PRESENTED BY:-

Nitish Garg
Gurharpreet
Ranganath
SCAM WAS…
The Saradha Group financial scandal was a major financial
scam and political scandal caused by the collapse of a Ponzi
scheme run by Saradha Group, a association of over 300
private companies that was believed to be running collective
investment schemes popularly referred to as chit funds.
The group collected around 200 to 300 billion (US$4–
6 billion)
1.7 million depositors before it collapsed in April 2013.
Its name is a cacography of Sarada Devi, the wife and spiritual
counterpart of Ramakrishna Paramahansa—a nineteenth-
century mystic of Bengal.
Sudipto Sen was the chairman and managing director of the
Saradha Group. Sen was described as a softly spoken, charming,
and forceful orator. At the time of his arrest, he was in his mid-50s.
In his youth, he was known as Shankaraditya Sen, and was part of
the Naxalite movement in West Bengal.
Debjani Mukherjee was one of the executive directors of Saradha
Group who could sign cheques on behalf of the group. She was
arrested together with Sudipto Sen.
Key People
 Sudipto Sen
 Debjani Mukherjee

Originally a financial concern but invested heavily in brand

building.
 Bengali film industry

 Local television channels

 Newspapers

In 2011, Saradha Group buys Global Automobiles, a heavily

indebted motorcycle company.
CSR Activities – Donated motorcycles to Kolkata Police
The group also invested in football clubs like Mohan Bagan and
sponsored Durga Puja.
TO BUILD BRAND…
Saradha group heavily invested over high visibility sectors such
as;
• Bengali film industry
• Local TV channel
• News papers
Saradha group brought Bollywood actor Mithun Chakraborty
as brand ambassador of Saradha group’s Media platform&
paid him a whopping Rs.1.76cr as fees for hosting a political
chat show ‘’Bangla bolche songe Mithun’’ on his Channel 10
news channel but allegedly without signing any formal
agreement.
• Saradha group had several branches in West Bengal, Jharkhand,
Assam, Odisha, Chhattisgarh and other state to get public
deposit.
• Scam summed up to Rs.2460 crore & about 80% of money still
unpaid to depositors.
• They used three scheme namely monthly income deposit, Fixed
deposit & recurring deposit.
 SARADHA GROUP HAD NOTHING TO DO
WITH CHIT FUND BUSINESS:
Saradha Group have got
about 160 registered
activities including realty
and resort but not even one
activity was registered as
Chit Fund in the State.
In the report, it is also stated
that the four companies of
Saradha group used to
retrieve money by attracting
many people by promising
them a landed property or a
foreign tour, either of the
two, in return of their
deposits.
CHIT FUND
• A kind of savings scheme practiced in India
• Can be conducted by financial institutions or between group of
friends and family.
• Popular because other small savings schemes run by Indian
Postal Service etc give low rate of return.
• Chit Funds are also misused by its promoters and there are
many instances of the founders running what is basically a
Ponzi scheme and absconding with their money.
HOW CHIT FUND WORK
WHAT IS A PONZI SCHEME ?
A ponzi scheme is a fraudulent investment operation that pays
returns to its investors from their own money or the money
paid by subsequent investors, rather than profit earned by the
organization.
Offering investment products with extreme high returns in
investments that actually don’t exist.
They don’t invest the money, but pay the promised returns
with the investors own money.
The money of new investors is being used to pay the old
investors.
Man behind Saradha…
• Sen was chairman & MD of saradha group.

• After collapse of Saradha group, Sen wrote

a latter to CBI hurling serious allegation
against suspended MP of Trinamool
congress (TMC) Kunal Ghosh.

• Sen wrote he had paid large sum of money

to several politicians.

• Currently, he is in jail in Kolkata.

Con…
He also stated that TMC leader Kunal Ghosh had forced him to
enter into money-losing media ventures.

Kunal Ghosh allegedly blackmailed Sen and forced him to sell

one of his channels at below market price.

After posting this letter to CBI on April 10, 2013. Sen fled from
Kolkata.

Later he along with two other aides was arrested from

Kashmir.

Currently, he has been lodged in a jail in Kolkata.

OPERATIONS AND SCAM

•Started in 2006 with promises of astronomical returns in Ponzi

Schemes. Started building brand by buying and selling media
channels
• Used nexus of companies for money laundering
•Collected money by using secured debentures and redeemable
preferential bond
• Violation of section 67 of Indian Companies Act
• SEBI challenged them for the first time in 2009
• Creation of more than 200 new companies associated with each
other in various fields like education, Exports, Automobiles,
Shopping mall, Agro Development, Tour & Travels and much
more.
COMPANIES INCORPORATED UNDER SARADHA
GROUP
Saradha BuildDev,
Saradha Realty India,
Saradha Infra Properties,
Saradha Township,
Saradha Villa
Saradha Housing
Saradha Exports
Saradha Automobiles India
Saradha Tours & Travels
Saradha Biogas Production
Saradha Printing & Publications
And many more
• As per the Chit Fund Act of 1982 the chit funds are regulated
by the state governments rather than the SEBI.
• Scam first investigate by SEBI in 2009, later SEBI warned the
state government of West Bengal about Saradha Group's chit
fund activities in 2011, again prompting Saradha Group to
change its methods.
OPERATIONS AND SCAM CONT…….
•SEBI persisted, in 2010, Saradha’s method of raising funds
changed
•Collective Investment Schemes like tourism packages, real
estate fund launched in the name of Chit Fund
•In 2011, SEBI warned West Bengal government about the
alleged schemes of the company as the concept of chit fund is
regulated by state governments and not by SEBI
•In 2012, SEBI identified that the group operated CIS and not
Chit Fund.
•Saradha group started trading in stock market and siphoning
off the proceeds
• Money collected by Saradha Group of companies per year in
billion INR. 95% of the fund was collected in the last three
years of the scam.
• Source: 2014 SIT Report
 Economic effect…
A steady decline in small-
savings deposits and a rise in
withdrawals.
This affected the overall
macroeconomic situation of
the state.

Graph shows the

fall of savings in
government
schemes with the
rise of Ponzi
funds (figures on
y axis are in
Crores INR)
REACTIONS -

• On 7 December 2012, RBI governor stated that the West

Bengal government should initiate suo motu action against
companies which were indulging in financial malpractices.
• Sudipto Sen, wrote a confessional letter to CBI in April
2013 and fled. He was later arrested.
• PIL was filed on 22nd April 2013 in Guwahati High Court
and Calcutta High Court
• CBI investigation started
• As per Supreme Court's order Bengal SIT handed over all
arrested suspects including Sudipto Sen, Debjani Mukherjee
and Kunal Ghosh over to CBI.
• CBI arrested West Bengal Transport minister Madan Mitra on
the charges of criminal conspiracy, cheating, misappropriation
and deriving undue financial benefits from the Saradha Group.
Cont…
 The CBI said Mitra was arrested on prima facie evidence of
criminal conspiracy, cheating, misappropriation and deriving
undue financial benefits from the Saradha Group after five hours
of questioning by the investigating agency.

Mitra's arrest came weeks after the investigating agency

arrested Trinamool Congress's Rajya Sabha MP Srinjoy Bose,
accused of blackmailing Saradha Group chief Sudipto Sen into
paying him Rs.60 lakh a month, an allegation he later declined.
• Sudipto Sen, Debjani Mukherjee, politicians(TMC leaders
Kunal Ghosh, Shrinjoy Ghosh, West Bengal Transport
minister Madan Mitra etc.) & several other arrested.
• Most of politicians bailed out now.
LEGAL IMPLICATION AND CURRENT
STATUS

22nd April 2013 West Bengal government announced that a

four-member judicial inquiry commission headed by
Shyamal Kumar Sen, retired Chief justice of Allahabad High
Court would probe the scam

On 24th April 2013, Mamata Banerjee announced a

controversial Rs 500-crore relief fund for the low income
depositors of the Saradha Group
CONT…
In light of the scam, SEBI requested sweeping powers to
investigate and prosecute any fraudulent collective investment
schemes.

On 7 May 2013, Calcutta High Court appointed a three

member administrator group to run Tara News and Tara Muzic

On 23 May 2013, Chief Minister, Mamata Bannerjee indicated

the willingness of West Bengal Government to take over
Saradha owned TV channels Tara News and Tara Muzic, which
had earlier been sent under administration by Calcutta High
Court