(Weekly Organ of the Communist Party of India (Marxist)
May 12, 2013
Left Leaders Meet President, PM on Saradha Scam
A delegation of Left Front MLAs from West Bengal led by Surjo Kanta Misra, leader of the opposition in West Bengal assembly and a delegation of Left MPs led by Sitaram Yechury, met President Pranab Mukherjee, Prime Minister Manmohan Singh and Finance Minister P Chidambaram on May 9 and handed over the memorandum demanding a neutral, fair and high level investigation into the massive fraud committed by the Saradha group of companies as well as for the return of thousands of crore of rupees to all the affected depositors immediately.
Below we reproduce the text of the memorandum
PLEASE refer to
submitted to you on August
22, 2011 by
the Left Front Legislative Party in West Bengal as well as
placed before you on December 19, 2012
by the Left Front Members of Parliament, drawing your kind
attention to the
alarming problem of irregularities being committed by
companies (so-called ‘Chit Funds’ in terms of local parlance
in West Bengal)
and requesting for an urgent action by the central
however, no timely intervention was made by the central
government and the
present state government. As a result, a massive fraud has
been committed by an
irregular financial company (Saradha Group) by suddenly
closing down all its
offices and resulting in a widespread default on repayment
to lakhs and lakhs
of depositors, belonging mostly to the poorer sections in
rural and urban areas
You are kindly aware that among the different types of financial companies, there is one category of companies which raise deposits from the people, invest the money and promise returns in terms of interest, etc. These companies are required to register with the Registrar of Companies (ROC) under the ministry of corporate affairs of the central government, and then also obtain permission from the Reserve Bank of India (RBI) and function by obeying the guidelines of RBI. If there is any violation of these guidelines, then the RBI can take necessary actions, including stoppage of work of the concerned companies. There is another category of financial companies which raise funds from the people in terms of share/debentures, and then invest the money in various ventures, including real estate, hotels, television channels, newspapers, entertainment business etc., with promise of returns in terms of lands, apartments, etc. These companies are again to register first with ROC and then get approval from the Securities and Exchange Board of India (SEBI) under the union finance ministry, and obey the guidelines of SEBI. If the guidelines are flouted, then SEBI can take action in terms of prohibiting the activities of the concerned companies. The Saradha Group belongs to this second category. It may be noted in the context that the state government does not have any role in giving approval of these companies.
Grave financial irregularities are committed by both these two categories of companies when they violate the guidelines of RBI or SEBI, as the case may be, by alluring promises in terms of false and unrealizable offers of interest or returns. There is usually a period after which these returns are to be paid back to the depositors. In the intervening period, the concerned companies keep on raising funds and often make very partial payment, and then suddenly close their activities without any notice, thus cheating the common people on a large scale as has been the case with the Saradha Group, as mentioned above.
Under the circumstances, the state government, within its limited power, can take action if any written complaint of being cheated is obtained, by immediately arresting the proprietors of the concerned companies, attaching all of their properties and then arranging through the Court, the sale of the properties for repaying back to the affected depositors. If there is no written complaint, even then the state government can conduct enquiry on its own and submit the findings to the concerned Central Agencies (SEBI or RBI) for taking necessary action. The state government can also pass a bill in the state assembly for presidential assent for implementing the act, so as to take necessary action at the very initial stage of the offence in terms of decentralised administrative and legal framework in the districts.
The Left Front
It needs to be mentioned that from 2008-09, a new feature emerged when several companies within jurisdiction of SEBI had started operating in a manner which created apprehension of cheating of people. However, no written complaint of cheating was received by the state government. The Left Front government, therefore, started enquiry on its own involving jointly the finance department and home department (in terms of Kolkata police and district police) and then submitted its findings concerning four relatively big companies (including Saradha Group) to SEBI for necessary action. For the Saradha Group, the attention-drawing letter was sent by the Left Front government on August 23, 2010. We now find that after closing down of offices of Saradha Group that SEBI has recently issued an instruction on April 23, 2013 on the Saradha Group to pay back to the depositors within a period of three months and with prohibition on taking any further deposit. Although this is a step in the right direction, it has been much too delayed.
It is also noted
with serious concern
that we still do not know about any follow-up action by the
government regarding the enquiries started by the Left Front
the affairs of four companies mentioned above. We do not
know because despite
our specific queries, no answer was given in the state
assembly. Moreover, when
a discussion on this issue was proposed on December 11, 2012
two Left Front
MLAs (including one lady tribal MLA) were beaten up. We also
do not know what
action was taken by the TMC-led state government on the 2009
bill which was
unanimously passed in the assembly (with TMC MLAs present)
assent in the first twenty months of its existence. We now
find that on the
basis of a communication from OSD & ED special secretary
to the governor of
West Bengal to the secretary to the
Meanwhile, the sufferings of depositors remain unattended. We therefore urge upon you for considering the following actions:
(1) As several states are involved in this massive fraud of Saradha Group, CBI should immediately be involved in the investigation of this fraud under supervision of appropriate Court.
Since SEBI is the nodal central agency, and the recent verdict of the Supreme Court (2012) clearly directs SEBI to be the agency for necessary action, SEBI should also be instructed in coordination with CBI and SFIO to move into this Saradha case immediately, for a proper and comprehensive investigation into the total list of properties (including different forms of illegal transfers) for immediate attachment and for moving the Supreme Court as well as Kolkata High Court for selling of the properties needed for repayment to the depositors without delay, and also for exemplary punishment for the offending persons.
This entire process of investigation and attachment should be, for reasons of neutrality and fairness, under the appropriate supervision of Supreme Court and Calcutta High Court.
(2) Where there are reasons for anxiety regarding other financial companies in the state, joint action as mentioned about, may be undertaken immediately for correcting the practices of these financial companies for preventing further damages.
(3) National small saving schemes should be immediately restored by the central government to their previous status of attractiveness, with simultaneous restoration of commission of agents by both the centre and the state government.
(4) Along with the highest priority on refund of depositors’ money, attention may be given from the national level for a massive programme of an economic reconstruction of the lives of affected depositors (small and marginal farmers, small and tiny entrepreneurs, traders etc.) in terms of soft loans from the nationalised banks to the willing persons as well as rejuvenating the movement of Self-Help Groups in the state and democratically elected co-operatives (now rendered inoperative in the state) so that this massive loss can be transformed into a programme of reconstruction for growth of production and employment.
There is also a need for paying attention to problems of journalists, performers and others connected with the closing down of newspapers and TV channels in terms of inducting new entrepreneurs (without any link with irregular financial companies), or in terms of helping formation of co-operative of employees through assistance including soft loan.
(5) An all-out democratic and decentralised campaign should be started immediately among the affected people for convincing them to stay away from these irregular financial companies and to keep their savings, among others, specially in post office small saving schemes, nationalised banks and co-operative banks.
Other members of the delegation were Asim Dasgupta (former finance minister, West Bengal), Basudev Acharia (MP), Probodh Panda (MP), Manohar Tirkey (MP), Barun Mukherjee (MP), Subhas Naskar (MLA), Paresh Adhikary (MLA), Prabodh Chandra Sinha (MLA), Anadamoy Mondal (MLA), Chand Mohammed (MLA)