Trust is a commodity: What the underbelly of Bengal's Saradha scam reveals

At its heart there is nothing that new about the Saradha scam. It’s not the first Ponzi scam, nor will it be the last. Bengal itself has seen quite a few including the infamous Sanchayita investment scheme that rocked the state thirty years ago. Like all Ponzi pyramid collective investment schemes, Saradha tempted small investors by promising almost irresistible rates of returns of over 20 percent to investors and giving its agents hefty commissions. It flourishes even more in rural setting where banking options are fewer. It works for awhile but eventually the pyramid collapses as Saradha did in April 2013. It’s a tragic story but not an unfamiliar one. (Check out Outlook and Indian Express for detailed investigations laying out the scam.)

The investigations into Saradha are laying bare the complicated web of companies created to make it as difficult as possible to follow the money. But Saradha is fascinating because it is telling a story that is bigger than one about murky financial dealings.

It has become in effect a portrait of a society in decay.

Saradha is really a story about trust as a commodity. Its very name suggests that. Sanchayita, the old financial scam, had a connotation of money and savings in its chosen name. Saradha’s name does not suggest a collective investment scheme. It suggests trust. Saradha used one of Bengal’s most sainted names to establish its trustworthy credentials - that of Sri Ramakrishna's consort Saradha Ma, the calendar art personification of compassion, motherliness and general beatitude. And it sold itself to the investors by touting its photo-op proximity to the other icon of personal probity and simple living in Bengal – Mamata Banerjee. No wonder a wickedly irreverent cartoon is now doing the rounds showing Ramakrishna and Saradha Ma sitting side by side as they do in so many calendars across Bengal but with the faces of Sudipta Sen and Mamata Banerjee photoshopped in.

Sudipta Sen. AFP.

Chairman of Saradha group Sudipta Sen. AFP

All that is holy is going up in holy smoke.

Now that the whole can of worms is coming out in the open, pundits are obviously looking for the political fall-out. Can the BJP raise the slogan “Gali gali mein shor hain, Mamata Banerjee chor hai” to use Saradha as a battering ram against Didi’s personal reputation? How close to Mamata can the CBI reach? The BJP is confident that Saradha will be its brahmastra but as Outlook points out that is not necessarily true. The scam has affected 17 lakh people but West Bengal has a population of nine crore and Mamata retains huge support in rural Bengal as the Didi with the common touch.

These days it is easy to pillory Sudipta Sen, Saradha’s king-pin as a con man with two wives. The Enforcement Directorate alleges his son Subhajit spent at least Rs 20 crore every year on escort services and luxury cars. But the long procession of famous names being questioned by the CBI proves that not so long ago “Sen-sir” was the darling of all levels of Bengal society, not just Trinamool top brass.

In a state that attracted very little industry and capital he was the go-to Santa Claus. As Outlook reveals when Lionel Messi demanded Rs 20 crore for an exhibition match in Kolkata in 2011, the sponsors turned to Sen. In Bengal where Marwaris dominate industry, he was a rarity – a Bengali businessman happy to sponsor Bengali NRI sammelans and bail out Tollywood films and lavish money on big Durga Puja celebrations. His television channel Tara Muzik supported contemporary Bengali singers and artistes. His money helped out both of Bengal’s legendary football clubs – East Bengal and Mohun Bagan. His money saw the rebirth of the magazine Parama with Aparna Sen at its helm.

"I was an employee there. I found out about the chit fund business later. First I thought it was just a publication house," Aparna Sen told NDTV.

That is quite believable. In a bleak industrial climate who wants to look at a gift horse, especially one who wants to invest in new magazine or a film, too closely in the mouth? The names surfacing on the Saradha rolodex from Sen to Mithun Chakravarty as a brand ambassador to artist Suvaprasanna to actor-MP Satabdi Roy to the secretary of the football club show not a necessarily a nexus of corruption but the portrait of a state starved for other options. In the land of the blind-eyed, a one-eyed man is king. In parched Bengal, a businessman no one had heard of before 2007 was suddenly a VVIP and media mogul within two years.

If anyone had wanted to look closely at the kamdhenu, of course they could have found a lot of bullshit. Sources tell the Economic Times that more than 90 percent of the companies under Saradha existed only on paper and only 17 of the 224 companies actually carried out any business. It was a text-book example of “trading without capital”, Anindya Sen, professor at IIM-Calcutta tells Indian Express. “If there is no industry or no manufacturing unit, people tend to earn money through muscle-flexing and other easy ways. Offshoots of crony capitalism are real estate, syndicates, extortion and ponzi schemes.”

But it benefited everyone to turn a blind eye. Somen Mitra, ex-Trinamool MP says when he alerted Manmohan Singh about a spurt of chit fund scams, Mamata pulled him up and told him it was none of his business.

Saradha is often portrayed as a confidence scam that duped domestic helps and auto-rickshaw drivers and retired widows out of their savings. But what is being gradually revealed is how much bigger it is than a garden variety chit fund scam.

At one end is the poor widow who commits suicide after losing her life’s savings. At another end even the President Pranab Mukherjee’s name has surfaced in the scam with Bengal minister Madan Mitra alleging crores of Saradha money went to Mukherjee’s son and daughter. Given that range it’s hardly surprising a Nalini Chidambaram has surfaced on its radar. Chidambaram has said she was not "questioned" but just asked whether Manoranjana Sinh, estranged wife of former minister Matang Singh had consulted her professionally while trying to get Saradha to invest Rs 42 crore in a television channel in the North East. But in a business that sells confidence, names matter and a Chidambaram name surely was at the very least meant to impress someone somewhere quite apart from her expertise as a lawyer.

At one level this is a domestic small savings tragedy. At another level it’s playing out as a matter of international import with allegations that Saradha money was being used to destabilize Sheikh Hasina’s government in Dhaka and shore up Jamaat-e-Islami forces in return for votebank help in Bengal. Until now no one could imagine a chit-fund scam could affect the fate of a Teesta water sharing treaty. Now even that is in the realm of possibility.

Mamata’s supporters allege the CBI enquiry is politically motivated to launch a witchhunt against her. Her now suspended MP Kunal Ghosh says “If there is one person who has benefited most from the chit fund-run media companies, it is Mamata Banerjee.” But whether the Saradha trail leads all the way to Didi or not (or even beyond her) one thing is clear - this is a story about bankruptcy that extends beyond the balance sheet of one greedy company.

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Updated Date: Sep 23, 2014 16:18:03 IST

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