Saradha Group scandal exposes ties between India’s media, politicians
The discovery of a colossal financial scam at a company in India's West Bengal state is exposing the underbelly of the relationship between politicians and media owners in the world's largest democracy, Mahima Kaul reports.
08 May 13

The discovery of a financial scam at a company in India’s West Bengal state is shining a light on the relationship between politicians and media owners, Mahima Kaul reports.

The firm in question, Saradha Group, had risen to become a financial empire over the past eight years under boss and owner Sudipta Sen. The company has business interests ranging from construction to travel to exports and agriculture. When the “chit fund” scandal came to light — with an estimated loss of $4-6 billion (US) to investors — Sen fled to Jammu and Kashmir, where he was ultimately arrested.

A chit-fund scandal, or “cheat fund” as some sections of the media are calling it, operates like a ponzi scheme. Sen duped many small and middle class investors into giving him their life savings, with promises of great returns. He managed to evade the regulators by using a nexus of companies to launder the money. The money collected was used to recklessly invest in a range of industries — including a mismanaged media empire. The government of West Bengal has had to set up a $2.5 million fund to ensure that the small investors are not bankrupted.

300-IndiaIn a letter to the Central Bureau of Investigation (CBI), Sen claims to have been misled by a group of individuals who cheated investors by using his name, unbeknownst to him. However, the letter also shows how political patronage is obtained through acquiring media houses.

Saradha Group owns 18 newspapers and TV channels in West Bengal and Assam. These include Bengal Post, Sakalbela, Kalam, Paroma, Azad Hind, Prabhat Varta, Seven Sisters Post – and the TV channels, Tara Musik, Tara Newz, South Asia TV, and Channel 10, all under the umbrella of Saradha Printing and Publishing Pvt Ltd.

As Indian media blog the Hoot reports, “many senior journalists then suspected that media ownership was a matter of business strategy to establish the company’s credentials and also a bid to emerge as the mouthpiece of the major political party and perhaps get benefits in return.”

This view is supported by BBC journalist Sudhir Bhowmik, who says he left a job with the Saradha Group after he was told to “go soft on some leaders.”

It appears that Sen bought and built a media empire, allegedly on the behest of politicians of the ruling Trinamool Congress party, to play the part of a proganda-spinning machine for the government. This is no small feat – the net worth requirement of an applicant seeking to launch a news channel had been raised by the government from approximately $555,500 to $3,703,000, ostensibly to keep away “fly by night” operators away. But since Sen had already raised his financial portfolio, by dubious financial practises as we know now, he was able to take this step to becoming a media baron.

The curious case of the Saradha Group media empire gets murkier as the story unravels. In his letter to the CBI, Sen also claims to have been regularly blackmailed by Kunal Ghosh and Srinjoy Bose — two sitting Trinamool Congress members of the Upper House — into setting up his news channels. He also says he paid Ghosh $28,000 USD a month. Ghosh, now on the back foot, claims that he was simply a “salaried employee” and that he had “no authority to sign cheques.”

Sen’s use of the media empire to build political clout and protection is now being outlined by the national media. Influential members of West Bengal’s ruling Trinamool Congress party have been closely aligned with the media group. But some politicians are now distancing themselves from the group, despite having benefited from positive propaganda from its media outlets.

In India, which now has over 800 private satellite channels, media houses often favour particular political parties, and many are actually directed owned by politicians themselves. Amid growing unease, the Ministry of Information and Broadcasting has asked all channels to furnish details of their shareholding patterns and equity share. Both the ministry and the Telecom Regulatory Authority of India (TRAI) have been looking to ways to ensure pluralism and diversity in the Indian media, and curbing monopolistic growth. They feel tracking ownership patterns might be one way of finding out which groups and individuals are involved in unethical behaviour like corporate and political lobbying, biased analysis and forecast in the political arena and sensationalism of news. The ministry has made it clear that if it finds any media group in violation of its license agreement – including shareholding patterns – it is ready to cancel licenses.

Meanwhile, another unfortunate result of the scandal is that more than 1,400 journalists are out of jobs, while some of Sen’s Channel 10 employees have filed a complaint with the police over non-payment of salaries by Sen and Ghosh.

By Mahima Kaul

Mahima Kaul is a Fellow at Observer Research Foundation, Delhi and writes about internet/media governance, inclusion and security issues.