A report by a government agency that tracks corporate fraud has revealed that poor and small investors who put in less than Rs 50,000 were the main target of an unlicensed fund run by media conglomerate Saradha group and are still owed a huge Rs 2,394 crore more than a year after the group went bust.
Last year, the Centre ordered a multi-agency probe into the activities of the Kolkata-based Saradha group of companies in a scandal involving around Rs 20,000 crore. The company's promoters and top executives were accused by angry investors of creating a web of companies across several states in eastern India to dupe small depositors.
Its flagship company, Saradha Realty, collected Rs 2,459 crore from hundreds of thousands of people, promising astronomical returns. It didn't return the maturity value to the investors and closed down its offices without paying employees. The group went bust in April 2013.
"Out of the total collections, Rs 1,983 crore is still outstanding. 96% of outstanding policies are from small investors who invested less than Rs 50,000," says the Serious Frauds Investigation Office (SFIO) report. The 516-page report adds that along with the accrued interest of Rs 411 crore, the outstanding amount works out to Rs 2,394 crore.
The total number of outstanding policies are about 2,160,798, with policies up to Rs 50,000 accounting for the bulk of the total at 2,074,228.
The SFIO report says the Saradha group of companies mobilised Rs 2,459 crore from 14 states between April 2008 and April 2013, with 93% of total collections in cash. West Bengal, Assam and Odisha accounted for 96% of the total collections.
The entire operation was carefully planned with scam kingpin Sudipta Sen and his key henchmen even manipulating the Web Spiders software to cheat the poor.
"Security feature in the software helped in denying refund to a person even if any unauthorised user had created a policy as the signatures of the authorised person with his stamp was necessary required for collecting the payment for refund / cancellation along with other documents," the report says.
American firm Web Spiders provided software development and related support services to the Saradha group which was then customised into a specific software tool called SAFARI (Saradha Assets and Financial Accounting Records System).
All business operations relating to the collection of deposits from the public by the Saradha group had been computerised and networked through the internet by SAFARI.
The Central Bureau of Investigation and the Enforcement Directorate are also investigation the scam.