Falling Pyramids

Chitty Chitty Scam Scam

TMC: The political party with the most obvious chit fund links, it is no secret that TMC came to power relying heavily on campaign money from groups like Saradha and chit fund-operated print and electronic media.
Fallout: Having broken just before the panchayat polls in Bengal, the scandal, involving hundreds and thousands of rural voters, is bad news for the party

Congress: Party high command was made aware of the “dubious” nature of chit funds but UPA-II only had its corporate affairs ministry go after Saradha and others after TMC pulled out.
Fallout: While the Centre is passing the buck to the state, questions will be asked about why it took SEBI so long to file charges.

CPI(M): Bengal chit funds flourished during 34-year Left regime; one of Saradha’s key accused has Left links
Fallout: If probes against chit fund firms go deep, Left can be hit; but it can legitimately claim not to have relied on fund money for campaigning or media coverage, unlike TMC

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Amidst all the accusations, insinuations, vehement protestations of innocence and perceived shifting of blame of recent days that has attended the Saradha Group chit fund scandal in West Bengal, a few questions, directed at the political parties that have shaped the state’s destiny in recent decades, can be avoided no more.

While not taking our eyes off the Trinamool Congress’s proximity to the scam, this has to be asked of the CPI(M), which was in power in Bengal for 34  years. Why were dubious chit funds allowed to mushroom in the state for more than three decades even after the notorious collapse of the Sanchaita chit fund as far back as the early 1980s, when thousands of small investors were duped out of their money?

As the lid blew off the Saradha depo­sit mobilising scam, Mamata Banerjee’s people’s party has been facing the most insistent queries. It will be interesting to see how they explain the curious phenomena that each of the chit fund-backed media had been, without fail, Trinamool mouthpieces. Chief among them was print and broadcast units of the Saradha Group, against which the CM has now announced a criminal probe involving a commission and a special investigation team.

It also has to be asked why, considering ponzi schemes are on any list of questionable businesses, did it take the Serious Fraud Investigation Office of the Union corporate affairs ministry so long (till October 2012) to probe dodgy chit fund companies in Bengal? Many point to the politically significant fact that such proceedings waited till the Trinamool pulled out of the UPA-ii government. It is well-known that TMC MP Somen Mitra wrote to Prime Min­ister Manmohan Singh to alert him of dodgy chit funds as early as 2009.

Youth Congress actvists protest against the scam in Calcutta

Sources told Outlook that the corporate affairs ministry’s decision to go after Bengal’s chit funds, and Sen’s Saradha Group in particular, “has roots in the Congress in the Northeast”. They claimed that Sen had financially aided a couple of former central ministers from the Congress who wanted to dethrone Assam chief minister Tarun Gogoi. There are now dark insinuations linking matters to a top Congress politician who runs a key portfolio in the Manmohan Singh regime.

When asked about the questionable practices of chit funds in an earlier interview to Outlook, Ghosh had asserted with breezy confidence that “not all chit fund companies are fraudulent”. Today, he sings a different tune, making nervous statements that he had no knowledge of Saradha’s dubious dealings, even its source of funds.

Ghosh may well claim innocence, but it is an open secret in Bengal that all major political parties—TMC, Congress and the Left—have been aware of the existence of these dubious non-banking financial institutions for decades. That the aam aadmi were being cozened out of their hard-earned, often meagre, life’s savings and lured into investing it with false promises of big returns was not news to our politicians.

Sham deposit mobilising schemes, in fact, have had a particular appeal in West Bengal, which witnessed a flight of industry dur­ing Left rule. Its economically immiserated people have few options for inc­­ome and investments, and are easy prey for swindlers of all shades. And history points to the notorious San­chaita incident during Left Front rule, when investors were duped out of their money. Indeed, at this moment this ske­leton from the Left’s past has bec­ome the sole—if feeble—Trinamool defence.

After the scandal broke with the sudden force of a nor’wester, Mamata in a public address squarely blamed the erstwhile Left Front regime for the mushrooming of fraudulent chit funds, alleging that they had never secured the people against such schemes. Acc­using them of only taking cursory act­ion, Mamata said the Left government had drafted a “weak anti-chit fund bill” in 2003 (when Buddhadeb Bhatt­ach­arya was chief minister) and sent it to the Centre for approval. “Little can be done unless the Centre sends back the bill that the Left Front government had sent for presidential assent,” she said. While her broad-brush claims were dismissed by constitutional experts, who pointed out that it was a bill and not an act, and therefore there was no question of it returning, Left leaders questioned why she had not issued an ordinance against chit fund  firms.

But even that misses the point. Because Mamata’s attack on the Left’s inability to control fraudulent chit fund firms still doesn’t explain why her party banked so heavily on such companies, including Saradha, to bail them out of a funds crunch her fledgling party faced before the assembly elections of 2011, when she took on the might of the Left front. CPI(M) leader Gautam Deb points out how the sources of the funds of Mamata’s many helicopter trips across the state during her poll campaign—which naturally cost crores—are still unexplained.

Sudipta Sen, who was arrested by the police on April 23 in Sonmarg, Kashmir, along with associates Debjani Mukh­er­jee and Arvind Chouhan, after a 12-day  cross-country run from the law, reportedly provided the funding for the high-profile distribution of bicycles to girls in Bengal’s Maoist-hit areas.

Interestingly, this is not the first instance of Mamata denying links with former ‘associates’. Her attempt to disown her involvement with Sen—after allegedly tapping him for funds, as well as using his publications and TV channels to air her views during the 2009 Lok Sabha polls and the 2011 assembly polls—is reminiscent of her spurning the Maoists after allegedly  taking their help (TMC MP Kabir Suman confirms this to Outlook) to fight  CPI(M) goons in Nandigram and Jangalmahal. Trinamool’s successful agitation in those places contributed hugely to its subsequent poll wins. 

In her public address, a desperate Mamata strove to outdo herself in earnest denunciation. Not only did Mamata say she was clueless about the nefarious dealings of the Saradha Group, not only did she claim to not have any inkling of the source of Sen’s funds, she also went to the extent of questioning Sen’s character. “I have heard that he has three wives. Such people often transfer property in the names of wives before divorcing them. After serving a jail term, they ret­urn to enjoy life with their ‘divorced’ wives,” she said. Meanwhile, in an 18-page justificatory letter to the CBI wri­tten on April 6, Sen accused TMC and Congress leaders of using him to make money, blackmailing him, and for­cing him to buy loss-making companies.

There seemed to be few takers in Bengal for Mamata’s excoriation. Anger at the outrage spread from the streets of Calcutta to all over Bengal, with angry mobs of both duped investors as well as agents (many of whose lives are still in danger) vandalised Saradha offices and came out in droves to demand justice and the return of their funds. Fingers were pointed at the Trinamool too, for many depositors said they invested in Saradha primarily because of the group’s perceived proximity to the governing party.

Asked about their own role in allowing chit funds to flourish, CPI(M) leader Mohammed Salim told Outlook: “Not a single top CPI(M) leader can be named  in connection with any of the chit funds. They may have grown in Bengal as alternative banking institutions which the poor were attracted to for the promised high returns, but our party never used ill-gotten money from such schemes, nor have we ever made use of any media that these groups ran.”

But the old question—why criminal proceedings had not been initiated against chit funds during the Left Front’s long tenure—lingers unanswered. It is also perhaps an indication of a certain level of complicity. For some Left members are believed by many to have associated with chit funds—even with the Saradha Group.

Whatever strategy Mamata may employ to distance herself from the Saradha fiasco, instances of bonhomie and dependence are too well-documented for her to wish away—especially the Trinamool-friendly Saradha media shepherded at the top by a TMC MP himself, popular notions of Saradha shoring up the party coffers in time of need, and finally Sen’s letter to the CBI, where he levels charges against several senior Trinamool leaders.

It has to be ensured that a crisis that has brought misery upon thousands is never repeated. And the sobbing chorus of the Saradha tragedy ask a final question: should the Centre cynically wait for a politically opportune mom­ent to investigate and initiate proceedings against crimes of this magnitude?