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Protests rock West Bengal over chit fund scam

Mamata Banerjee chairs a high-delegation meeting to find a legislative solution

Gulf News

Kolkata: Scenes of violent protests were witnessed all over West Bengal against chit fund company Saradha Group after its owner Sudipto Sen absconded with money from thousands of small depositors.

Reports of suicides by depositors and agents of the company came in from different parts of the state. According to the police, there were at least three confirmed reports of death, two attempted suicides and several incidents of vandalism at various branches of the company across the state over the weekend. Homes of agents who used to work for the company were either vandalised or set ablaze. A few hundred agents are already on the run and some were arrested, based on complaints of fraud and cheating by depositors. Police pickets have been set up all across Bengal to prevent a law and order crisis.

Urmila Pramanik, a resident of Baruipur in South-24 Parganas district, who had invested Rs30,000 (Dh2,035) in the chit fund company, set herself on fire on Sunday evening in her home after coming to know that the firm had gone bust.

Lakshman Ghorui of Diamond Harbour consumed poison but his condition was stable, police informed.

“At risk is at least Rs200 billion, mostly in small savings from people of the lowest denominator such as daily wage labourers and shared croppers. But this crisis is only going to deepen as there are at least 10 more Ponzi companies operating in Bengal offering higher returns. They have not yet defaulted on repayment but will collapse soon because fresh collections will completely dry up. Companies such as these have ruined households in Bengal in every decade since the 1980s, but the crisis is far bigger this time because of its sheer size,” said an official requesting anonymity.

TMC distances itself

The Trinamool Congress (TMC) distanced itself from the chit fund company. Speaking to Gulf News, Mukul Roy, general secretary of TMC, said: “These companies were floated in 2008 in collusion with the then Left Front government and UPA. Charges of TMC leadership having links with the promoters of these companies are completely baseless. The state government is mulling a legislation to regularise collective investment scheme firms. Strict action will also be taken in case of payment defaults or fraudulent practices.”

The crisis could not have come at a worse time for the TMC as the state soon goes to panchayat (local body) elections, ahead of the 2014 general elections. According to party insiders, TMC founder and West Bengal chief minister Mamata Banerjee is extremely unhappy with the way things have turned out and has asked Kunal Ghosh, TMC Rajya Sabha member of parliament (MP), who was also the CEO of the media unit of the chit fund, and Srinjoy Bose, another TMC MP who collaborated with the group, to be ready to resign from parliament and all party positions in the next few days.

Banerjee on Monday chaired a high-delegation meeting with various ministers, departmental secretaries and senior police officials to frame a legislative response to the scam. Insiders claim that an ordinance will soon be initiated to acquire all property belonging to the chit fund company and later auctioned. The proceeds will then be offered to investors along with their principal amount.

After the high-level meeting, Banerjee blamed the central government and the Left Front for the mess. “I have set up a high-level committee chaired by Shyamal Sen, ex-governor of West Bengal and ex-chief justice of the Calcutta High Court. The government will also enact a new law to protect people from such cheats. The bill that CPI-M is talking about has been stuck since 2006 due to certain weaknesses. The centre will refund the bill and then we will enact the new law,” said Banerjee.

“The chief minister may be keen to acquire the properties and return the principal to the investors. But the problem is that Sen had been planning his escape for sometime now. Initial investigations reveal that most of the money has been siphoned off to unknown destinations and properties have been bought in the name of third parties. Unless Sen is arrested, it is impossible to know the truth. We have dispatched various teams all over the country to nab him, but we fear he may have left the country using a forged passport,” said a police official in charge of the investigation.