RoC’s slow inspection, police laxity marred Saradha probe in 2011

Anandita Singh Mankotia

NEW DELHI: The efforts of the ministry of corporate affairs to investigate the accounts of the Saradha group and dozens of other deposit-taking companies were marred by the uncooperative attitude of the Kolkata police and the Kolkata RoC, reveal ministry documents.

An internal note of the corporate affairs ministry said the inspection procedure was extremely slow and despite several letters, the Kolkata Police failed to furnish details of their investigations with regard to Rose Valley, one of the firms being probed. “The RoC (Registrar of Companies) office wrote to Commissioner of Police, Kolkata on 13, October 2011 followed by reminder on March 2, 2012, but no response was received from the Police,” stated an internal note of the ministry points dated March 29, 2012.

The ministry has also been critical of the functioning of the RoC Kolkata. “Inspection of none of the companies has been commenced by RoC Kolkata even after four and a half months from the date of ordering…This indicates an irresponsible approach on the part of RoC Kolkata and lack of supervision on the part of Regional Director (ED),” said another internal note of the ministry dated October 23, 2012, which also expressed frustration at the lack of progress into investigations against Rose Valley.

The ministry repeatedly informed the Economic Offences Wing of the West Bengal government about the complaints against the deposit-taking companies but did not hear back from the cell.

The government had begun investigating these firms after AH Khan Choudhury , the Congress MP from West Bengal, wrote a letter to the PMO on August 25, 2011, in which he alleged that 57 companies in the state in collusion with the leaders of Trinamool Congress had siphoned off money to buy 7,000 acres of land in the state, which would later be sold to companies that wanted to set up industries in the state. He had also said that directors in the corporate affairs ministry in Kolkata had links to these companies.

It had asked the regional director to personally look into the matter and to direct the registrar of companies (RoC) to report on the allegation regarding the land purchase. The inspection of all the 57 companies, including 14 Saradha Group companies was jointly deputed to the registrar of companies of Kolkata, Shillong, Patna and Cuttuck.

After the Saradha group went bust last month, the ministry of corporate affairs has tasked the Serious Fraud Investigation Organisation or the SFIO to investigate the operations of its 14 group companies. Sachin Pilot, the corporate affairs minister, has said that his priority is to help recuperate the savings of small investors who invested money in the Saradha group. The group’s chairman and managing director, Sudipta Sen, is under currently under police custody.

In his letter, Khan Choudhury had specifically complained against Saradha and Rose Valley. Six months later, he withdrew his complaint against Saradha, but in a letter on June 8, 2012 reiterated his demand that the central government probe Rose Vallye group companies. “Rose Valley Companies owned by Gautam Kundu has been cheating a large number of people in the name of chit funds,” Khan wrote in the letter to the PMO.

In July 2012, All India Trinamool Congress MP Somendhra Nath Mitra wrote a letter to the corporate affairs ministry alleging that the Rose Valley group was ‘collecting unaccounted black money from gullible investors’ and channeling it into political outfits in West Bengal. The MP asked the ministry to appoint a ‘special task force’ with central powers since ‘political level authorities in ‘their respective states of operations’ protected the group. The corporate affairs ministry’s inspection into Rose Valley’s accounts has revealed that it had a negative net worth of Rs 611 crore, while its liabilities amounted to Rs 2,094 crore for the year 2011-12.