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Money laundering companies thrive in Odisha 

Published: 09th August 2012 11:52 AM  |   Last Updated: 09th August 2012 11:56 AM   |  A+A-

Notwithstanding the raids by the State Crime Branch and negative campaigns against the chit-fund organizations and multi-level marketing (MLM) companies, the mushrooming money-circulation and network business in Odisha’s Balasore district has left the market experts worried.

Official sources said the coastal district has close to 200 such organizations, which are spread in all most all 12 blocks, the vulnerable pocket being the northern region, considered as wealth zone of the district. The organizations include real estate companies, micro-finance and self help co-operative societies.
Although none could figure out the exact amount of money involved in the business, but sources at the Crime Branch indicated the MLMs have done a business of roughly over Rs 500 Cr within last seven years in the district alone. Promising to double their investment within 2 to 3 years, such companies have collected deposits from over 2.5 lakh unsuspecting depositors.

The ‘broad daylight loot’ of the chit fund organisations however came to fore in July 2009 when the Crime Branch unearthed a scam of Rs 200 crore involving seven MLMs. The CB has already frozen about Rs 191 crores deposited in several banks across the country. Altogether five persons including producer and actor of Bollywood flick Shadow Naseer Khan and his aide have been arrested in this connection.
Prior to the raid while companies from neighbouring states have been collecting deposits through their branches across the district, a market insider said, most of the local companies flourished after 2009 under the nose of the police and all law enforcement agencies.

What has left the intelligentsia astonished is that the dwindling business of the banks and postal department, which were earlier considered safe for savings. While the banks and postal department have been providing returns at an interest rate of 8.5 to 9 per annum, the non-banking organizations are luring the depositors with an interest rate of 15 to 18 percent which is not viable and illegal.

As per the recent report of the district small savings officer, while Rs 52 Cr were deposited with the Postal Department in the last fiscal, so far only Rs 10 Cr has been deposited in the current financial year.
A social activist Dilip Kumar Parida said though the CB has unearthed the scam, but the raids conducted by the agency is not sufficient. “It should conduct raids frequently and take necessary legal steps to seal the companies to ensure that they won’t collect deposits anymore,” he suggested besides demanding that the government should take measures to refund the depositors their hard-earned money.

The CB in last couple of months has raided three more such MLMs, which include Seashore Group, Sai Pragati Assets and Properties Pvt Ltd and Ashore Group. A CB official said the investigation of the 2009 scam has been completed and charge-sheet submitted in the High Court. “We are just waiting for the judgement,” he said.

Additional Director General of Police (Crime Branch) Bijay Kumar Sharma said the agency was keeping a tab on the fraudulent activities and would soon launch raids on a number of such organizations in near future.

Reports said network-marketing firms are flocking to Odisha because they have managed to skirt between the legal loopholes. Though such schemes are banned under the Prize Chits and Money Circulation Scheme (Banning) Act, 1978, but it has failed to completely put a check on the business.

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