The back-to-back arrests of Trinamool Congress MPs Sudip Bandyopadhyay and Tapas Pal have put the focus back on the Rose Valley scam which according to the Central Bureau of Investigation is worth around Rs 15,000 crore. West Bengal and the TMC have been hit by two major scams, Saradha and Rose Valley. "In comparison, the Rose Valley is much bigger than Saradha," a CBI officer informed OneIndia.
Rose Valley was set up in 1990 by Kajal Kundu. After his death in a car accident in 2003, the business was handled by his brother Gautam. At that time there were rumours of foul play in that car accident. CBI officials say their investigations show that Rose Valley Hotels and Entertainment Ltd launched a scheme known as the Rose Valley Holiday Membership Plan in 2010. The plan offered a hotel membership and the allegation by market regulator SEBI, the company had earned money without regulatory approval.
What is the scam about?
Investors were given the option of booking a holiday package by paying monthly installments. After maturity, investors were given the option of a holiday. Investors could opt for a hotel accommodation or a return of investment with annual interest.
When the SEBI clamped down on Rose Valley, it was found that the company was offering plans with interests ranging between 11.2 to 17.6 per cent. Further it was also found that the investor could not get his back before the end of the tenure or even cancel his membership.
Defrauding several investors
Files with the CBI suggest that the company had defrauded several investors from the country to the tune of Rs 15,000 crore. The Rose Valley group when compared to Saradha had mobilised six times the amount that Saradha had. The scam is approximately worth around Rs 15,000 crore.
The ED has already frozen 2,500 accounts of the Rose Valley group and the agency suspects that there are many more to be tracked and frozen. Madan Mitra of the TMC who was arrested in connection with the Saradha scam was questioned for his alleged role in the case as well. Mitra's name had cropped up when the probe indicated that he had in fact helped Rose Valley and East Bengal strike a deal. The name of TMC MP, Tapas Paul too had cropped up during initial investigations as he was the director in the company.
The ED and the CBI found it strange in the manner in which Rose Valley had been expanding its business. Over night there were several investments that were made which included investments into film production, sports teams and more importantly media houses.
From raising funds to Bengali movies
Rose Valley, which has been under the scanner of the SEBI was also found to have issued non-convertible debentures which were completely in violation of the law. This was done to raise funds from the market, ED officials say. Prior to the arrest of Gautam had been questioned for several hours and the CBI found that his answers were inconsistent. An officer part of the interrogation said that he had no answers to questions relating to the losses the company was incurring despite it collecting several crores. Despite showing losses he continued to invest in media houses and also is said to have financed around 40 Bengali movies.
How the scam unfolded
- Rose Valley according to the ED reportedly collected more than Rs. 15,000 crore from depositors across India, especially in West Bengal, Assam and Bihar
- In March 2015, the ED arrested group's chairman Gautam Kundu.
- Huge amounts were allegedly siphoned off and a large chunk was used to bribe politicians according to the ED.
- SEBI had prohibited the sale of real estate by Rose Valley in January 2011.
- 2,600 bank accounts of the company have been frozen.
- There are 30 companies under the Rose Valley banner on paper.
- Kajal, the elder brother of Gautam Kundu had created the Rose Valley empire.
- In 2003 Kajal, along with his wife and son were killed in an accident after which Gautam took over.
- All was smooth at Rose Valley until 2012 when the IRDAI raised objections over the manner in which the company was being run.