BackED officials attach Rs296 crore in Rose Valley group case
The group's bank accounts were attached on basis of complaints filed by depositors in Odisha, West Bengal
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Kolkata: Federal investigating agency Enforcement Directorate’s (ED) attachment of 2,630 bank accounts of the Rose Valley group—a diversified conglomerate that collected public deposits in eastern India—has resulted in a cash haul of ₹ 296 crore, a key ED official said on Thursday.
This person, who did not want to be identified, described it as the “biggest" cash recovery from such enterprises in recent times, but it is a paltry sum compared with the agency’s own estimate that the Rose Valley group had collected around ₹ 15,000 crore in public deposits through various firms.
The estimate is based on the agency’s investigation so far and interrogation of Rose Valley executives, according to the ED official.
The group’s bank accounts were attached on the basis of several complaints filed by depositors in Odisha and West Bengal, and a chargesheet was filed in a court in Bhubaneswar, he added.
Companies under the Rose Valley group have defaulted in repaying depositors in Odisha, and collectively owe people there at least ₹ 362 crore, according to the ED official.
The group’s chairman, Gautam Kundu, had earlier said he would request the ED to defreeze the bank accounts in the interest of 10,000 employees. He couldn’t be immediately contacted on Thursday.
The conglomerate has at all times denied having received public deposits, saying that it sold so called time share—or a right to enjoy hospitality at its hotels.
Its agents, however, collected deposits claiming that this right could be cashed on maturity.
The first deposit-collecting conglomerate to be investigated was the Saradha Group.
Despite two federal agencies—ED and the Central Bureau of Investigation (CBI)—joining forces to unearth where it had stashed the cash that it had collected, nothing substantial has so far emerged except some real estate assets.
ED specializes in probing financial crimes, especially those that involve money laundering and foreign currency violations.
According to the latest available regulatory filings, Rose Valley Hotels and Entertainment Ltd, which is believed to be the group’s flagship firm, had ₹ 1,800 crore in cash and cash equivalents in bank accounts at the end of March 2013, up from ₹ 1,222 crore from a year earlier.
The Saradha Group had by then collapsed and though an investigation had been launched into its operations, the West Bengal government wasn’t immediately sure whether to expand it to other deposit-taking companies.
To be sure, even after the Saradha Group ran aground, enterprises under the Rose Valley group continued to repay their depositors.
For fear of triggering a contagion, the state administration chose to target its investigation at one group at a time though it was suspicious about the activities of other conglomerates such as the Rose Valley Group, a government official said, asking not to be named.
From the ED’s initial findings, which came to light on Thursday, it appears that in the same way as with the Saradha Group, the federal agencies are now struggling to recover cash from Rose Valley as well.
Earlier this year, the Supreme Court handed the mandate to investigate the operations of the Saradha Group and other such enterprises in eastern India to the CBI after the West Bengal state police were unable to establish how the cash had been siphoned off.
The ED joined the investigation on its own, suspecting illegitimate overseas remittances of the cash collected from depositors.
Asked if the ED was looking to attach the Rose Valley group’s hotels, the official said an investigation was underway and so couldn’t reveal more details.
The group, according to its own media statements, has at least 23 hotels at various stages of completion in different parts of India.
Mint couldn’t independently verify who owns them, especially in the light of the West Bengal government launching a drive from late last year to seize the title of various plots of land owned by the Rose Valley group in violation of provincial land laws that restrict ownership beyond 24 acres except with permission of the administration.
The district administration of East Midnapore has identified 125 acres of land illegally held by companies under the Rose Valley group for being taken over, an official said, asking not to be named.
The state government, however, has not yet been able to seize these plots and the properties that stand on them because of legal disputes, he said.
The state, though, has taken over 13 acres from the Rose Valley group in East Midnapore, this person added.
Manish Basu contributed to this story.
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