Scam brake

ON January 3, four-time Lok Sabha Member Sudip Bandopadhyay of the Trinamool Congress was arrested for aiding the financial growth of the Rose Valley Group. According to the Central Bureau of Investigation (CBI), the Rose Valley Group “had collected around Rs.17,000 crore illegally from general public after enticing them with false promise of paying higher rate of interest”. A senior CBI officer said that the MP had been accused of “promoting the business of the Rose Valley Group of Companies and benefiting from the proceeds of the business both in cash and kind”. Sudip Bandopadhyay is also known to be close to the Rose Valley Group chairman, Gautam Kundu, who was arrested in March 2015. The CBI has reportedly also found Sudip Bandopadhyay to have had links with the Saradha Group, whose multi-crore deposit collections scheme was one of the biggest financial disasters to hit West Bengal.

Three days before Sudip Bandopadhyay’s arrest, another Trinamool MP, Tapas Paul, a major star of Bengali cinema, was arrested in connection with the Rose Valley scam. He was on the board of directors of the Rose Valley Group’s films division for a period of eight months during 2009-2010. This was after he was elected from the Krishnanagar Lok Sabha seat in the 2009 elections.

Both the Trinamool MPs were charged under Sections 420 (cheating), 409 (criminal breach of trust by a public servant) and 120B (criminal conspiracy) of the Indian Penal Code (IPC), and under several provisions of the Prize Chits & Money Circulation Schemes (Banning) Act, 1978. They were taken to Bhubaneswar and produced in a court there since the FIR in the case was registered by the CBI in the Odisha capital.

If Tapas Paul’s arrest came as an irritant to the Trinamool, Sudip Bandopadhyay’s arrest has been the biggest setback faced by the party in connection with its association with ponzi scams. Sudip Bandopadhyay is not only one of the most respected party veterans and a trusted aide of Chief Minister Mamata Banerjee but also the Leader of the Trinamool Congress Parliamentary Party in the Lok Sabha. The Chief Minister’s immediate reactions to the two arrests were telling. She responded to Tapas Paul’s arrest with allegations of “political vendetta” and said: “I don’t care if they arrest all my colleagues. Tell me Modi babu, when will you arrest us all, including myself?” But after the CBI put the cuffs on Sudip Bandopadhyay, she exclaimed with barely concealed perturbation: “I cannot believe they have arrested Sudip-da.”

The Trinamool is indeed still smarting from the damage done to its reputation by the arrest of several top leaders in connection with the multi-crore Saradha scam—Rajya Sabha members Kunal Ghosh and Srinjoy Bose in 2013 and Madan Mitra, then a senior Minister, in 2014. The recent arrests have shaken the party. The insecurity at the topmost level was reflected in Mamata Banerjee’s words: “Some of the officers in E.D. [Enforcement Directorate] and the CBI have told me that the Modi government has given a list of whom to arrest. They have been told to arrest Abhishek [her nephew and Lok Sabha member who is being groomed to be her successor], Moloy Ghatak [State Minister for Labour, Law & Judiciary], Firhad Hakim [Minister of Urban Development], Sovan Chatterjee [Mayor of Kolkata, Minister for Housing, Environment, Fire & Emergency Services] and Suvendu Adhikari [Transport Minister].”

Ever since the Saradha scam broke in 2013, the Trinamool’s image has received one battering after another. The Narada sting operation was made public just before the Assembly elections in 2016. Top party leaders including MPs Saugata Roy, Suvendu Adhikari, Mukul Roy, Kakoli Ghosh Dastidar, Sultan Ahmed, Prasun Banerjee, Sovan Chatterjee and Deputy Mayor of Kolkata Iqbal Ahmed, and Ministers Firhad Hakim and Madan Mitra were seen accepting cash on camera.

The Trinamool, however, returned to power for its second consecutive term with a massive mandate, winning 211 out of the 294 Assembly seats, almost completely on the strength of Mamata Banerjee’s popularity and appeal. But that did not clean up the image of her colleagues who were seen on camera pocketing lakhs of rupees or erase the memory of how the ruling party had endorsed the activities of the Saradha Group, which pushed poor investors to the brink of ruin. The recent developments have revived the feeling of uncertainty that the Saradha arrests had produced in the party. “Once again, there is a feeling of tension over who will be arrested next,” a Trinamool source told Frontline .

‘Political vendetta’ The timing of the arrests, however, has given some credence to Mamata Banerjee’s accusation of “political vendetta”, at least among her supporters. The revival of the case by the central investigating agencies after a lull of more than one and a half years since Gautam Kundu’s arrest, at a time when the Trinamool’s protests against the demonetisation programme are the loudest in the country, has raised eyebrows in political and social circles. While the CBI claims that it was collecting evidence for the past two years, detractors of the Modi government feel that the investigating agency is being used by the Centre to strike at political opponents.

“I have been asked to remain quiet [on the issue of demonetisation], but I have always raised my voice for the people. I cannot remain quiet, even if all my MLAs and MPs are arrested, even if me and my family members are arrested,” Mamata Banerjee said. “He [Modi] is sawing off the very branch on which he is sitting,” she said, borrowing an image from the legend of Kalidasa. “I have no objections if another veteran BJP [Bharatiya Janata Party] leader like Lal Krishna Advani, or Rajnath Singh, or Arun Jaitley takes over the reins of the government.” She labelled the Centre a government of conspirators and rechristened the CBI as “Conspiracy Bureau of India”.

Mamata Banerjee found support in the Congress, especially after sharing the dais with Congress vice president Rahul Gandhi on demonetisation. The Congress also accused Prime Minister Narendra Modi of using the CBI, the E.D. and other agencies “to unleash vendetta against political opponents”. The BJP, however, pointed out that the probe had been ordered by the Supreme Court during the time of the previous Congress-led United Progressive Alliance (UPA) government.

Mamata Banerjee’s defiant stance notwithstanding, the image of her party has once again taken a severe beating. This, according to the eminent social scientist and political observer Biswanath Chakraborty, may hamper her ambition to play a greater role in national politics. “The impact she had hoped to make at national-level politics with her opposition to the BJP’s demonetisation programme has undoubtedly suffered a setback. Now, whether Mamata Banerjee will be able to keep up the momentum of her movement against the Modi government will depend on how the BJP fares in the upcoming Uttar Pradesh Assembly elections,” said Chakraborty, a professor of political science at Rabindra Bharati University, in a conversation with Frontline .

As the news of Sudip Bandopadhyay’s arrest became public, clashes broke out between Trinamool and BJP activists. Trinamool workers laid siege to the BJP headquarters in Kolkata and a pitched battle ensued for hours. Sporadic clashes between supporters of the two parties continued for days afterwards, and Trinamool mobs vandalised several offices of the BJP in different parts of the State. The residences of BJP MP Babul Supriyo and State president Dilip Ghosh were attacked.

In Delhi, acting upon the instructions of their party supremo, Trinamool MPs staged demonstrations and courted arrest outside the Prime Minister’s office and residence.

The tentacles of Rose Valley had spread far and wide in political, cultural and social spheres. According to sources in the CBI, investigations have revealed that politicians from different parties, actors and entertainers had links with the group.

Even Babul Supriyo’s name has been making the rounds. Supriyo himself admitted to having given performances in Rose Valley functions. Mamata Banerjee immediately demanded his arrest. “Why will Sujan Chakraborty [of the Communist Party of India–Marxist] not be arrested? Why will Babul Supriyo and Rupa Ganguly [BJP leaders], who regularly did programmes for Rose Valley, not be arrested?” she asked.

Mamata Banerjee has always insisted that chit fund companies like Saradha and Rose Valley began their operations during Left Front rule in the State. “My government, in fact, was the first to bring legislation against chit fund companies,” she said. However, so far, it is only the Trinamool, and no other political party, whose leaders have formally come under investigation.

The rise of Rose Valley The Rose Valley Group, which started its operations in 1997, allegedly raised around Rs.17,000 crore from the public from several States through a huge army of agents. Over 70 per cent of this collection is believed to have come from West Bengal alone.

Gautam Kundu and his elder brother Kajal set up the company Rose Valley Resorts and Plantations in 1997 and began raising funds from the public through illegal collective investment schemes (CIS). In 1999, the group was denied permission by the Securities and Exchange Board of India (SEBI) when it approached the latter for clearance to raise funds from the public. However, the group allegedly continued with its operations and started expanding and diversifying its business. Real estate, entertainment, media, travel and tourism and hotels—Rose Valley had its fingers in many pies. But the bulk of its income continued to come from various fund-collection schemes that were in violation of SEBI’s rules. At a time when other ponzi firms and chit fund companies began to close down, the Rose Valley Group found ways to survive.

The tables turned the day the Supreme Court allowed the CBI to investigate the Saradha scam in 2014. The CBI and the E.D. soon widened the scope of their investigations to chit fund operations in the entire eastern and north-eastern region, and Rose Valley came under their lens.

However, there were no cases of default, and Kundu maintained that his was a legitimate “time share” business. The group claimed to raise money by way of hotel bookings, to be redeemed on maturity in the form of accommodation in its many hotels. In reality, the money was raised on the promise of huge returns, like any other illegal deposit collection scheme. Finally, in 2014, the E.D. started investigating the Group after receiving a complaint from SEBI.

Apart from West Bengal, the Rose Valley Group had considerable business in Tripura, where the Kundu brothers hail from. In fact, the CPI(M)-led Left Front government of the State found itself in an uncomfortable position after it emerged that Chief Minister Manik Sarkar himself had attended a programme organised by the group in 2008. Sarkar, who is reputed to be an honest politician, said: “At the time I attended the function, I did not know that the company was cheating people and raising funds. If I had known, I would not have attended the function.” He pointed out that it was the Left Front government of Tripura that had first asked for a CBI probe against chit fund companies.

Gautam Kundu, who took over the reins of the company after Kajal and his family died in a mysterious car accident in 2003, was known for his flamboyant lifestyle. He owned a fleet of cars, including a Rolls Royce Phantom; loved being photographed with matinee idols; produced films; and was also one of the main sponsors of the Kolkata Knight Riders of the Indian Premier League for two seasons.