Comment

Of Saradha and Others

During the first term of the erstwhile Left Front Government of West Bengal, Ashok Mitra, the then finance minister, imposed a ban on the operation of the then existing chit funds, some of which were named Sanchita, Sanchayani etc. But subsequently, many such non-banking financial intermediaries mushroomed in this state, A few of them collapsed and those who deposited their hard-earned savings with them suffered severely. Since the areas of operation of these agencies were not large, there was not much uproar.

But now, the operation of one such fraudulent intermediary group with a wide catchment area, namely the Saradha group, has hit the headlines, because its directors have closed down the business and gone into hiding without paying back the money deposited by the customers through agents. At the time of writing the Chief of the Group was finally nabbed by the police in J and K. The money was collected by offering abnormally lucrative terms. The group drew crores of rupees, and most of the depositors in their land-flat scheme were to be repaid during the second half of April. But just on 16 April, the main office and all the branch offices closed their shutters. The depositors, unable to trace the officials, have vented the full venom of their wrath on the agents and the latter have either absconded or taken to the streets, some agents themselves had deposited good amounts of money, and one of them has already committed suicide. And the wrath of the agents has not spared even the chief minister. The group was engaged in multifarious business activities and brought out several newspapers as well, all of which are now closed.

More revelations have followed. One MP of the ruling Trinamul Congress was the Chief Executive Officer of the Saradha Group, and he must have known what the future of the concern, as far as keeping the promises to the depositors was concerned, was going to be. The MP on a more charitable interpretation, may be called an extremely gullible person, but many would prefer to call him a manipulator, because a high-level executive cannot evade his responsibility and to call him just a paid employee is only a specious defence.

An agent named Krishnapada Mandal of Dumdum area, who was formerly a rickshaw puller, had collected about Rs 2.5 millions from the depositors for the company. He reported to the correspondent of a leading daily that he had served the company because he and other agents had been shown the chief minister's pictures with the owner, Sudipto Sen. They had also seen on the TV the ruling party's closeness with the owner. The revelation about the Saradha group has highlighted several points. One is the severity of the unemployment problem. The Company could draw numerous agents from different areas in West Bengal, and employ them for collection of deposits. These agents served the company because they hoped to earn more than they could do earlier. Most of these agents had been either totally unemployed, or underemployed, falling in the category of 'disguised unemployment' according to the original definition of the term. One can find throughout West Bengal many other such companies and thousands of such agents trying to draw deposits from the people and thus endeavouring to endear themselves to their bosses and to attain a decent standard of living with their salaries and commissions. The Saradha Group outdid all others in the collection of money, presumably because of its camaraderie with the power-wielding politicians. The senseless remarks of some ministers of the present Trinamul Congress government have already strengthened the impression that the functionaries of this government were active collaborators in the cheating business. The second point meriting attention is the poor level of consciousness of the depositors who, relying on the promises of the company, deposited their hard earned money. It is, however, not unnatural in a situation where human beings, under the influence of globalization and consumerism, become greedier and self-centric, which make even the poorer and weaker of them liable to be duped by the fraudulent promise of high returns. The possibility of the success of such trickery increases when powerful persons in political power are projected as patrons. This time, nemesis has caused such projections to miscarry and functionaries of the ruling party itself have been accused of cheating people. Of course, the human cost is heartbreaking; a number of depositors have committed suicide.

Usually such companies repay the earlier depositors and pay their agents with the money collected from the later depositors. This is feasible, although temporarily, when a company makes brisk business in other fields with high returns and continues to attract deposits on a highly increasing scale. But in an economy that is struggling to emerge from recession such a proposition is a chimera. This is not beyond the comprehension of the founders of such companies. But when a company decides beforehand that it would use its political clout to cheat its customers, this consideration has little value.

Frontier
Vol. 45, No. 43, -May 5-11, 2013

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