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Completing its over a-year-long probe into Saradha scam, the Serious Fraud Investigation Office (SFIO) has submitted its final investigation report to the government, which may soon start prosecution proceedings for numerous serious violations found during investigations.
The scam, wherein lakhs of investors in West Bengal and neighbouring states were defrauded of thousands of crores through illegal money pooling activities, came to light early last year and has also had its political ramifications.
Sources said that the final report, submitted by SFIO to the Corporate Affairs Ministry, has listed violations of many provisions of the companies law by various entities.
The Ministry is looking into the report and prosecution proceedings are expected to start soon under Companies Act, they added.
According to sources, the findings of the SFIO probe are also being shared with CBI, which has also been probing the case, while matters pertaining to collective investment schemes are being referred to capital markets regulator Sebi (Securities and Exchange Board of India) for further action.
Sebi had passed an order against Saradha Realty in April last year, soon after massive protests by public investors began in West Bengal. The company was asked by Sebi to refund the investors' money, among other strictures.
In the wake of public protests, the Ministry also asked SFIO in April 2013 to probe the case. The agency, which looks into white collar crimes and violations of companies law, investigated more than 60 companies in this regard.
The probe agency had questioned many people including suspended Trinamool Congress leader Kunal Ghosh. Saradha Group chief Sudipta Sen is behind the bars. An interim report was submitted by SFIO in September 2013. The SFIO has found serious financial mismanagement and siphoning off funds by promoters of various companies of Saradha group that were probed in this case.
This case has widely been known as 'Saradha chit funds scam' even though the suspected entities were not actually registered as chit funds.
In May this year, the Supreme Court had handed over the Saradha chit fund scam probe to the CBI and asked the state governments to provide all logistical help to the CBI team investigating the matter.
The case has also become a political hot potato with Mamata Banerjee-led West Bengal government facing flak from various quarters.
On Sunday, BJP chief Amit Shah had said that Banerjee's associates and "stooges" were involved in the Saradha scam, which had hit over 17 lakh investors, and asked her to quit office if she couldn't act against the wrongdoers.
In response, Trinamool Congress on Monday asserted that Banerjee would support an unbiased investigation. There are allegations that a section of Trinamool Congress leaders are involved in the scam.
Apart from Saradha group firms, the SFIO probed entities from various other groups including RoseValley, Icore E-Services and Sunshine India Land Developers.
As many as 14 Saradha group entities including Saradha Realty India, Saradha Agro Development, Saradha Exports, Saradha Construction Company and Saradha Garden Resorts and Hotels are under the scanner.
Entities from the Sunshine India Land Developers group, Icore E-Services Ltd group and RoseValley group, among others, were also probed.
The Corporate Affairs Ministry, while ordering the SFIO probe last April, had said the decision was taken in view of the larger public interest involved in such cases, "and concerns regarding misuse/laundering by such companies of the ill-gotten wealth and the possibility that the promoters of these companies may strip these companies".
Even though state governments are appropriate authorities for regulations of such 'chit fund' companies under the Chit Funds Act 1982, the MCA had ordered a probe in April after a huge public outcry over Saradha scam in West Bengal.
Following the scam, efforts are being made to strengthen co-ordination between various agencies to curb ponzi schemes and safeguard the interests of investors.
Regulatory agencies such as Sebi and the Reserve Bank and those under the MCA also launched media campaigns aimed at cautioning investors not to fall prey to fraudulent companies.
With recent amendments to Sebi Act, the capital market watchdog has got more powers to crack down on fraudulent money pooling schemes. Among others, collective investment schemes worth Rs 100 crore (Rs 1 billion) or more are now under Sebi jurisdiction.
Besides, Sebi has taken action against many entities for running unauthorised money pooling activities, having raised funds totalling to the tune of over Rs 1 lakh crore.