Mamata vs CBI: All you need to know about Saradha, Rose Valley chit fund scams agency is investigating

West Bengal chief minister Mamata Banerjee on Sunday launched a ‘Save the Constitution’ protest in Kolkata after the Central Bureau of Investigation (CBI) tried to question Commissioner of Police of Kolkata Rajeev Kumar in connection with chit fund scams. Alleging a coup against her government, Mamata said she will continue with the “indefinite dharna” till the country and Constitution are “saved”.

“Narendra Modi is destroying institutions in the country. How can CBI officials come to the Kolkata police chief’s residence without a warrant? I am proud of my police force. The Kolkata Police chief is among the best,” Mamata had said before starting her protest.

A team of CBI officers, which had arrived at Kumar’s house in the city’s Loudon Street area, was not allowed to enter and instead, was put into jeeps and then detained at a police station. Interim CBI chief M Nageshwar Rao had said there was evidence against Kumar in the chit funds case.

This is why on Monday, the CBI moved the Supreme Court seeking an urgent hearing in the matter, alleging that police teams in Kolkata, on Kumar’s direction, would tamper with evidence against him unless the matter was heard urgently. However, Chief Justice of India Ranjan Gogoi rejected the petition, saying that the CBI should present evidence if it fears that evidence will be tampered with. The hearing is scheduled for Tuesday.

The CBI is sure of Kumar’s involvement in chit fund cases in West Bengal. But what are these alleged scams?

Kumar, an Indian Police Service Officer from the 1989 batch, is considered close to Mamata. He had headed the Special Investigation Team that had looked into the Saradha and Rose Valley ponzi scams before the cases were transferred to the CBI in 2014 on the orders of the Supreme Court.

Saradha scam

The Saradha Group — an umbrella company of over 200 private firms and once one of the largest chit fund  companies in eastern India — allegedly tricked poor and marginalised people from villages and small towns into handing over hundreds of crores of rupees by promising huge returns for their investments. The group is believed to have raised Rs 200 to 300 billion from millions of depositors before shutting shop in April 2013, when the Rs 10,000-crore alleged scam came to light.

Several high profile names came up in the case, including those of Trinamool Congress MPs Kunal Ghosh and Srijoy Bose, former West Bengal Director General of Police (DGP) Rajat Majumdar, former sports and transport minister Madan Mitra and former finance minister P Chidambaram’s wife Nalini. After his arrest on 23 April, 2013, chairman and managing director of the Saradha Group Sudipta Sen had confessed to the involvement of these politicians.

In the line of fire, Mamata announced that a Rs 500-crore relief fund would be set up for the investors who had put money in the Saradha Group’s scheme so they did not go bankrupt. However, she still denies the involvement of her party MPs and instead, blamed rivals of politicising the case.

Politicians from outside the state also allegedly benefitted from the scam. Besides West Bengal, Odisha, Assam, Jharkhand and Tripura were also affected by the Ponzi scam.

A Special Investigation Team (SIT) of the Bidhannagar Police first headed the investigation into the scam. They filed a FIR against Sen on 14 April, 2013, after which Sen and six officials from the Saradha Group were arrested. TMC Rajya Sabha MP Kunal Ghosh was also implicated in the scam and arrested in November 2013 after he posted a list of 12 names on his Facebook page, including those of at least four TMC MPs and the West Bengal chief minister.

By April 2014, the SIT had registered around 385 FIRs against the Saradha Group and filed 288 chargesheets. On complaints from depositors, the investigation was extended to include other Ponzi companies such as the ATM Group and Annex Infrastructure Private Limited.

Following allegations of international money laundering, regulatory failures and political nexus, the Supreme Court transferred the Saradha case to the CBI in May 2014. By the time the CBI took over the case, the SIT had arrested 11 people, traced 224 immovable properties, seized 54 vehicles and had filed chargesheets in nearly 300 cases.

Rose Valley scam

The scale of the Rose Valley scam was even bigger than that of the Saradha scam. According to the Enforcement Directorate, more than Rs 15,000 crore is believed to have been collected from depositors from across India, primarily from West Bengal, Assam and Bihar.

However, there are varying estimates of how much the investors had deposited. According to the All India Small Depositors’ Association, the amount is nearly Rs 40,000 crore, around  16 times the scale of the Saradha scam .

The Enforcement Directorate alleged that a part of the money was also used to bribe politicians to facilitate the smooth functioning of the Ponzi scheme. The agency arrested the chairman of the Rose Valley Group, Gautam Kundu, in March 2015 on money laundering charges after interrogating him at his house in Kolkata’s Salt Lake locality.

In the course of the investigation, the government froze all the 2,600 bank accounts of the Rose Valley Group, which held around Rs 800 to 1,000 crore.

Like the Saradha scam, this time, too, unsuspecting poor had invested in the scheme — mane with their life savings — falling for the promise of high returns. The Rose Valley group had allegedly floated a total of 27 companies for running the alleged chit fund operations of which only half a dozen were active. It is alleged that the company had made “cross investments” in its various sister firms to suppress its liabilities towards investors.

The money taken from investors was used to create several assets, many established over 18 years since his elder brother Kajal Kundu started Rose Valley Hotels & Entertainment. There are more than 30 companies that operated under the Rose Valley Group’s banner, including Rose Valley Microfinance, Rose Valley Fashion, Rose Valley Airlines, Rose Valley Beverages, Rose Valley Infotech, Rose Valley Consultancy and Rose Valley Housing Finance.

In 2017, the CBI, also investigation the case, had arrested TMC Lok Sabha MP Sudip Bandyopadhyay on charges of alleged links with Kundu. Another TMC MP, Tapas Pal, was also arrested for his alleged involvement in the scam.