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Rediff News  All News  » Business » Bengal singes as chit fund collapses

Bengal singes as chit fund collapses

April 21, 2013 12:07 IST

Congress MP Adhir Choudhury has pegged the loss at Rs 17,000 crore.

Frustrated depositors and agents on Saturday vented their anger by ransacking Saradha offices across West Bengal.

An agent in Durgapur committed suicide  as news of Saradha promoter’s disappearance broke. Depositors had apparently turned up at his door to claim their money.

The incident brought back memories of a similar crisis that gripped Bengal in the 1970s, when the Sanchayita chit fund went bust, leaving thousands in the lurch.

Reports of vandalism and violence poured in from across the state. Agents and depositors went on a rampage in Durgapur, Domjur, Siliguri, Kanthi and in some places there were clashes between depositors and agents.

Agents, who laid siege to the chief minister’s house yesterday, also landed up at the Trinamool Bhavan. Some claimed that proximity to the Trinamool leadership had lent credence to the Saradha Group.

While some claimed that Trinamool Member of Parliament (MP) Satabdi Roy was the brand ambassador, others said that the transport minister, Madan Mitra was the president of one of the employees’ union. Mitra, however, denied any kind of involvement.

The Communist Party of India (Marxist), which was on backfoot after the assault on Mamata Banerjee and Amit Mitra in Delhi, on Saturday found its voice back. CPI(M) leader Mohammed Salim claimed the Saradha promoter, Sudipta Sen, had been given asylum by TMC.

“They have already got hold of him. They are trying to arrive at a deal that could save both the parties (TMC & Sudipta Sen),” he said.

He also demanded that central agencies should take up the case, given the proximity of the state government to the Saradha Group.

The Congress, too, demanded the case be investigated by the Central Bureau of Investigation (CBI). “Many have lost money and jobs. The TMC provided shelter to the chit fund companies. There be a thorough investigation by the Sebi and CBI. We will demonstrate against this on April 23 across the state,” said Pradip Bhattacharya, president, state Congress.

He added TMC come out with a white paper on links with the Saradha Group.

The police said all the steps had been taken so Sen could not leave the country. His immovable properties had been seized and the bank accounts’ debit freezed.

“We have informed all the important terminals on Sen. We have arrested one director, who was on the boards of Saradha Realty and Saradha Printing and Publishing. Efforts are on to catch other directors,” said the police spokesman.

The police has also asked the firm that had developed software for the company to provide back-up data.

The Union minister of state for railways, Adhir Ranjan Choudhury, said the Saradha Group had paid the highest amount for Mamata Banerjee’s paintings.

Mukul Roy, general secretary of TMC,  blamed the Left Front regime for the chit fund fiasco, saying these companies were formed in the earlier regime.

Asked if the government was mulling action against other chit fund companies, Roy said, “We are trying to find a method.” Roy said there was nothing wrong if Mitra was heading any employees’ association.

Saradha Group director arrested

One of the directors of the 'chit fund' company Saradha Group was on Saturday arrested while its chairman and managing director Sudipta Sen was still at large.

"We have arrested Manoj Kumar Nagel who is one of the directors of the company from Bidhannagar. We are also looking out for their chairman Sudipta Sen by keeping a vigil at airport and other places," a senior police official at Bidhannagar Commissionerate said.

West Bengal government has already ordered Sen's arrest. With a huge default in repayments, the Saradha Group is virtually on the verge of collapse.

Pressure on its finances recently forced the group to wind up at least 10 media organisations, including newspapers and television channels it had launched or acquired since 2010-11.

Agents knock at govt door

Some 10,000 agents gathered near West Bengal Chief Minister Mamata Banerjee’s residence near Kalighat on Friday, seeking the state government’s intervention in the payment crisis surrounding the Saradha group.

The Saradha Group has been raising money from small investors - that range from domestic helps to small traders - since 2008, but last week, thousands of depositors were left in the lurch when the promoter made a quiet exit from an anticipated scene of action. A visibly worried Mithu Saha from Ultadanga says she can’t go home as depositors are knocking her doors day and night for their money.

Among the most wanted persons are Kunal Ghosh and Sudipto Sen. Incidentally, the intelligence bureau on Friday issued a look-out notice for Sen. Chief Minister Mamata Banerjee said that Sen was hiding somewhere in North India and would be arrested soon.  Kunal Ghosh is a Trinamool Congress member of Parliament in the Rajya Sabha. He used to oversee the media business of the Saradha Group.

“Our anger is towards two people-- Kunal Ghosh and Sudipto Sen. Ghosh has been drawing a hefty salary, making overseas trips at our expense,” says Romel Bose, one the agents of Saradha. 

Ghosh, however, on Friday absolved himself from all responsibilities. “I was a salaried employee of their media unit. I was never a director or owner. I was connected with media wing only. I was never connected with any other aspect of the business of the Saradha group. I was not connected with the Saradha group when it ventured into media. Sudipto Sen started the media business on his own accord and his own team,” he said.

As far as Sudipto Sen is concerned, his public image is somewhat better.

“Sen was a very warm and gentle person. He donated hundreds of ambulances that helped people in Naxal-affected areas. Maybe, it all was a farce,” says Subhajit Haldar from Kestopur. Haldar is on the verge of tears, with as much Rs 25 crore due for maturity over the next few years.

Saradha used to raise money as advances for its real estate and travel agency under three schemes: fixed deposit, monthly income and recurring deposits. Almost all agents are depositors, with the company working on the principal of referral marketing.

New Year shocker

Ramadeb Ghosh, an agent, spoke to Sen last on April 15, the Bengali New Year. He had hardly anticipated that it was just the beginning of his ordeal.

Agents, employees and contractors at the company were told to come to office after 15th of April to collect payments.

“Sen said he is taking steps to avert the crisis, but the sale of land and other properties would take some time. Even with so much money at stake, we believed him,” says Ghosh. But his phone has been switched off since then.

It is quite the same for employees. “I joined as a class D staff about four months ago, but over the last three months, I did not get any salary,” says Rajib Saha at the Salt Lake office of Saradha.

The crisis at Saradha has been brewing since January this year. Agents were asked to make payments through fresh collections, as the company was unable to redeem the money.

Several members of the staff at Saradha too were not getting salary. Sen had apparently told his agents that one of his projects was stuck, which has led to some crisis in payment.

The agents’ association of the company has estimated the value of assets held by Sen at Rs 500 crore. About Rs 120 crore is estimated to be outstanding for maturity through deposits raised by the company. The association is planning to form a fund, with contributions from agents and other related stakeholders, to meet the immediate maturity proceeds of the company, according to a member of the association.

Meanwhile, the association, along with other stakeholders are exploring the possibility of forming a trustee board, which will take over the company, said one of the members of the association.

The state government, on its part, is looking for possible investors who can take over the company. The long wait continues till then.

BS Reporter in Kolkata