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Ministry To Probe Saradha Group

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In the wake of an alleged fraud involving thousands of crores by Kolkata-based Saradha group, the Centre on Thursday, 25 April 2013, ordered a SFIO probe into suspected misuse of the public money by various chit fund companies. The Enforcement Directorate has also registered a money laundering case in the case.

A special task force has been set up under the Serious Fraud Investigation Office (SFIO) to carry out all investigations into such companies, the Corporate Affairs Ministry said today in a statement.

The decision was taken in view of a "larger public interest involved in these cases, and concerns regarding misuse/laundering by such companies of the ill-gotten wealth and the possibility that the promoters of these companies may strip these companies," the Ministry said.

The Corporate Affairs Ministry said that the Task Force will also coordinate with other law enforcement agencies and regulators wherever required, in its investigations.

Capital market regulator Sebi has already passed an order against one group entity, Saradha Realty India, asking it to wind up all collective investment schemes and refund the money collected from investors.

Besides, Sebi is also probing at least ten other Saradha entities for raising funds without the regulator's approval.

The Income Tax Department would also soon start its investigations into the activities of this group.

Besides Saradha group, the meeting also deliberated on steps required to check suspected fraudulent activities of other chit fund companies, they said, while adding that a formal announcement of the probe would be made soon.

The alleged scam at Saradha group is said to have defrauded thousands of investors, including poor people, in West Bengal, while its chief Sudipta Sen has been brought to Kolkata after being arrested in Kashmir valley two days ago.

In the past, the Ministry had received complaints of alleged ponzi schemes at 73 companies of about a dozen different groups operating in West Bengal. These complaints, which include those against Saradha group entities, had been referred to concerned agencies and departments by the Ministry.

Market regulator Sebi is also probing the fund-raising activities of Kolkata-based Saradha group. Besides, the Income Tax department would also investigate investments and finances of Saradha group. It is already probing five other similar cases in West Bengal.

Read Also: More Saradha Entities Under Sebi Scanner

Without specifically naming Saradha group, the Corporate Affairs Ministry said that it has "taken note of the misuse by certain chit fund companies who have raised huge sums of money from the public at large."

The Ministry said the probe has been ordered in view of a larger public interest involved in the issues, although the state governments are the appropriate authorities for regulation of such chit fund companies and schemes under the Chit Fund Act, 1982.

"... it has been decided by the Ministry of Corporate Affairs to set up a Special Task Force in the SFIO to investigate the affairs of such companies. Accordingly, all investigations into such companies are being entrusted to SFIO with immediate effect," it said.

The decision to order a probe came after a meeting taken by the Corporate Affairs Minister Sachin Pilot of the top ministry officials this morning, where activities of Saradha group and other money-pooling entities were discussed.

Besides Saradha group, the meeting also deliberated on steps required to check suspected fraudulent activities of other chit fund companies, sources said.

The alleged scam at Saradha group is said to have defrauded thousands of investors, including poor people.

In the past, the Ministry had received complaints of alleged ponzi schemes at 73 companies of about a dozen different groups in West Bengal. These complaints, which also include those against Saradha group entities, were referred to concerned agencies and departments by the Ministry.

Saradha group has more than 100 firms registered with the RoC (Registrar of Companies) for businesses across sectors including real estate, auto, education and entertainment.

Most of these companies are registered with names starting with 'Saradha', while there are also firms with other names. Authorities are already looking into alleged ponzi or multi-level marketing schemes of at least ten Saradha firms.

Majority of the group's firms are into real estate. These include Saradha Build-Dev, Saradha Realty India, Saradha Infra Properties, Saradha Township, Saradha Villa and Saradha Housing. The group also has registered companies related to education, exports, automobiles, shopping mall, agro development, tour and travels, among others.

I-T To Probe Saradha Investment Schemes
The Income Tax department will probe investments and finances of Kolkata-based Saradha group which is hitting headlines for allegedly defrauding thousands of depositors. The department will probe the group even as it is investigating five other similar cases of this kind in West Bengal since last year, top sources in the department said.

Showcause notices for production of documents and recording of statements of promoters, investors and prominent agents in this case could be issued soon, they said.

The I-T, according to sources, will also go through the business and personal accounts of the Chairman of the Saradha group Sudipto Sen and his close associates and the transactions of the groups' various investment schemes, they said.

(Agencies)