On the last day of 2014, if one looks back over the year, one notices a series of scams in the poor State of Odisha. Most of these scams have deprived the State or the impoverished. They have flourished over more than a decade with impunity on account of patronage. Their ripples were felt from 2013, and 2014 has been a period of upheavals with no sign of effective remedy against the errant entities and persons.
The tip of the iceberg relating to the chit fund scandal throws up many important questions. Way back in April, 2004, the State Government was aware of the illegalities relating to a large number of nonbanking financial entities. The investigative agency, viz, the Crime Branch, was requested to keep a close watch on their activity and action taken in the matter was to be reported to the higher authorities. This letter was left in dung heap of papers and was not acted upon by the police authorities till around 2013. A decade of inaction provided a fertile ground for the scam to flourish.
Around March 2011, the Government of India’s Ministry of Finance, Department of Revenue (Central Economic Intelligence Bureau) addressed the Odisha Chief Secretary to convey certain intelligence inputs regarding the Seashore Securities ltd for further appropriate action. This communication was in continuation of an earlier one of February 2011 from the Deputy Director General of the Central Economic Intelligence Bureau addressed to the Chief Secretary. The communication inter alia conveyed, “The entity group collects deposits from the public through its main company Seashore Securities ltd. During a search, it was detected that the depositors have been lured by this company by offering very high interest rate, etc. But the interest paid has been shown in the accounts as dividends and paid out of the deposits only. As such, the company has no commensurate business income to make such huge interest payments. In effect, it is running a money circulation scheme. The amount paid as dividends was to the tune of Rs 99.85 crore and wrongly shown as expenditure in the accounts.” This communication of March 2011 was endorsed by the Chief Secretary to the Inspector General of Police (Crime), Odisha, for compliance, which was to be reported to the Chief Secretary. The endorsement was made around May 2011. This also hibernated in the records of the concerned police authorities till the stink bomb exploded in 2013 and its ramifications in the hands of the CBI have been on a rather slow pace of late.
There were affidavits filed in the Supreme Court by the State Government asserting that there was no involvement of persons in power, including politicians and bureaucrats and there was no “larger conspiracy”. It was also urged through affidavit by officers representing the State that there was nothing substantial to investigate in the case of Nabadiganta. The Supreme Court, however, came to hold, “Investigation by the State police in a scam that involves thousands of crores collected from the public allegedly because of the patronage of people occupying the high positions in the system will hardly carry conviction especially when even the regulators who are expected to prevent or check such a scam appear to have turned blind eye to what was going on.” The court went on to point out, “Money trail has not yet been traced. … so also the larger conspiracy angle in the States of Assam, Odisha and West Bengal …, … has not made much headway partly because of the inter-State ramifications, which the investigating agency needs to examine, but are handicapped in examining.” Pursuant to the apex court’s directions on May 9, 2014, the investigation and pursuant actions were handed over to the CBI.
Interestingly, during the interregnum of a decade from the Government of India’s letter of 2004, important leaders of political parties, including the one in power, continued to demonstrate their patronage through their blessings at the inauguration ceremonies, etc., of TV channels (connected with chit fund entities) and so on. The letter of 2004 never germinated into any fruitful action. It remained barren till things got out of hand. A present senior Cabinet Minister has mentioned both in the legislature and outside it that the arrangements made with a chit fund company relating to 11 hospitals (approved prior to the present Minister’s tenure) have been annulled. The statement inter alia indicates that the Minister is of the opinion that official patronage was extended to this specific tainted chit fund company. There is no indication as to whether the CBI has interacted with the Minister to elicit further details. It has been reported that Subhankar Nayak has disclosed the names of important officers belonging to different Services and has also indicated alleged involvement of some Ministers. But little is known about further investigations in this regard. The inexplicable hibernation relating to the letter of 2004, which was available to the Commissionerate of Police and Crime Branch, resulted in facilitating a decade of destiny to the culprits. The chief of a chit fund entity under investigation has disclosed to the media that he has revealed the names of politicians and bureaucrats whose patronage has been enjoyed in the widespread operation of illegal exploitation. The wheels of investigation are yet to reach those doors.
Meanwhile, one of the petitioners in the Supreme Court inter alia states, “The media reports quoting the sources in CBI states 11 MlAs, including a couple of Ministers, have been dodging summons to appear before it for questioning on their links with the AT Group, which appears to have thrived with the patronage of the entire top brass of the BJD. Several top police officers are also under the CBI scanner for their dubious role in first facilitating the operations of the chit fund scam and then badly botching up the probe after the scandal broke in early 2013. Constrained by a shortage of staff, the CBI office here has not been able to start the investigation against other 40 players in the chit fund scam yet. ….. There are several disturbing media reports of strings being pulled at the highest quarters in New Delhi to get the CBI to go slow on the investigation. Further, the CBI sources in the State admit that they are under ‘tremendous pressure’ not to dig too deep into the scam, especially its political links.” These statements have been made in the context of an application (arising out of an earlier writ application) for suitable directions for monitoring, etc. The Supreme Court is yet adjudicate the prayers.
What baffles the ordinary citizen is that illegalities were rampant and demonstrably visible, but there was apparent slumber and convenient inaction. The subsequent ongoing investigations have to bear in mind the directions of the Supreme Court relating to the “larger conspiracy angle”, “money trail” and “patronage of people occupying high positions in the system”. The days ahead are going to be taxing and crucial for the CBI to establish its efficiency and trustworthiness. No doubt, they are short of the required manpower in quantitative terms. Surely, this position can be easily remedied. The grapevine has it that some positive steps in this direction have already been initiated. The credibility of the CBI is now under an acid test.
Independent of the all this, there has to be an increased focus of attention on the modality of the refund of money to the defrauded gullible depositors. A legal mechanism has to be put in place so as to enable refund of money pending finalisation of the cases in the CBI Court. Attempt of creating a corpus for such a purpose out of taxpayers’ money has invited very adverse reactions. The corpus could base itself on the forfeiture of the properties acquired through utilisation of the depositors’ money. lessons could be drawn from the steps taken in this regard in the context of the case of Harshad Mehta and finally and a total annihilation of this racket of exploitation has to be ensured. It is common knowledge that there are scamsters still in operation making a mockery of the relevant laws. A combing operation in furtherance of enforcement of law appears to be an unavoidable necessity in the prevalent scenario. This, however, calls for active assertion of the alert citizens for protecting themselves from being fatally attacked by the virus of ponzi schemes. In that context, it is now an urgent duty of every citizen to cry out and pinpoint the deceptive devices of the proponents of the look of several thousands of crores. Arise, awake and act is the insistent cry of the hour. And this concerns us all!
I wish you all a very Happy New Year.
(The writer, a Senior Advocate, is a former All India Service officer, a former diplomat, a former editor, a former President of Orissa High Court Bar Association and a former Advocate General of Odisha. jayantdas@hotmail.com)
