basis points, to 64 per cent, between March 2011 and 2012, due to high interest rates, slower economic growth and absence of fresh big-ticket investments in the state.

According to Anindy Sen, an economist and IIM-Calcutta professor, "This scam has left a deep impact on small savings deposits in the state. The small savings run the economy to a great extent here... This scam will impact the rural economy as well. Due to the existence of these companies, the element of greed comes. That is why people start investing in Ponzi schemes, rejecting the 8 to 9 per cent interest rate of organised banks. The greed is aggravated with the political backing behind these companies."

***

The true magnitude of the chit fund scam is yet to unfold. Market watchdog SEBI has alerted the West Bengal government about five companies whose total deposits of about Rs 7,000 crore are at stake. The investors' interests are not protected, they categorically told the government. The RBI, on the other hand, estimates the size of deposits collected by several hundred chit fund companies to be around Rs 17,000 crore. The Income Tax Department too carried out a survey and claimed that almost Rs 70,000 crore have been raised by over 800 such companies in an unauthorised manner in West Bengal. One owner of a chit fund company was found to have 25 imported cars, some IT officials said as an aside.

***

Given this disparity between the depositors and those at the other end of the spectrum, and the coming panchayat polls, the Saradha scandal has assumed a greater dimension. That explains partly the haste with which the beleaguered Trinamool government, many of whose leaders are accused of links with the Saradha Group, has announced a commission of inquiry and announced a relief plan of Rs 500 crore.

Should more such companies collapse, which is being predicted, the state may be headed for severe political, economic and social fallout. Political circles now believe the panchayat polls, already caught in a dispute between the state government and the State Election Commission, will not be held on schedule.

SARADHA EMPIRE

150 companies, deposits totalling Rs 1,200 crore. Apart from its 18 media outlets, now all shut, the major companies in Saradha Group are:

Saradha Realty Pvt Ltd; Saradha Construction; Saradha Tours and Travel; Saradha Exports; Saradha Agro; Saradha Printing and Publication Pvt Ltd; Saradha Ad Agency Pvt Ltd; Saradha Properties Pvt Ltd; Saradha Biogas Production Pvt Ltd; Saradha Multipurpose Himghar Pvt Ltd; Saradha Livestock Breeding Pvt Ltd; Bhasank Foods Pvt Ltd; Global Automobiles

SEBI FINDINGS

From its april 23 report:

* Towards end 2012, Sudipta Sen submitted in all 268 cartons of documents to SEBI in batches. SEBI found the papers deficient, irrelevant. Its report called this a "strategy to avoid submitting specific documents" and "to delay proceedings".

* SEBI says while Saradha was believed to have acquired land in 31 locations, it submitted information pertaining to just five of them.

* The report raises doubts about Saradha entering into sale of agreement for two same-size flats, in the same building, on same day, with two different people for hugely varying prices

The grey world of a blue-eyed boy

FROM his blue eyes to his "nerves of steel", his numerous houses to his "multiple wives", his mystery lineage to the name of his father-almost everything about Sudipta Sen is a matter of conjecture and now feverish gossip.

His former associates recall seeing him earlier with black eyes, till he reportedly went in for cosmetic surgery in Singapore to lend them a bluish tinge, apparently to stand out.

The physical makeover only reflected how far Sen, who started his career in the early '80s as an employee in a firm dealing in land and property, in Behala, on the outskirts of Kolkata, had travelled from his past. Sen would leave the Behala firm for a company called Saradha City dealing in real estate in Bishnupur area of South 24 Parganas in the late '90s. The owner, now recalled just as "one Karmakar", died in mysterious circumstances and Sen inherited the property.

Sen founded the Saradha Group in 2001. That man and that firm-now a conglomerate, with over 150 companies-are behind a chit fund scam that's currently rocking West Bengal and has left the Mamata government shaken.

Sen also took great care to ensure his past remained hazy. In the passport that the police seized after he went underground (issued on January 5, 2004 with his date of birth as March 30, 1959), his parents' names are recorded as Nripendra Narayan Sen and Ranu Kana Sen.

While his address on the passport is 'A/5, Survey Park, Santoshpur (on the southern fringes of Kolkata)', one Shankar Sen has been verified to have been staying there till he left after trouble with neighbours.

According to police and business sources, while he had taken over Saradha City, Sen's rise started from Uttar Pradesh in 2004, when he decided to launch his chit fund operations with attractive schemes and high returns. He did well and spread his interests to real estate.

Sen, according to the police, later saw an opportunity to raise money from rural Bengal, where there is less awareness about the risks of chit fund schemes. Here, his "asset-based" firm began to advertise real estate projects. He also offered "holiday packages" in Singapore, Switzerland and the UAE. His schemes were based on raising recurring deposits, in which investors would give small amounts of money ranging from Rs 100 to Rs 1,000.

According to officials, Sen took another precaution to ensure he wasn't caught. He rented a large number of premises and kept switching residence. At least five properties have been located in the elite Salt Lake area alone that he used.

Chief Minister Banerjee added gist to the rumour mills recently by saying she had heard that Sen had been married thrice, which she described as a "ploy" to siphon off money in the name of paying alimony to divorced wives.

What even the police vouch for is that Sen had to have nerves of steel for the racket he allegedly pulled off. The talk at the Bidhannagar East police station is all about him registering a blood pressure of 132/80-near perfect-before being produced before a judge last week, even as people bayed for his blood outside the court building.

Perhaps Sen knew this day would come to pass. The man who was apparently quite conscious of his looks displays no photograph of his on the company's website. The 'Message from the CMD' instead bears the photo of a big empty chair, with a speech bubble: "Saradha Group of Companies has brought into (sic) a new renaissance."


The Indian Express, 28 April, 2013, http://www.indianexpress.com/news/in-story-of-saradhas-crores-bengals-forgotten-hundreds/1108543/0


Related Articles

 

Write Comments

Your email address will not be published. Required fields are marked *

*

Video Archives

Archives

Im4Change.org हिंदी वेबसाइट का परिचय. Short Video on im4change.org...

Im4Change.org हिंदी वेबसाइट का परिचय. Short Video on im4change.org...

"Session 1: Scope of IDEA and AgriStack" in Exploring...

"Session 2: Farmer Centric Digitalisation in Agriculture" in Exploring...

"Session 3: Future of Digitalisation in Agriculture" in Exploring...

Objectives | About Us | Workshops | Disclaimer
share on Facebook
Twitter
RSS
Feedback
Read Later

Contact Form

Please enter security code
      Close