Despite repeated alerts from Central agencies
The State Government consistently ignored all alerts and inputs from the Central agencies between 2004 and 2011 on massive financial fraud committed by several chit fund firms.
On the contrary, far from taking action against the offenders, the ruling party, including the Chief Minister, some prominent leaders and senior officers, promoted at least some of them.
According to sources, the State Government was very much aware of the modus operandi of the chit fund companies since 2004.
The State Home department in a letter to the Crime Branch (CB) police on April 27, 2004 had asked it to keep a watch on the functioning of 16 non-banking financial companies (NBFCs)/chit fund companies along with a list of 42 companies whose applications for certificate of registration had already been rejected by the Reserve Bank of India (RBI). But the early warning was either ignored or not taken seriously by the State Government.
Then on July 23, August 3 and August 11, 2010, the Reserve Bank of India (RBI) had written to the Crime Branch to take action against three non-banking financial companies such as Royal Vision Care, Shastra Enterprises limited and AM Finance who were running controversial ponzi schemes. In three letters, RBI Deputy General Manager M Sinha had asked the agency to investigate the matter and take action.
However, for some strange reasons, the CB sat over the matter until July 2012 when it finally chose to probe only one of them- the Shastra Enterprises limited and arrested four persons, including the CMD of the company on charges of duping investors of nearly Rs 5 crore at Baripada.
Shastra Enterprises is among the 44 chit fund firms being probed by the CBI presently under directions from the Supreme Court.
It is important to note that on February 14 and then on March 22, 2011, the State Government was apprised of the huge financial irregularities of the Seashore Group of Companies by the Central Economic Intelligence Bureau (CEIB) of the Union Ministry of Finance.
But the CB took up the investigation at long last in May 2012, a year after the then Chief Secretary in a letter directed it to probe the matter in May 2011.
On May 9, 2012, the CB asked a DSP-rank officer to probe the matter and a full-fledged inquiry into the financial fraud by the Seashore Group began two months later, in July 2012.