 "Sen floated 100 firms in run-up to 2011 state polls")
That day, Sudipta Sen, the promoter of the Saradha Group, became director of four new firms - Saradha Infracastle, Saradha Realhousing, Saradha Upanagar and Saradha Commodity Market. By January 24, he would create and step into the boards of 88 more companies, all bearing the Saradha name. While most of these had real estate-related middle names such as Villa, Shelter, Realhome, Duplex, Cottage, Heights, etc, some had names such as Commodity Markets and Multilevel Marketing.
Business Standard checked a few companies from this lot to understand their finances. Saradha Banglo-House had only two shareholders - Sudipta Sen and son Subhojit Sen. Both were directors. Its initial paid-up capital had eroded to Rs 63,000 by the end of FY12, after it booked losses of Rs 26,861 and Rs 10,623. It was based at an address on Diamond Harbour Road in Behala area of Kolkata.
Another company based at the same address was Saradha Multilevel Marketing. Its losses for the two years were almost similar to Banglo-House, while Sudipta owned 99 per cent of the shares in this company. By March, another dozen such companies would come up. From being the director of seven firms in 2008, he would sit on 160 companies by 2012. This coincides with the period of ascension of Banerjee and her party, the Trinamool Congress (TMC), first as an ally in the United Progressive Alliance (UPA)-II government in 2009 and then as the ruling party in West Bengal since May 2011.
The Opposition is quick to pounce on the apparent connection between the party's political gains and the growth of Saradha's chit fund scheme. "Saradha's rise in West Bengal was in tandem with TMC's rise as the main political force in West Bengal since 2009. The chief minister herself or senior minister or party leaders were always seen in some sort of function of the Saradha group. There was a give-and-take policy between TMC and Saradha, which is now coming to the fore," said Communist Part of India-Marxist (CPI-M) leader Mohammad Salim.
However, it was under the CPI-M-led Left rule that Sen floated his first venture, Saradha Construction Company, in 1995. He continues to be a director of this firm. It took four years for him to float another. In 1999, Behala Saradha Construction and Subhojit Construction came into being. For the next eight years, there were no new ventures. In 2007, Sudipta made his first diversification by launching Saradha Tours and Travels and Saradha Garden Resorts and Hotel.
Saradha Realty, the firm which got winding-up orders from market regulator Securities and Exchange Board of India (Sebi) in April 2013, triggering the collapse of the empire, came into being only in 2008. It is this firm that engaged in the chit fund business of collecting money from depositors, based on offers of attractive returns.
The Saradha Group highly publicised its proximity with TMC leaders, from chief minister Banerjee to the lowest rung local leaders, which had helped the company to convince potential investors.
"The brochure of Saradha used to have a lot of pictures showing top leaders of TMC and state ministers attending Saradha's functions. This gave Saradha the image of almost a government-sponsored company," said a former agent of Saradha, in South 24-Parganas district.
Endorsed by the political establishment, Saradha grew from strength to strength. It even managed to acquire Global Automobiles and was able to position itself as a motorcycle maker.
Banerjee herself was the chief guest at events such as the launch of Saradha Group's magazin-turned Bengali daily, Kalom. In one such event on July 29, 2009, state transport minister Madan Mitra, who skipped the Central Bureau of Investigation's summons earlier this week, citing poor health, had said, "I am thankful to Sudipta Sen... He has proved himself spreading his business empire outside Bengal... I am proud that Saradha Group has its roots in Bankura's Bishnupur from where I am elected to Assembly."
Things began to go wrong around the time of Presidential elections when Banerjee went around canvassing for alternative candidates. By the time Banerjee pulled out of the UPA government in September 2012 following differences over foreign direct investment in retail and fuel price hikes, Sebi had begun turning the screws. Within months, investors were on the streets and Sen was behind bars. His empire that spanned across finance, real estate, hotels, media, films and sports began to crumble.
While there was a brief lull in probes by central agencies after the arrest of Kunal Ghosh in November 2013 , in the run-up to Lok Sabha elections, it picked up after the Bharatiya Janata Party (BJP)-led National Democratic Alliance government took charge in May this year.
In a June probe report, reported by PTI, the Enforcement Directorate found the Saradha group used 224 companies such as the ones described above and 338 bank accounts to allegedly launder Rs 1,983.02 crore.
The PTI report dated June 8 added that Investigations by the central enforcement agency found that a part of this huge amount was allegedly "channeled into various investments through a maze of 338 bank accounts in various branches of different banks and a total of 224 private limited companies were floated with definite equity basis so as to conceal the irregular collection defrauding the common mass."
Key figures such as East Bengal club executive committee member Debabrata Sarkar and senior TMC leader Rajat Majumder were arrested in August and September, respectively.
The CBI filed its first chargesheet on October 22 in the Saradha Tours and Travels case. Charges were framed against Sen, his receptionist-turned-director Debjani Mukherjee, Trinamool MP and former journalist Kunal Ghosh for alleged violations of Prize Chits and Money Circulation Schemes (Banning) Act, 1978. News reports have talked of worse things such as alleged terror links across the border.
Last week, CBI filed a chargesheet in the Saradha Realty case, naming key figures including Sen, Mukherjee, Sarkar and Majumder. With the arrest of TMC Rajya Sabha MP Srinjoy Bose on Friday, the pressure on Banerjee and her party has risen.
Soon after Saradha went bust, Banerjee had defended when questions were raised by media. "Is Kunal a thief? Is Madan a thief? Is Tumpai (Srinjoy Bose) a thief? Is Mukul a thief? Am I a thief? Are all of us thieves? And, the rest are saints?" Banerjee had said in a party meeting on May 3, 2013, at the Netaji Indoor Stadium in Kolkata.
Of those defended, Ghosh and Bose have been arrested. Another TMC leader, West Bengal transport minister Madan Mitra, who was also summoned by the CBI on Friday, did not appear before the investigating agency citing "poor health". Hours after receiving the summons on Wednesday evening, Mitra was admitted to a private hospital and later moved to the government-run SSKM Hospital. Banerjee's defence a year-and-a-half ago has now come back to haunt Banerjee and TMC as state BJP leader Tathagata Roy recalled that comment, saying: "The CBI noose should tighten around the rest of the two soon."
Banerjee, ironically, held a similar meeting with party cadres at the same venue on Saturday. "I do not need a character certificate from the BJP... My credentials are known to the people of Bengal," she roared. Calling the arrest of TMC MPs as "political vendetta", Banerjee said: "Just because I went to Delhi to attend a conclave of secular parties, they took revenge by arresting our MPs".
She did not hold back the anger against the CBI and the BJP-led Centre, calling the party workers to hit the streets.
"A battle lies ahead. We have to keep fighting. We are not afraid of anybody. We accept the challenge. If we are hit, we will hit back," she said.
MULTIPLE ENTITIES, MULTI-AGENCY PROBE
- 1995-99: Sudipta Sen floats Saradha Construction; expands with two more construction firms
- 2007: Saradha Tours and Travels set up
- July 2008: Saradha Realty formed; floats schemes to raise money
- May 2009: Trinamool wins 19 seats in Lok Sabha polls, becomes second largest party in UPA-II, gets key ministries
- April 23, 2010: West Bengal economic offences investigation cell writes to Sebi complaining about money being raised by Saradha Group
- June 3: Sebi seeks information from Saradha
- Dec 15: Unsatisfied with responses, Sebi issues showcause notice to Saradha
- Jan 3, 2011: Saradha denies all charges
- Jan 13: Election Commission appoints special observers
- Jan to March: Saradha launches more than 100 companies
- May: Mamata Banerjee-led Trinamool Congress sweeps state polls
- Jan 2011-May 2012: Saradha case goes into cold storage
- May 3, 2012: UPA-Banerjee rift starts
- Sep 18: Banerjee withdraws support to UPA
- Sep 27: Sebi offers personal hearing on Saradha issue
- Dec 19, 2012: Saradha produces 28 cartons of documents; Sebi finds deficiencies; Saradha gets more time
- Mar 26, 2013: Sebi asks Saradha representative to explain documents on March 28 but Saradha seeks more time; Sebi gives till April 1
- April 1: No one from Saradha turns up; Saradha claims in a letter it’s not an investment scheme, some brokers may be misusing its systems
- April 13-22: Investors, agents take to streets; state issues arrest warrant for Sudipta Sen’s arrest
- April 23: Sebi issues winding-up order; Sen arrested in J&K; tell-all letter purportedly written by him to CBI is leaked
- May: HC appoints 3-member panel to monitor depositors’ repayment
- Nov 23: TMC MP Kunal Ghosh arrested
- April 22: Calcutta High Court orders WB govt to repay depositors; ED begins probe
- June: Enforcement Directorate probe report detects alleged offences under money-laundering laws
- August: Debabrata Sarkar arrested
- Sept 9: Senior TMC leader Rajat Majumder arrested
- Oct 22: CBI files chargesheet in Saradha Tours and Travels case
- Nov 17: Second chargesheet filed by CBI in Saradha Realty case
- Nov 21: TMC MP Srinjoy Bose arrested; summons issued to Madan Mitra
- Nov 22: Banerjee alleges political vendetta; asks cadre to prepare for a long fight
Sources: Sebi order, MCA, news reports