How Ex-Kolkata Top Cop Rajeev Kumar Got Embroiled in Ponzi Schemes

A lowdown on the Saradha and Rose Valley ponzi schemes and how Rajeev Kumar got embroiled in it all.

A look at the Sarada and Rose Valley ponzi scams and how former Kolkata top cop Rajeev Kumar got embroiled in the investigation.

(Photo: Shruti Mathur/The Quint)

A 1989-batch IPS officer and former police commissioner of Kolkata, Rajeev Kumar has earned the dubious distinction of being investigated by a central government agency. The Central Bureau of Investigation (CBI) has sought arrest for Kumar in relation to the Saradha and Rose Valley chit fund scams – two of the largest ponzi scams in West Bengal in the recent years. Kumar is currently under protection from arrest granted to him by the Calcutta High Court.

But why is an IPS officer being investigated in a ponzi scam? For that, we first have to understand what the Saradha and Rose Valley chit fund scams were.

What Are the Saradha & Rose Valley Scams?

In the early 2000s, businessman Sudipto Sen set up the Saradha Group and launched what the Securities and Exchange Board of India (SEBI) later categorised as a “collective investment scheme”.

The Saradha Group used a consortium of about 200 companies to tap small investors, promising them high returns. The investments were collected through a network of agents who made a 25 percent commission on the same. An investor could invest a minimum of Rs 100, with no maximum upper limit. To this, Saradha promised returns from 15 to 50 percent.

According to a report by The Indian Express, the Saradha chit fund had, in a few years, raised over Rs 2,500 crore and had over 17 lakh investors.

The Rose Valley scam was along similar lines.

The Rose Valley Group — run by then-chairperson Gautam Kundu — promised incredible schemes for its investors where they were given the choice of choosing between a holiday package or "a return on the investment with annualised interest”. Some reports put this interest rate at a hefty 21 percent. The various entities affiliated with the Rose Valley group, like Rose Valley Real Estates and Constructions and Rose Valley Hotels and Entertainment, were part of the scheme. It was later found that the money being invested was being siphoned off to other accounts instead of being collected to meet investment promises. The scam amounted to a total of Rs 60,000 crore.

Both Rose Valley and Saradha Group received massive political patronage at the time from the Trinamool Congress and attracted investments by roping in top Bengali actors, politicians and entertainment personalities to do their bidding. In fact, the Rose Valley Group were also the sponsors of the Kolkata Knight Riders IPL team.

How the Scams Broke

In 2012, SEBI, which already had the group on its radar, asked the Saradha Group to stop accepting money from investors until it got their permission. Things came to a head in January 2013, when the group’s cash inflow was lower than its outflow, thus exposing the scheme.

After the news of Saradha broke, the Supreme Court, in 2012, ordered the probe of all companies involved in raising funds from small depositors.

It was then that the Rose Valley chit fund scheme was also investigated. According to a report by News18, investigations found that Rose Valley, as per estimates of the Enforcement Directorate (ED), had collected up to Rs 15,000 crore from depositors across India — in West Bengal, Assam and Bihar — but the all-India small depositors association claimed that the actual amount was about Rs 40,000 crore.

Both scams hit the ruling Trinamool Congress dispensation in West Bengal like a torpedo.

Trinamool Involvement in the Scams

At this point, Saradha group owner Sudipto Sen fled West Bengal, but before he did, he wrote an 18-page letter in which he named several Trinamool Congress politicians who allegedly led him to make poor investment decisions leading to the collapse of the company. He was later caught and an FIR was registered against him.

Before the scam was exposed, Sen had acquired media houses and invested heavily in the Bengali film industry.

Actor and TMC MP Satabdi Roy and TMC Rajya Sabha member Mithun Chakraborty were brand ambassadors for the group. TMC MP Kunal Ghosh was the CEO of the media group in which Saradha invested. Another MP from the party, Srinjoy Bose, was involved in the media operations of the Group, while then-Transport Minister Madan Mitra was head of the Group’s employees’ union.

The Saradha group also gave regular gifts to the Kolkata police and aided government relief work in Naxal-hit areas.

It was a similar tale with the Rose Valley group as well.

After the investigation of both scams were handed over to the CBI in 2014, the agency questioned over a dozen TMC MLAs and MPs, and arrested Srinjoy Bose, Madan Mitra and Kunal Ghosh, all of whom are now out on bail. The group also had connections with Mukul Roy and Himanta Biswa Sarma (in Assam) who were then with the TMC and Congress respectively, but are part of the BJP now.

How Rajeev Kumar Got Involved in the Scams

After the arrest of Sudipto Sen and subsequent SEBI investigations into the Rose Valley scam as well, the Mamata Banerjee government formed a Special Investigation Team (SIT) to probe both cases. Rajeev Kumar, who was then the commissioner of Bidhannagar Police, was appointed head of the SIT.

Kumar, who had also held important positions in the state CID, was known to be close to Chief Minister Mamata Banerjee. A Telegraph report quotes him calling himself the “the Amitabh Bachchan of Bengal Police” in a closed-door meeting. Many also say that Kumar enjoyed what was similar to a ‘cabinet rank’ in the books of the Mamata government.

Due to the inter-state nature of both scams, the Supreme Court, in 2014, transferred all cases to the CBI. The SIT, which had by then conducted a year-long probe, had to hand over all the papers, documents and evidences related to the case to the CBI.

The CBI claims that it has been trying since September 2017 to question members of the SIT, including Kumar. The agency said that various notices and summons have been issued to members of the SIT to cooperate in the investigation, but no one turned up.

According to The Indian Express report, the CBI sent five summons to Rajeev Kumar between 18 October 2017 and the 8 December 2018.

Kumar replied to the final summon saying that a meeting could be arranged between the SIT and the CBI in a “mutually convenient place”, in case “the need arose”.

Where the Case Against Kumar Stands Now

The Indian Express report also states that the CBI claims that the SIT did not hand over certain pieces of evidence to the CBI which includes, but is not limited to, a diary of Sudipto Sen which contained details of payments he had made to various people.

This escalated to what was thereafter known as the ‘Mamata vs CBI’ episode. On 3 February 2019, about 40 CBI officials turned up outside Rajeev Kumar’s house, who was still serving as the Kolkata Police Commissioner. The CBI officials were instantly detained by the Kolkata Police after which Chief Minister Mamata Banerjee went on a three-day long ‘Save Democracy” dharna alleging that the BJP-ruled central government was out to get her cops.

Thereafter, the Supreme Court on 5 February, asked Kumar to cooperate with the CBI and appear for questioning in a “neutral location”. The court also categorically said that Kumar could not be arrested. Starting 9 February, Kumar was questioned for over 40 hours in 5 days in interrogation sessions with the CBI in Shillong.

On February 19, Kumar was removed as the commissioner of Kolkata Police and now serves as the Additional-General (ADG) of the CID. Thereafter, on 20 February, the Supreme Court ordered the CBI to file an affidavit on the charges against Kumar. On 8 April, the CBI moved the Supreme Court seeking Kumar’s arrest and on 17 May, the SC removed arrest protection for Kumar.

The CBI then issued a lookout notice for Kumar.

Kumar’s counsels then approached the Calcutta High Court to seek protection from arrest. The court granted Kumar protection from arrest till 10 July (later extended to 17 July). He was asked to deposit his passport with the CBI and extend cooperation to the agency whenever required. A designated CBI officer was also asked to visit Kumar’s residence daily to mark his attendance.

The Calcutta High Court will begin hearing the CBI’s petition in the case from 17 July.

(With inputs from The Indian Express, News18, and The Telegraph)