A year after the Chit Funds scam rattled the Odisha Government, swindling so many poor and unsuspecting depositors, it seems that the non-banking companies are still active and continuing to dupe small investors by offering lucrative schemes and high returns. Yet, before the CBI tightens its noose on them, Sidheswar Misra, finds that the scams may cast a shadow at the impending Panchayat polls in the State
Chit Funds schemes, today have become the easiest way for saving and borrowing. Investors are becoming the victims and taking high risks in the name of such chit funds. However, the Odisha Government has not been able to put a proper policy in place to check these dubious schemes effectively, though they say they are on the task.
The ghosts of Saradha and Artha Tatva (AT), the notorious chit fund companies that ran fraudulent Ponzi schemes and defrauded lakhs of people, mostly the poor, in Assam, West Bengal and Odisha, besides ensnaring many politicians in the wake of their scams. It has now come back to haunt the ruling party in Odisha at a time when it is bracing for the Panchayat polls that barely a few months away. It is adding to the resentment brewing among the rural voters who are disturbed over crop loss, lack of irrigation and power problems.
It has certainly given a jolt to the Government as the fresh allegations have again resurrected the ghost of old scams. When the case first came out in public towards the end of 2014, many big names were exposed and the sitting BJD MLA Pravat Tripathy and BJD MP Ramachadra Hansda were arrested for their complicity in the multi-crore chit fund scam.
Union Minister Jual Oram took a dig at the investigators for inordinate delay in completing the investigation while the Pradesh Congress alleged that the NDA Government led by Prime Minister Narendra Modi was in nexus with the BJD Government in the State.
In response to the public outcry against the delayed investigation, the Central Bureau of Investigation intensified their probe, and the arrest of an alleged broker Subhendu Nayak reportedly spilled the beans. More and more skeletons are tumbling out of the cupboard with evidence pointing to a nexus between Ponzi bosses, politicians, bureaucrats, top police officials, senior journalists, television channel owners, top police officials, lawyers, chartered accountants, and the list continues to grow with every passing day. So much so that it reads like a virtual Who’s Who in Odisha politics and those who frequent the corridors of power.
The proprietors of nearly all chit fund firms -- starting from Sea shore’s Prashant Das to Sudhansu Lenka of Astha – who allegedly spread their tentacles to almost every part of the country – are cooling their heels in jails. The politicians, to note a few, such as MP Ramchadra Hansda, former MLA Subarna Nayak too are behind the bars for their direct or indirect involvement in the scam.
Top police officials such as suspended Kendrapara SP Satish Gajbhiye and many police officers have also been quizzed by the sleuths in the past one-and-a-half year since the probe began.
At such a point, firebrand Congress leader Lalatendu Bidyadhar Mohapatra sprang the ‘biggest expose’ in the chit fund scam linking one of Naveen’s close aides in the Odisha Council of Ministers and president of the Youth wing of the party Sanjay Dasburma to a ‘green pajero’ which he claimed was a gift to the Minister from tainted chit fund company owner – CMD of Artha Tatwa group of companies.
Sanjay Dasburma, is currently the Minister of State (Independent Charge), Food Supplies and Consumer Welfare, Skill Development and Technical Education, and Lalatendu Bidyadhar Mahapatra, is the arch rival of Sanjay Dasburma in his constituency.
The ‘Green Pajero’ issue is being seen as the ‘return of the Chit fund ghost’ to haunt the BJD government and party. The timing of the exposure has every potential to impact the prospects of the party in the impending Panchayat elections.
Probably this fresh twist in the scam has provided enough material to the opposition to grill corner the ruling party, and this new revelation and allegations are being termed as the ‘Government-criminal nexus’.
When the Minister himself has been denying it stoutly calling it a ‘conspiracy’ against him by Mohapatra -- his arch political rival in Brahmagiri Assembly constituency – for being humbled at the hustings repeatedly, Party spokespersons are presenting a picture of being solidly behind the Minister and spending hours talking to reporters of both print and television channels to prove Dasburma’s ‘innocence’.
The Chief Minister himself though is maintaining an intriguing silence. It is felt that Patnaik could show the door to Dasburma anytime now as he has a record of getting rid of tainted colleagues from his team and party as well.
Just to build pressure, a few senior leaders of the party including some Ministers and MPs have already hinted that Dasburma must quit on moral grounds as the issue has immense potential to damage the party’s image so as to cost it dearly in the Panchayat polls.
For the opposition, the Dasburma Pajero issue has come in handy to harp on besides the alleged massive irregularities in the National Food Security Act, digital ration card distribution by the Food Supply and Consumer Welfare Department. A large number of BJD leaders and workers, including the former Mayor of Cuttack Municipal Corporation Anita Behera, have allegedly benefited from the irregularities.
Notably, the CBI is now inquiring about 46 chit fund companies in the State and subsequent quizzing of stakeholders is on. If the neighbouring West Bengal had one Sudipto Sen who conned lakhs of depositors alone, Odisha has become the breeding ground for one too many, though they are smaller in scale. As Odisha grapples with the ever growing tentacles of chit fund and money circulation companies which have gone into the nook and cranny of the State with numerous schemes, the magnitude of their financial mobilisation and investor base is slowly coming to the fore.
According to a status report published towards the end of 2015, the Institutional Finance wing of Finance department puts the total number of depositors in such firms at 6.89 lakh across the State. The investments by these depositors in various companies amount to a whopping Rs 4,375 crore, which is nearer to the high-profile Saradha Group financial scam, in which at least 1.4 million investors were duped of about Rs 5,000 crore.
The Finance department assessment is based on the enforcement measures undertaken against such companies in 2012 and 2013 (till June). It all started after simultaneous searches and raids were conducted across the State on May 10 by the Economic Offences Wing (EOW) and the police of different districts against the money circulation schemes and unauthorised chit fund companies. The raids covered 116 companies and as many as 243 cases were registered involving 231 persons.
The EOW, a dedicated unit of the State Government, which takes up cases involving Rs 1 core and above, is investigating 24 cases involving 19 companies, mostly big and high-profile ones like Seashore and Greenray. That apart different police stations have registered another 13 cases in the last two years in connection with similar cheating and financial frauds.
The figures are approximate and tentative in nature and likely to change as more and more investors are coming forward and reporting about the cheating.
It has also been observed that many investors whose names figure in the records of companies have been paid back their principal or maturity amount under normal circumstances and there has not been any complaint from them.
The crux of the problem is that the poor people are not able to identify the difference between a registered chit fund company which is legal and safe and the unregistered unorganised chit fund masqueraders. Many case studies and attempts have been made by different organizations, including the IRC international Journal which attempted to depict the working principle of a recognised chit fund company/scheme and to create awareness among people before making their choice and decision of choosing a chit fund scheme.
In India, if the value of the chit run by a chit fund operator exceeds Rs 10 and it is not registered, the fund is considered to be illegal. Every institutionalised and registered chit fund is safe and sound and offers greatest support to its customers. For a particular chit fund scheme there is a chit group which has fixed number of investors.
According to the survey and report published by IRC journal, the Indian chit fund industry generates an estimated 3.39 percent of household savings (or Rs 5.88 crore), compared to 4.92 percent invested in shares and debentures. Over 95 percent of chit fund companies are small and medium enterprises (SMEs) and they are important sources of finance for SMEs operating in other sectors. Large companies have managed to attract investors. The $1.3 billion (Rs 6,110 crore) Chennai-based Shriram Group, for example, which runs the largest chit fund business in the country, manages a corpus of Rs 3,200 crore annually.
There are yet no signs to indicate when such a big problem affecting so many people is going to be taken on at the countrywide level. And so it is not know how soon the State Government in Odisha could put a proper regulation in place to safeguard the interest of the common man who is turning out to be so gullible to the chit fund raisers.