More details will doubtless pour out about Sudipto Sen’s rackets as investigations proceed. But one thing is certain. The vast majority of Saradha’s victims will only get a pittance from the Rs 5 billion compensation fund set up by the Mamata Banerjee government, to be part financed by an additional levy on cigarettes, of all things. But the investors’ stake is estimated at Rs 170 billion, if not more, says Praful Bidwai.
The lightning speed at which the Saradha scandal unfolded in West Bengal was only matched by the collapse of the business group with 120 firms, which has wiped out the savings of an estimated 400,000 investors in 19 districts, many of them small and poor.
Thousands of people have become paupers overnight, including daily wage labourers, who invested in Saradha’s chit funds the few thousand rupees they had managed to save over many years. Several have committed suicide.
The scam has turned into the greatest-ever political crisis for the Trinamool Congress government, which hasn’t completed even two years in office.
So intimate is the brazenly flaunted connection between Saradha’s Promoter-Chairman Sudipta Sen and some TMC leaders that the public -- especially in rural Bengal -- considers them inseparable, indivisible and identical in their culpability.
The Saradha-TMC mutual identification was strong and manifold. Trinamool MP Kunal Ghosh was the CEO (later, executive chairman) of the Saradha media group. Another TMC MP, actress Satabdi Roy, was its brand ambassador.
Sen ran a range of papers and television channels in Bangla, English, Hindi and Urdu, whose main function and purpose was to promote the TMC. Several party MLAs openly canvassed support in small towns and villages for Saradha’s chits -- Ponzi schemes which, like 'chain letters' promise impossibly high returns to investment on the assumption that investors would indefinitely multiply at geometric rates. But the chain breaks down and the scheme collapses.
Sen has himself documented his close links with TMC leaders in an 18-page letter to the Central Bureau of Investigation. He reportedly spent Rs 18.6 million to buy Mamata Banerjee’s amateurish paintings and showered expensive gifts on her party and government. Trinamool leaders allegedly extorted millions of rupees from him in return for ignoring his activities including building-rule violations.
To lure innocent people to invest their hard-earned money in high-risk speculative schemes, Sen had to pretend that he was a genuinely successful businessman who owned a massive land bank and many factories. To acquire clout and respectability, he set up media operations not just in Kolkata, but also in Guwahati and elsewhere.
To pump money into Saradha’s schemes, people withdrew savings of nearly Rs 120 billion within a year from public sector banks and post offices. This set off an alarm in the state bankers’ committee, which recommended corrective measures. Banerjee ignored the warning. Even the Securities and Exchange Board of India failed to investigate the Saradha group in time.
Sen kept a ghost motorcycle factory running on 7.7 acres of land 50 kilometres from Kolkata as a showpiece for prospective investors brought there in truckloads. The plant stopped production in January 2011, but Sen continued for two years to employ workers and pay them for appearing to be busy running conveyor belts and assemblies. Gullible investors were convinced that their investment would soon bear fruit.
Sen’s media ventures all ran up losses. Their collapse resulted in massive job losses. Journalists’ salary payments, always erratic, totally stopped this past January. It’s not clear if Sen paid to the government the taxes he deducted from employees’ salaries or made his provident fund contributions.
On April 15, he switched off his three cellphones and simply vanished -- till he was arrested in Sonmarg, Kashmir with his accomplices.
Sen is a clever manipulator who kept the powers-that-be pleased through generous donations and bribes. The Saradha group wasn’t just a milch cow for the TMC in West Bengal. It also filled the coffers of unscrupulous politicians in states like Assam and Odisha. Nothing could be a starker example of politician-business-media collusion.
More details will doubtless pour out about Sen’s rackets as investigations proceed. But one thing is certain. The vast majority of Saradha’s victims will only get a pittance from the Rs 5 billion compensation fund set up by the Banerjee government, to be part financed by an additional levy on cigarettes, of all things. But the investors’ stake is estimated at Rs 170 billion, if not more.
Sen’s personal assets, even assuming they can be found and liquidated, are unlikely to equal this.
This would be a repetition of West Bengal’s bitter experience with the Sanchayita chit fund fraud of the early 1980s, where no investor got his or her money back. The difference is, many more people are involved in Saradha, including collection agents and sub-agents, journalists, and white-collar staff, besides hundreds of thousands of investors, who probably hold the TMC and Saradha equally guilty.
As the investors’ wrath is trained on the TMC, that party is likely to find that its political credibility is in tatters. How this gets reflected in the panchayat elections, which are due soon in West Bengal, remains a matter of speculation for the moment. But it would offer a god-sent opportunity to the Left Front -- which is still licking its wounds from the assembly election rout of 2011 -- to rejuvenate itself by fighting the TMC’s muscle and money power.
Revolting as the Saradha scam is, it has major implications for the Indian media. It exposes the many pathologies that afflict the media, including interference by business interests via 'paid news'; prevalence of mercenary considerations in the newsroom; and passing off advertising and political promotion as news.
The media increasingly fails to play its legitimate role as a chronicler of events, a forum of public debate and whistle-blower. Its integrity and reliability is in steep decline.
The bulk of India’s corporate-controlled media is no longer a forum that has anything to do with social relevance, truthfulness and pluralism. Rather, it promotes tawdry glamour, titillation and sensationalism. Indeed, much of the media doesn’t generate news content independently so much as get it from corporate sources and public relations agencies, as the Niira Radia tapes clearly showed.
Top-level editors increasingly act like and are designated as managers and directors. Many are mere hatchet men for businessmen. Most journalists feel insecure because they are employed on contract in breach of the Working Journalists Act.
The media situation has deteriorated significantly in recent years as the integrity of those in authority has declined. Pressures to sacrifice news coverage quality and pluralism in the comment pages have grown as increases in advertising revenue slow down (from 17 percent in 2010 to nine percent last year), and predatory pricing becomes the norm, squeezing out small and independent publications.
Under predatory pricing, a newspaper that costs Rs 20 to produce is routinely sold for Rs 3 or 4. Only the top-selling papers can make up this under-recovery through advertising and sponsorship; the rest lose money and market-share. This practice is common, but palpably unfair and illegal. It also undermines diversity -- with deplorable consequences for a 1.2 billion-population society.
Television is even more sordid so far as relevance, independent content generation and ethics are concerned. Most of India’s 300-odd news channels are loss-making and dependent on dubious cross-holding arrangements, black money infusion and dodgy investors.
Two other factors have made matters worse: The incursion of Big Business into the media, and growing cross-media ownership, both of which lead to concentration and market dominance, and work against competition and media freedom.
Cross-media ownership is an unhealthy phenomenon, and is severely restricted in many countries, including the US, UK, Germany, France and also South Africa. But in India there are no restrictions. The Administrative Staff College of India and Telecom Regulatory Authority of India have both examined cross-ownership.
ASCI found that 11 of the top 23 television networks had stakes in print and radio; the remaining had interests in at least two media platforms including television. Four networks (Sun, Anil Ambani’s ADAG, Essel-Zee and Star) had vertical linkages in cable/DTH broadcasting.
TRAI found that as many as 15 media companies had such cross-holdings. The 'conflict of interest' arising from this manifests itself in 'paid news', 'corporate and political lobbying', 'biased analysis and forecasts', and 'irresponsible reporting' and 'sensationalism'. This is 'even more lethal where the ownership/control rests with entities which have both business and political interests.'
Sen was a small-time fly-by-night operator, who crashed out. But successful control of the media by Big Business would be much more damaging. That’s why media regulation is imperative.