Odisha Chit Fund Scam and the Human face

Carlo Pietro Giovanni Guglielmo Tebaldo Ponzi or simply Charles Ponzi. It is the name of a con artist who in the 1920s did something similar to what you find in the oft-mentioned Chit fund scam presently in news across Odisha and beyond. The art of tempting investors to invest their funds for highly profitable early returns while actually paying the early investors with the funds from the later investors was the con-artistry of Ponzi and such fraudulent schemes have been termed as Ponzi schemes in the dubious memory of Charles Ponzi. Unfortunately Odisha today boasts of not one but allegedly several Ponzis.

The Odisha Ponzi or Chit fund scam makes for interesting reading nowadays. The morning newspapers detail that a certain chit fund company’s managing director was housing his wife in a plush South Delhi bungalow at a princely monthly rental amount of Rs. 7 lakhs apart from the company’s corporate office rental billing at Rs.8.5 lakhs per month. Another Odia Ponzi was recently arrested in a metro city while attempting to reorganize his company agents for another round of money-making notwithstanding that he was out on bail. Still another Ponzi admitted about his Rs.75 crore pay-offs to some bigwigs in the ruling Biju Janata Dal party in Odisha. The names of those bigwigs are not revealed strangely by the investigating state department which has a habit of leaking information otherwise. But a vernacular television channel played a taped telephonic conversation of a Ponzi indicating links to an Odisha Jan Morch leader. It is surprising that the television channel could only lay hands on that specific tape which has the conversation of the Ponzi linking to the OJM leader. Probably the conversations with alleged BJD leaders are still in transit!

Before the Odisha Chit fund scam was unearthed, each time a BMW, Mercedes, Audi or Jaguar car would pass by on Bhubaneswar high streets, I would marvel at the new entrepreneurs of Odisha. After the scam broke, the media has been reporting of dozens of such high-breed cars being confiscated from the Ponzis. Interestingly a few days back it was reported that a few BMWs, Audis and a Jaguar were found with keys in the ignition near the house of a Ponzi. It appeared that a few political biggies had undertaken a James Bond-like operation late night and quietly left the cars near the house of the Ponzi. These cars had probably been supplied by the Ponzi to them as protection money in kind probably. With each day, a new Ponzi appears with a few high value cars. The next time a BMW or Jaguar passes by; I may be excused for peering too hard and scratching my chin to decipher whether it belongs to a real-time entrepreneur, wannabe-Ponzi, fleeing-Ponzi or Ponzi’s political god-fathers.

In the race of media reports, from cars to wealthy property, from Ponzis to Ponzi masters, all have been reported diligently. The political accusations and counter-accusations have been blowing from both the ruling party and the opposition. Demands for a judicial probe or a CBI probe or a probe by the Serious Fraud Investigating Organisation (SFIO) have been gaining coverage. But in all of this, about 20 lakh people of Odisha are estimated to have been impacted by this Chit fund scam. They of course have been heard and seen shouting slogans, holding rallies and demanding that their invested funds be returned back by the state Government. There are quite a few voices who think otherwise. They are of the opinion that since these investors indulged in greed by investing their funds in such highly illogical financial dreams woven by the Ponzis, therefore the responsibility for the good or bad of the invested funds lie with the investors and not with the state. The fraud was rather brought on by these investors on themselves is argued by some quarters.

There is no logical riposte to such a logical statement. If someone approached you with a financial plan of doubling your money in 75 days or giving you a 20 percent monthly dividend on your investment, naturally you would spot it as a fraud.  When the nationalized and private sector banks and financial institutions have a hard time in trying to keep the return on investment at a respectable distance beyond the reach of the creeping inflation, the idea of such grandiose schemes would ring warning bells for many reading this article. But spare a thought for a retired school teacher in an obscure part of rural Odisha’s Balasore district. His monthly pension barely covers his family’s food, clothing and shelter needs. Having married late, his son is presently in 12th Class and wants to be an engineer. His beautiful daughter is about to graduate in Political Science with quite a few matrimonial offers without any dowry demands lining the house. But the retired gentleman has to find funds for the education of his son and the marriage expenses of minimum clothing and jewellery for his daughter coupled with a wedding lunch for the village.

Anticipating these financial needs, he had invested his meager funds that he got when he retired two years back. The first stop for the funds was the nearest bank branch. But at about nine percent return, it was barely trying to keep up against the rising inflation. Then a former student as an agent of a company arrived and promised a better financial deal. When hunger wrenches the stomach and thirst parches the throat, the burning sand in the desert resembles an oasis and this mirage leads such retired people to believe in the fraudulent much-promised oasis. This school teacher invested his everything in the financial company that his former student in the form of an agent offered. It turned out that this was a Ponzi scam which hit him on his face. Presently, he has no money for his daughter’s wedding, no funds for his wannabe engineer son and now no money for his ailing wife who took to the bed after this Ponzi scam hit their family like a sledge hammer. I am not trying to justify the illogical decision taken by this gentleman. I am just trying to establish the human behavioural weaknesses of a retired school teacher with empty pockets and rising needs and a former student on whom he blindly placed his trust. Can we truly pass on the guilt to him for having invested in this company?

There are many young girls who will not see the wedding that they were coyly looking forward to due to this Chit fund scam. Many young men who were expecting to start their professional education or vocations will never find that fitting start in life. Many elderly men and women who have nothing left in their coffers as bad health approaches with growing age will recline back with closed weary eyes. Many dreams will never come alive. Many hopes will die before seeing the light of the day. Many smiles will never crease the face. The Odisha chit fund scam is not only about the confiscated BMWs and Audis, neither about the sealed filthy rich properties of the Ponzis nor about the political slug-fest that will continue till 2014. It is about those hundreds and thousands of shattered dreams that see no tomorrow. It is about those thousands of families that stare into an unknown future. It is about those twenty lakh people who demand an answer.

Why were such Ponzi companies allowed to function? Did no one in the state Government know about them? How come the Chief Minister Naveen Patnaik graces the meetings hosted by such a Ponzi? How come a Ponzi was recommended by a ruling BJD big-wig for a state award? How come the Ponzis print prospectuses, open bank accounts, run financial circulation and strut about thumbing a nose at the Government apparatus for so many years without not one, repeat; not one MLA or minister or bureaucrat ever raising a finger about this in the state assembly or secretariat? Why have the BJD leaders who have been named by the Ponzis not been questioned by the investigating agencies so far? Why have the journalists named by a Ponzi for allegedly having been provided protection money not been questioned so far? Why is Chief Minister Naveen Patnaik trying to wash his hands off the sins of his party-men like Pontius Pilate? It is not the greed of the investors that has failed them; it is the breeding ground of illegitimate political corruption that ensured the survival of such Ponzi companies to thrive for many years before the Ponzi dirt belched into the open. The state Government has to answer.

The human face of this grave travesty of justice cannot be wished away by a judicial probe till kingdom come. The investigation has to be handed over to the CBI or SFIO. The fast track courts need to be expedited for the trail of all these chit fund cases and since the widespread fraud has taken place under the watch of the state Government, the state Government has to create a corpus for returning the principal amount invested by these small investors of Odisha. It is not the first time that a Ponzi scam has surfaced but it could well be the last, only if the corrupt politicians can be weeded out through impartial investigation and strict compliances ensured through the Registrar of Cooperative Societies and or the Registrar of Companies coupled with due vigilance and diligence by law enforcement agencies. Only then the small investor will not have to watch his daughter sit unwed at home or his son’s dreams of being an engineer remain unfulfilled. The real story of this Odisha Chit fund scam is not the cash or the fancy cars but rather the creased forehead of a pensive looking retired school teacher. The human face!

Report by Dr. Sasmit Patra.

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