Saradha Group financial scandal

SaradhaGroup
Company typePrivately owned
IndustryFinancial services, infrastructure management, automobiles, manufacturing
GenreDeposit mobilising company
FounderUnclear
DefunctApril 2013
FateAllegations that this consortium of companies is a Ponzi scheme
HeadquartersKolkata, West Bengal, India
Key people
Sudipto Sen, Chairman and MD
Debjani Mukherjee, Director
Kunal Ghosh
Number of employees
16,000+
DivisionsSaradha Realty
Saradha Exports
Global automobiles
Saradha media group

The Saradha Group financial scandal was a major political scandal caused by the collapse of a Ponzi scheme run by Saradha Group, a consortium of over 200 private companies that was believed to be running collective investment schemes popularly but incorrectly referred to as chit funds[1][2][3] in Eastern India.[4]

The group collected around ₹200 to 300 billion (US$4–6 billion[5]) from over 1.7 million depositors[6] before it collapsed in April 2013. In the aftermath of the scandal, the State Government of West Bengal where the Saradha Group and most of its investors were based instituted an inquiry commission to investigate the collapse.[7] The State government also set up a fund of ₹5 billion (US$60 million) to ensure that low-income investors were not bankrupted.[8]

The central government through the Income Tax Department and Enforcement Directorate launched a multi-agency probe to investigate the Saradha scam and similar Ponzi schemes.[9] In May 2014, the Supreme Court of India, due to inter-state ramifications, possible international money laundering, serious regulatory failures and alleged political nexus, transferred all investigations into the Saradha scam and other Ponzi schemes to the Central Bureau of Investigation (CBI), India's federal investigative agency.[10][11] Many prominent personalities were arrested for their alleged involvement in the scam including two Members of Parliament (MP) - Kunal Ghosh and Srinjoy Bose from the Trinamool Congress, former West Bengal Director General of Police Rajat Majumdar, a top football club official Debabrata Sarkar, Sports and Transport minister in the Trinamool Congress government Madan Mitra.[12][13]

The scam has often been compared to the Sanchayita investment scam, a multi crore rupees scam that occurred in West Bengal in the 1970s, complaints related to which led to the formation of the Prize Chits and Money Circulation Schemes (Banning) Act of 1978.[14][15]

  1. ^ "Chitti chitti bang bang". The Telegraph. Mumbai. 30 April 2013. Archived from the original on 15 June 2013. Retrieved 1 May 2013.
  2. ^ Agarwal, Abhyudaya; Satyaditya Singh Dhakare (5 June 2013). "What exactly happened in the Saradha Scam? Understanding chit fund, MLM, corporate deposits and collective investment schemes". Marketing and advertising law. Retrieved 13 June 2013.
  3. ^ Kaul, Vivek (30 April 2013). "Here's why Saradha was not a chit fund but a Ponzi scheme". Firstpost. Retrieved 3 May 2013.
  4. ^ PTI (24 April 2013). "More Saradha entities under SEBI scanner". The Hindu. Retrieved 25 April 2013.
  5. ^ "Cheat funds, again". The Hindu. 26 April 2013. Retrieved 27 April 2013.
  6. ^ Dutta, Romita (20 June 2013). "Saradha raised deposits from 1.7 mn people, probe finds". LiveMint. Retrieved 19 August 2013.
  7. ^ "Mamata announces SIT, inquiry into Saradha". The Telegraph. Kolkota. 1 March 1999. Archived from the original on 15 June 2013. Retrieved 25 April 2013.
  8. ^ Mamata sets up fund for duped Saradha investors, Business Standard, 24 April 2013
  9. ^ Dasgupta, Mithun (26 April 2013). "60 firms like Saradha Group operating in Bengal". The New Indian Express. Archived from the original on 28 April 2013. Retrieved 29 April 2013.
  10. ^ "SC jolt for Mamata: CBI to probe Saradha scam The CBI will also probe other Ponzi schemes in West Bengal, Odisha, Tripura, Jharkhand and Assam". Business Standard. 10 May 2014. Retrieved 10 May 2014.
  11. ^ "Supreme Court orders just what Mamata didn't want". Calcutta Telegraph. 9 May 2014. Archived from the original on 10 May 2014. Retrieved 10 May 2014.
  12. ^ "WB Minister Madan Mitra arrested in Saradha scam". Retrieved 15 December 2014.
  13. ^ "West Bengal minister Madan Mitra arrested by CBI". Retrieved 15 December 2014.
  14. ^ Mukherji, Udit Prasanna; Bandyopadhyay, Krishnendu (21 April 2013). "Sanchayita haunts Saradha victims". Times of India. Retrieved 26 October 2017.
  15. ^ "Kuriachan Chacko and Ors. Vs. State of Kerla JT2008(7)SC614". www.neerajaarora.com. Neeraj Arora. Retrieved 26 October 2017.