The Public Annihilation of Calcutta’s ‘Chit Fund’ Media

For weeks this year, viewers and readers in the Indian state of West Bengal endured the very public collapse of over a dozen television stations, newspapers and magazines: weeping journalists and presenters announcing that quite suddenly their stations and publications were being shut down. All had the misfortune to have been recently bought or launched by Saradha Group, an industrial conglomerate built almost entirely on lies and false promises.

When Ponzi schemes unravel, the vast majority of investors lose everything they have invested; occasionally, they have crashed entire economies . But rarely has a pyramid scam invested so much money in the real economy as Saradha did since it launched in 2006, and rarely has a scheme’s collapse destroyed so many companies and jobs. Saradha had survived several years of investigations by state authorities by continuously changing its business model, and continuing to bilk poor and middle-class Bengalis out of their savings, eventually to the tune of some $6 billion, until it finally collapsed this year.

Indian law allows several types of small-investor schemes, including ‘chit funds,’ in which numerous contributors pay small amounts of money to an account from which one contributor at a time may use all of the money. Such investment schemes are however poorly regulated, and very vulnerable to fraud and Ponzi schemes, as the Saradha scam shows

On Monday, the Bengali New Year’s Day, viewers who tuned into Bengali music channel Tara Muzik witnessed a spectacle never seen before on Indian TV. Anchors of the channel and independent artistes called in to present Barsha Baran, a programme to celebrate the [Bengali] new year 1420, wept copiously on camera while announcing that the channel, facing an unprecedented “crisis of survival”, was shutting down.

Hundreds of viewers commiserated with the presenters – sharing their grief and shedding tears on live TV. As the spectacle unfolded, familiar, usually-smiling faces like those of Anindita Kazi, the granddaughter of the Bengali poet Kazi Nazrul Islam, Sujata, Maitrayee, Mallika and Rini came on air, tears rolling down their cheeks.

Their songs and recitations used the imagery of looming clouds, and declared their resolve to fight back in the face of adversity. Tara Muzik must live on, the music must play on, they pledged.

“It was an expression of solidarity. No artist asked for fees or remuneration,” a senior Tara Muzik official said on condition of anonymity. “They appeared simply for the love of music and to pray that the channel survives.”

The management of Tara Muzik has officially shut the channel down. Monday’s show was put on air by its now jobless employees. Tara Muzik’s sister channels, Tara Newz and South Asia TV, who have the same owner, have shut down as well.

The drama on Tara Muzik mirrored the unprecedented crisis that has taken over media organisations in West Bengal. Over the past month, nearly a dozen newspapers, magazines, TV channels and other media businesses have shut down one after the other. Most of these channels or publications had been set up – or had been taken over – by Saradha Printing and Publications Pvt Ltd., a part of the Saradha Group, which made its fortunes as a prize money circulation company or non-banking financial company – popularly known as a “chit fund company” – before diversifying into construction, realty, tourism, hospitality, agri-businesses and the media.

The number of journalists who have lost jobs on the eve of the Bengali new year is estimated to be over 800. If employees in the circulation, marketing and other non-journalism departments are taken into account, the number would be much bigger.

The Bengal Post daily, which launched in June 2010 with journalists hired from established Kolkata newspapers, shut down just before Holi. Some employees had sensed it was coming, given that their salaries had been delayed for several months earlier, but for most, it was a sudden, crippling blow.

In an announcement put up on the noticeboard on March 26, Sudipta Sen, chairman and managing director of Saradha Printing and Publications Pvt Ltd said, “… We regret to inform that due to some irrevocable reasons and compelling circumstances and in spite of the best of our intentions, we shall no longer be able to publish the daily from 1st April 2013. The notification shall be applicable to all editions of the newspaper in the state and beyond… The outstanding salary of the staff will be cleared within 1st April and if possible an additional amount will also be provided to the employees as compensation though the amount is yet to be decided.”

Laid-off employees of The Bengal Post said on Monday that they were yet to receive their dues, adding up to two or three months’ salary.

Similar notices were served on other publications and channels owned by the Saradha group: Tara Muzik, Tara Newz, South Asia TV, the Bengali daily Sakalbela, Urdu magazine Kalam, Bengali weekly magazine Paroma, Urdu daily Azad Hind, Hindi daily Prabhat Varta, and the Guwahati-based Seven Sisters Post.

Officials of the markets watchdog SEBI said companies of the Saradha Group are among several firms that are under the scanner for questionable money circulation schemes and complaints of financial fraud. SEBI and state finance department officials said notices had been served to the group and to several other companies.

Despite repeated attempts, Sudipta Sen could not be contacted.

The Bengali newspaper Pratyohik Khabor, which employed over 110 journalists, too has shut down. Its owner, the Tower Group, also a non-banking financial company, said it was forced to shut down the paper because of severe financial constraints.

A now-jobless senior journalist of the company who declined to be identified said, “It was awful, arbitrary action. The management has been invisible since then. Whom do we fight?”

In their editorial line, most of the chit fund-run publications had been supportive of Bengal’s Trinamool Congress [TMC Party] government. Nadimul Haque, a TMC nominated Rajya Sabha [Senate] member, himself an editor of an Urdu daily, said: “It is really sad that so many people have been affected by the sudden closure of so many publications and channels. A large number of genuine journalists have been affected. Their families and their lives are in jeopardy and in extreme uncertainty.”

Trinamool MP Dr Saugata Roy said: “A large number of journalists have come to suffer for no fault of theirs. Chit fund operations are always untenable. It is the central government which is primarily responsible for allowing such companies to thrive and do such damage. SEBI, RBI and the corporate affairs department of the union government should find out how such companies could survive and were allowed to operate and raise money for so long.”

Top TMC sources said party general secretary Mukul Roy has been negotiating with some business houses to try to resume operations of some channels and publications. He met representatives of several media organisations on Monday, the sources said. Roy himself declined to comment.

Subrata Nagchoudhury