Explained: Saradha chit fund scam and the Trinamool Congress connection

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Saradha scam: West Bengal Chief Minister Mamata Banerjee and the Narendra Modi government are locked in a fierce battle over CBIs attempt to quiz Kolkata Police Commissioner Rajeev Kumar in the infamous Saradha chit fund scam that an SIT headed by him probed before it was handed over to the central probe agency. The matter reached the legal corridors in Delhi on Monday with Supreme Court asking Kumar to appear before the CBI and also ruling out his arrest till February 20. The case that is in question is the Saradha financial scheme that promised high returns for small investments. The Saradha Group was set up by businessmen Sudipto Sen in the early 2000s. The company collected money through a wide network of agents who were paid 25% commissions. The company raised Rs 2,500 crore in just a few years. It managed to get film stars for endorsements of its schemes and made investment in football clubs, purchased ownership in media groups, sponsored cultural events like Durga Puja. At one time, actor and TMC MP Satabdi Roy and Bollywood star Mithun Chakraborty were Saradhas brand ambassadors. The group expanded its footprints in Assam, Tripura and Odisha and had a strong investors base of 17 lakh. The company was issuing secured debentures and redeemable preferential bonds to public in violation of SEBI rules. The watchdog bars companies from raising capital from more than 50 people without issuing a proper prospectus and balance sheet. Also, the companies must obtain SEBIs nod to operate and get their accounts audited. The SEBI had in 2009 raised a red flag and the group then diversified. It opened 239 more companies. The company raised money through schemes involving tourism packages, forward travel, hotel booking, credit transfer, real estate and others and also from ordinary people. The bulk of investors put in around Rs 50,000 each. Many also invested in the group through chit funds under the Chit Fund Act, 1982. Chit funds are regulated by the state government. By that time, politicians in the state had started taking about the fraudulent ways of Saradha to make money. In 2012, the SEBI asked the group to stop accepting money from investors and obtain the regulator This was the start of the crisis at the company. The second blow came in January 2013 when for the first time Saradha Group By April, the scheme had collapsed, prompting agents and investors to file hundreds of police complaints. Sen then fled West Bengal. In an 18-page letter, he blamed several politicians for poor investment and for the collapse of the company. The state government then set up a Special Investigation Team (SIT) to probe the case. The SIT was headed by now Kolkata Police Commissioner Rajeev Kumar. The case was transferred to the CBI in 2014 at the behest of Supreme Court. According to CBI, the SIT headed by Kumar had not handed over crucial documents to the CBI like diary, pen, pen drives. The CBI has also claimed that Kumar is a potential accused in the case. Sen had developed good relations with politicians. He had acquired ownership in media groups and also invested in the Bengal film industry. Then TMC MP Kunal Ghosh was appointed CEO of the media group in which Saradha invested Rs 988 crore. By 2013, the group was running newspapers in five different languages. According to Ghosh, he was withdrawing a salary of Rs 16 lakh per month. Srinjoy Bose, who was also a TMC MP at that time, was involved in the Saradha Groups media operations. Another TMC leader Madan Mitra who was then Transport minister, was heading the Saradha Group Sen had also gifted patrol motorcycles to Kolkata Police. The state government also deployed ambulances and motorcycles of Saradha in Naxal-hit areas of the state. In an affidavit filed before the Supreme Court, the Central Bureau of Investigation has alleged that the SIT headed by Kumar allegedly shielded companies that contributed heavily to the ruling Trinamool Congress. It said that there are a number of incriminating material collected during the probe against the senior police officials and politicians. It added that the SIT investigated the scam and crucial evidence like laptops, mobile phones etc were handed over to the main accused by investigating officer working under Rajeev Kumar.

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