Cat and mouse

 

On return from Central deputation, I was posted as Director of Economic Offences (DEO) in the cadre. Since I had headed a central organization for almost four years, I felt the posting was a little lacklustre as the remit was to investigate offences under one single non-IPC Act, viz., Protection of Interest of Depositors in Financial Establishments (PIDFE) Act. However, mine was not to question why and I deep-dived into my new assignment in all earnestness. 

The Act had come into being in the wake of a series of financial scandals in West Bengal, the most spectacular one being the Sarada scam. These scams were erroneously called chit fund scams. They were actually multi-level marketing schemes where essentially money from new depositors are used to pay huge returns to old depositors. Seeing the returns, more and more new depositors come in and the treadmill goes on until one day, the balloon bursts because no goods or services are getting produced and a few guys at the top of the pyramid vanish with all the money. Many people lose their entire life savings in the bargain. The Sarada scam alone was estimated to have involved Rs. 20,000 cr. of such deposits. Out of desperation and misery, more than 200 people had committed suicide in the aftermath of that one scam.

 

Even though many cases were registered with DEO, only one case had seen some action in terms of arrests and seizures. One of the big cases which had not seen any action involved the Pincon group of industries. My colleagues advised me not to touch it with a barge pole because very big people were involved. The scam amounted to around Rs. 1,100 crores of deposits they had mopped up and not fulfilled their obligations. During the Durga Puja, I found saturation Pincon hoardings all over Kolkata at most Puja pandals. It was an affront.

 

Since I was back in the cadre after a long time, I thought I’d feel my way. What I did was non-invasive forensics. Lots of details are available in the public domain, balance sheets, assets, shareholding, list of directors, SEBI rulings, etc.. We compiled all the details of the scam and the assets and function of all the companies in the group. Pincon group boasted some of the leading IMFL brands and the market leader of country liquor, Bangla no. 1. All the details were in hand. When we swung into action, in one single night, we managed to arrest most of the accused and seize the relevant documents.

 

Most of the documents were seized from one particular building close to my office. After seizing the documents, the office was sealed. The Chairman and the main accused, Monoranjan Roy, audaciously tried a burglary into the premises through a back entrance. He was unsuccessful but even if he had succeeded, it was too late for him.

 

Several assets spread all over the state were seized/ sealed. All the bank accounts were frozen. One of these assets was a school. The Principal and teachers of the school met me and explained that the students would be adversely affected because it was happening in a mid term. Since students were involved and since the school was not directly involved in the mainstream operations of the company, I was sympathetic and decided not to freeze the school account. The next thing I knew, Monoranjan Roy wiped out the entire account at lightning speed.

 

When Monoranjan Roy was arrested and brought on Police remand, he walked into my office chamber as though he owned the place. I asked him why he was speaking so loudly and he replied that he speaks that way only. It took some doing to bring him down a peg or two. The next day he obtained a court order mandating his lawyer’s presence during interrogation. However, I pointed out that I was not interrogating him but was merely asking after his welfare at that point. Bit by painful bit, sheet by voluminous balance sheet, the entire layering of the accounts spread over six companies, 39 verticals and branches all over India was uncovered. I mentally thanked all the teachers at IIMB and Harvard who had taught me all those courses in Finance and Accounts so that I could navigate through all the documents. What I found was that Monoranjan Roy was nothing short of a financial genius. Unfortunately, he applied that brain for wrong things.

 

After the Police remand was over, he was sent back to judicial custody. A few days later, I learnt that he had manged to get himself admitted into a hospital on health grounds and was happily operating his business empire from there. When my officers went there, they found him surrounded by his cronies and staff and it was business as usual for him. Seeing my officers, they all ran away. I took up the matter with then DG, Prisons and Monoranjan was shifted to another jail. A few days later, I learnt that he was still operating from the jail with the help of a cell phone. The cell phone was seized and another case was lodged in this regard. That case, being open-and-shut, was chargesheeted in quick time.

 

A total of 20 persons were arrested. The only requirement I set for myself and my colleagues was not to arrest anyone without enough evidence which would stand up in a court of law. The arrested persons included chartered accountants – what I found was these scams can never happen without the active connivance of chartered accountants and auditors who sign on the dotted lines, no questions asked. Even though they were not getting bail quickly, they were confident that at the end of 90 days, pending investigation, they would all get the bail.

 

Close to the 90-day limit, I ceased all overt activities such as raids, sealing, etc. and the accused persons thought that the investigation was going slow. However, with the help of a chartered accountant and an official of RBI, we built up a watertight case based primarily on documents. I went through a lot of chargesheets by sister agencies. These chargesheets were too long, some of them exceeding 1000 pages. They covered a lot of ground and were good for optics and media reports but were counter-productive because they tended to test judicial patience and clouded rather than clarified the main crime. In my opinion, a chargesheet is supposed to assist in proving the charges, that’s all; it’s not supposed to be an encyclopaedia. Or a display of the investigator’s erudition. I set myself and my officers an upper limit of 30 pages for the chargesheets in all cases. We also shunned all peripherals which would have been lapped up by the press – the involvement of very big names, certain actresses, etc., etc.. After giving final instructions, I left for Mumbai for my health issues.

 

The draft chargesheet that I received at Bombay on the 88^th day was extremely defective and sub-standard. That day I had undergone a complicated biopsy and was bleeding heavily. However, the 90-day deadline was also a matter of life and death so I sat up all night with my laptop to work on the chargesheet. When I reported to my doctor for some complications of the biopsy, he was furious at my having exerted so much the previous night. Anyway, we managed to submit the chargesheet on the 89^th day. It exceeded that 30-page limit but not by much, barring the annexures. My officers told me later that the submission of the chargesheet in quick-time left the accused and their lawyers stunned. The magistrate committed them to trial and rejected their bail application through a detailed order.

 

The real game started thereafter.

 

Almost every day, there were notices from either Calcutta High Court or the Supreme Court. These guys are extremely rich and connected and hire the best and most reputed lawyers. Meanwhile, junior lawyers represent the government. Engaging more senior lawyers takes time because a lot of processing is required and a lot of officials need to be convinced. Our government processing couldn’t keep up with the speed at which Monoranjan Roy was filing his petitions. However, the detailed trial court order rejecting the bail was a very strong weapon we had. Plus, in the teeth of virulent opposition from my officers and the government lawyers, I insisted on filing a counter-affidavit for each single petition by each of the accused persons. I was regularly attending the trial courts for the cases which were being heard in Kolkata and that experience improved the quality and comprehensiveness of the counter-affidavits. Once a counter-affidavit was filed, neither the investigating officer nor the government lawyer had any discretion and that could have been the reason they were opposing it so vehemently. One by one, each of the scores of petitions by the accused persons for bail was rejected by the various courts.

 

A few months later, the court pronounced its judgement. In a first of its kind in Ponzi scams (including cases investigated by the CBI, other states, etc.), eight of the accused persons were awarded life imprisonment. I considered that as the finest hour in my entire Policing career. Bigger than the Purulia arms drop case detection.