Business as usual for Bengal’s ponzi sharks
UNFAZED Nearly 200 unregistered groups still operate in the suburbs of Kolkata without any paper trail despite the highprofile arrests of TMC MPs Tapas Paul and Sudip Bandyopadhyay
KOLKATA: On the outside, a stack of dilapidated buildings in Kolkata’s bustling central district of Burrabazar look closed for business. There are hundreds of cart-pullers with heavy wares rushing past, vying for space with old yellow taxis on the city’s famously narrow roads. But a peek inside would reveal many of these buildings acting as headquarters of some of West Bengal’s top chit-fund companies, which are in the news for laundering thousands of crores belonging to mostly the rural poor.
Call it deposit mobilising, ponzi bubble or chit fund, West Bengal has emerged as the capital of this business in the last decade.
The central government said in 2014 that 73 out of 87 such entities under investigation were based in the state. The firms had collected money from ordinary people by promising high returns.
The four main players in the business are — the Gautam Kundu-owned Rose Valley Group, the Sudipta Sen-owned Saradha Group, the Anukul Maitiowned I-core Group and the Parmatha Manna-owned MPS Group. All four owners have been arrested.
The first two have been in the news because of senior politicians from the state associated with the financial scandal — some of chief minister Mamata Banerjee’s top aides and ministers have been arrested in the cases.
But there are nearly 200 other groups that aren’t even registered with the Registrar of Companies (ROC) and operate from nondescript offices in the suburbs of Kolkata and the districts.
When officers from the Serious Fraud Investigation Office (SFIO) started probing these entities a few years ago, they were in for a shock. Many people listed as directors of chit-fund firms were tending to cattle in the fields, catching fish in village ponds and bathing in them. Some promoters of these companies would often appoint divers, cooks and domestic helps as directors in these companies.
“Recently, we identified Paras Plantations, a company that used to run from the biggest red light area in Kolkata, Sonagachi and target sex workers to mobilise deposits,” said an official of the SFIO. The SFIO — the investigation arm of the corporate affairs ministry —said in 2015 that chit fund companies spanned fields such as media, entertainment, television channels, real estate, hospitality sector, food products and education, among others. “As per our estimates, the total deposits accumulated by these chit fund entities only from West Bengal is well above ₹75,000 crore, which is roughly around 25% of the total accumulated debt of the state government as on the last financial year of 2015-16,” said an SFIO official associated with the investigation process.
However, he added that the actual deposits might be much higher than the calculation. “A majority of these deposit accumulations were made in cash without any paper trail. So it is impossible for us to calculate the exact figure of deposit accumulated,” the SFIO official added.
Just about anybody close to the promoters would be entrusted with the job of mobilising funds and being the custodian of the money.
“Barring one or two who have their offices in the state capital, most of them are based mainly in the North 24 Parganas, South 24 Parganas, Malda, Murshidabad and Birbhum districts,” said an SFIO official.
These entities would often advertise their schemes in small classified advertisements in local, vernacular dailies to avoid being noticed by the regulatory agencies. They would lure people by promising returns as high as even 30%.
The Rose Valley group alone accumulated public deposits of around ₹15,000 crore. Kundu was arrested by CBI on March 25, 2015. The MPS Group collected deposits worth ₹4,000 crore illegally from public. Manna was arrested on September 26, 2014. The Saradha Group collected around ₹2,500 crore. Sen along with associate, Debjani Mukherjee, was arrested from Kashmir by a special investigation team of Bidhannagar Police Commiserate, then headed by the current Kolkata Police Commissioner, Rajiv Kumar, April 23, 2013.
The I-Core Group is estimated to have accumulated ₹500 crore from the market. Maiti was the last among the four to be arrested on April 16, 2015.
“Despite having lower deposit accumulation, the Saradha Group was more in the limelight because of two reasons — Sen’s opening and purchasing of different newspapers and TV channels, and his close association with top Trinamool Congress leaders,” pointed out a senior political analyst.
It is only in the last few months that high- profile arrests connecting to Rose Valley like that of Trinamool Congress Lok Sabha member Tapas Paul and Sudip Bandyopadhyay has been made.
“Kundu kept a lower profile compared to Sen and at least made some investments in terms of real estate and hence the real focus came to limelight at a later stage,” said the analyst.
With the Reserve Bank of India having already handed over a list of 194 entities to the West Bengal government for follow-up action, the SFIO is also gearing up to start probe against these dubious firms. The central bank is also preparing to launch a massive awareness drive cautioning the public about these entities. Rose Valley MPS Group Saradha Group I- Core Group
A majority of these deposit accumulations were made in cash without any paper trail. So it is impossible for us to calculate the exact figure of deposit accumulated.
Kunal Ghosh, Srinjoy Bose, Madan Mitra, Tapas Paul and Sudip Bandyopadhyay
194 new ponzi entities are now active in West Bengal as multi-level marketing and plantation companies