The collapse of Saradha Group, promoted by Sudipta Sen, is the greatest threat yet to Mamata Banerjee’s Trinamool Congress regime in Bengal. It could also imperil the finances of millions of people in Bengal, Assam, Jharkhand, Bihar, Orissa and eastern Uttar Pradesh.
Trinamool’s blatant association with the bigwigs of Saradha, which raised vast amounts of money from poor people before collapsing, is a potentially fatal political body blow. Saradha could drag many more Ponzi schemes down with it.
Saradha started operations in Bengal sometime in the mid-2000s. By 2009, when the Trinamool was part of the UPA II regime in Delhi, it had started expanding its vast Ponzi scheme, across Bengal and its neighbouring states. The idea was simple: engage unemployed people to act as agents of the company. These agents would attract depositors by promising fabulous returns which no proper bank or financial institution could hope to match. To burnish his credibility and win political support, Sen launched a raft of newspapers in English, Urdu and Bangla. He also bought into several television channels.
Sen also started wooing the top brass of Trinamool and other parties assiduously. His ambitions dovetailed with those of Trinamool, which dreamt of expanding into ethnically-diverse lower Assam. In a signed confession to the CBI, Sen says that he paid Assam’s minister of education and health, Himanta Biswa Sarma, Rs 3 crore in cash for unknown favours.
Very soon, Trinamool MP Shatabdi Roy, a former film actress, became the brand ambassador of the company. Kunal Ghosh, a journalist, was appointed as the media CEO of the company. Mamata soon appointed Ghosh as a Trinamool MP to the Rajya Sabha. After the Trinamool swept to power in Bengal in 2011, Sen roped in Madan Mitra, the minister of transport and sports, to head the association of Saradha’s agents. And now, Trinamool MP Mukul Roy is trying to salvage Saradha’s media operations.
Saradha’s agents openly flouted their proximity to the Trinamool administration. To many deluded souls, it seemed as if their deposits with Saradha were guaranteed by Bengal’s Mamata government. Then everything went bust. In mid-April, Saradha sacked around 1,200 journalists working for its newspapers and TV channels. By then, Sen had quietly left the state with two other accomplices.
Soon, hordes of depositors from all over the state descended on Kolkata to ask for their money back from an already-bankrupt government. Some despairing depositors killed themselves. Thousands of agents are reluctant to return home, fearing that they could be lynched by the people whose deposits they had taken.
Mamata has tried to wriggle out of her association with Saradha. She has promised to implement a law which the Left had tried to do earlier, which penalises Ponzi schemes.
It won’t wash. There is just too much footage of the chief minister and her cronies hobnobbing with the Saradha brass. In many villages and mofussil towns, local Trinamool hotshots doubled up as Saradha agents. Mamata herself presided over functions where ambulances, two wheelers and bicycles carrying Saradha logos were distributed in rural Bengal.
In the public imagination, Saradha and Trinamool are inseparable: it’s as if the Mamata administration itself has decamped with the lifetime savings of millions of poor people. A conservative estimate of the money siphoned off by the fund ranges from Rs 1,200 crore to Rs 1,700 crore. This newspaper reported recently that similar funds have mushroomed across Bengal from 2005-06. It reckoned that between them, they had raised around Rs 17,000 crore, mostly from poor people who don’t know better.
The central government is investigating several Bengal chit fund companies. These include Rose Valley, RTC, Chakra Infrastructure, Tower Infotech, ICore EService, MPS, Prayag, Rahul, Sunshine, Uro, Vibgyor and Waris.
It is also probing a company called Alchemist Infra. This company belongs to Kanwar Deep Singh, who was made a Trinamool Rajya Sabha MP last year. By 2011, Alchemist allegedly collected around Rs 1,100 crore from people, promising them residential property or debentures, without actually owning such assets. Isn’t it amazing how many Trinamool hotshots are associated with Ponzi schemes?
Saradha’s collapse has triggered panic among folks who have invested with other funds as well. One fund called Sunmarg is now under siege from aggrieved investors. Expect to see a run on these funds. Sahara, among the largest non-bank finance companies in India, is in legal trouble. Saradha’s collapse could also drive its investors towards the exit.
Sen and his companions have been arrested, but even after liquidating all his assets, it is unlikely that his investors can be paid off. Funds were splurged on media and a lot has allegedly gone into the coffers of political leaders.
History provides a bleak outlook. A court-assisted panel is still trying to identify and reimburse the investors of Sanchayani, a Bengal chit that collapsed around 20 years ago. No investor of Sanchayita, which folded in 1980, ever got his money back.
For a while, Trinamool’s ties with Saradha benefited both. Sen’s businesses grew, Trinamool got good press from the chit fund media and politicians allegedly got hefty payoffs. Now that the story has unraveled, there is no easy exit for Sen, his Trinamool cronies and the chit fund crooks of eastern India.
An excellent coverage with the right analysis. Liked reading it thoroughly.
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