(Image source from: ED arrested Rose Valley Group of Companies Chariman})
Rose Valley Group of Companies Chairman Gautam Kundu was arrested on Wednesday by Enforcement Directorate (ED), the federal agency that probes foreign exchange violations. ED interrogated Gautam for several hours in Ponzi scheme. The group-said to be the biggest deposit-taking enterprise in eastern India managed to stay afloat even as others ran aground.
A key ED official said the agency decided to take Kundu into custody because he wasn’t cooperating with the investigation. The group has been resisting attachment of its properties by filing cases in several high courts. Though its legal challenge has been dismissed by at least nine high courts, one remains pending at the Calcutta high court, according to the official cited above.
Last November, the ED had seized around Rs.300 crore from the Rose Valley group’s bank accounts, the agency’s biggest ever cash haul. It is, however, small change when compared with the amount that the Rose Valley group is estimated to have collected—at least Rs.10,281 crore, according to a statement made in the Rajya Sabha by junior finance minister Jayant Sinha.
After the ED froze its bank accounts, the group was operating entirely on cash. The Rose Valley group said it collected money under a so-called time-share scheme. The group claims it owns and operates properties across India, and that it is committed to redeeming deposits in the form of accommodation at its hotels.
Earlier this month, The Central Bureau of Investigation (CBI) conducted raids at 27 locations in West Bengal, seven in Tripura and one each in Odisha, Assam, Delhi, Uttar Pradesh, Maharashtra, Bihar, Jharkhand, Chhattisgarh and Tamil Nadu. Rose Valley collected most of its deposits, though, in the eastern states. Less than a year ago, Kundu had claimed it wasn’t easy to kill the Rose Valley group, which hadn’t collapsed even as other deposit-taking firms shut shop after the Saradha Group went bust in March-April 2013. Last April, Kundu had organized a convention of some 150,000 agents in Kolkata, in a show of strength.
Kundu, who famously drove a Rolls Royce Phantom, had diversified into several unrelated businesses. Apart from running hotels, the Rose Valley group produced films, published newspapers, ran TV channels, and had lately entered the jewellery business. For over a decade, the Securities and Exchange Board of India has been trying to nail the group, which first tried to raise money through collective investment schemes.
- Manohar. M
