Odisha's chit fund Czars can teach Sudipta Sen a lesson or two

By Sandeep Sahu

Bhubaneswar: West Bengal may currently be in turmoil over la affaire Saradha. But neighbouring Odisha has a much more ‘consistent’ record when it comes to rolling out the red carpet for bogus, fly-by-night chit fund companies, which lure the gullible small investors promising the moon before vanishing into thin air. Since the 1980s, there have been over a hundred such companies-some small, others big-which have duped the people for thousands of crores of rupees cashing in on the greed of the average lower middle class man.

Odisha’s home-grown ’entrepreneurs’ could teach a thing or two about duping innocent investors to their Bengal counterparts. Saradha was the first major chit fund scam in West Bengal after Sanchayita went bust in the 1980s. In sharp contrast, Odisha has hardly seen a year since such companies came into the picture in the 1980s when one or more companies have not vanished into thin air with the booty. No wonder almost every major chit fund company with its headquarters in Kolkata has operations in the state – Saradha and Rose Valley being the better known ones. Saradha alone has raked in Rs 50 crore from investors in Balasore-which, for reasons that remain to be investigated, has emerged as the chit fund capital of Odisha-and Rs 15 crore in Puri.[caption id=“attachment_747269” align=“alignleft” width=“380”] Bad money. Andrew Middleton/Flickr[/caption]

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Earlier, Nasir Khan, the first blind man to play the hero in a Bollywood movie, creamed off over Rs 500 crore from gullible investors mostly in Balsore district through two online investment schemes launched by him (and then invested part of the booty in making a Bollywood film featuring himself as the ‘hero’). In the wake of the current spotlight on the chit fund business, the finance department of the Odisha government has drawn up a list of about 20 companies which have operations in the state.

Then there are the much more numerous ‘home grown’ companies which flourish for a while before going bust. Seashore, Artha Tatwa, Safex India, Flourish India, Saipragati, Star Consultancy, Ashore, Adarsh Group, Future Group, DP Group – the list is endless. Besides, there are countless smaller companies which spring up at various localities, do ‘business’ mostly with daily earners like thelawalas for a few months before decamping with the loot. In short, it is the biggest organised industry in the state!

Not all of these companies have had the same degree of success in taking the investor for ride though. Among the ones which have duped the most number of people and siphoned off the maximum amounts are Seashore, Artha Tatwa (AT) and Saipragati. Saipragati went bust in November last year after making a cool Rs 500 crore while the Balasore-based chairman-cum-managing director (CMD) of AT Pradip Sethi and senior executives of the company are currently on the run after the Economic Offences Wing (EOW) began tightening the screws around it in the wake of the melt down of Saradha. The CMD of Seashore, the biggest of the current lot of home grown chit fund companies, Prashanta Dash, is now on bail after cooling his heels in the jail for a few weeks.

Dash’s is a truly rags-to-riches story. A lecturer in a private college till a few years ago, he started his operations under the Seashore banner only in 2005 and built up an empire that has been estimated to be worth over Rs1,000 crore in just seven years. Starting out the way most such companies start-offering lucrative interests of 2 to 3 percent per month on deposits-before foraging into a host of unrelated sectors like real estate, agriculture (it even signed a MoU with the state-owned Agriculture Promotion and Investment Corporation of Odisha Limited for food processing), insurance, IT, telecom, retail trade, FMCG, education, hospitality, transport, cooperatives, tourism, healthcare, entertainment and-perhaps inevitably-media.

In September last year, it stunned bankers by outbidding competitors to emerge as the Banking Correspondent (BC) for UCO Bank, the lead bank in the state, with an offer to pay six paise for every Rs 100 of government money transferred to the people when all other bidders-not just in Odisha, but in every single state-expected to be paid money by the government for the service. The company was truly living up to its motto of ‘Scalling (sic) Beyond Boundaries’!

The company website quotes the CMD as saying ‘Only money cannot build great business’. Dash was obviously speaking from experience because his meteoric rise has been widely attributed to his perceived proximity to erstwhile Biju Janata Dal (BJD) strongman Pyari Mohan Mohapatra, who is now the sworn enemy of BJD boss and Chief Minister Naveen Patnaik. In fact, many go to the extent of claiming that Seashore is actually a front company of Pyari, who handpicked Dash for the dirty job. There is reason to believe the role of the disgraced BJD leader in his rise since his troubles started only after his mentor fell from grace.

In the wake of the post-Saradha churning, the Odisha government is now planning a series of measures to protect the interests of the investors. Among them are strengthening the EOW of Crime Branch, expediting Presidential assent to the Odisha Protection of Interests of Depositors (in financial establishments) Bill passed by the Assembly back in December, 2011 and requisitioning the services of officers of Reserve Bank of India (RBI) and Securities and Exchange Board of India (SEBI) officials to detect cases of fraud. But the question is what was it doing all these years when scamsters conned the people of the state and siphoned off thousands of crores of hard earned money?