Monday, September 29, 2008

Fraud investigation may not unravel political links

A month after the "Total 4U" scandal broke, the police investigation has gone into slow mode, leading to suspicion in the public mind that it may be headed for a tame end.

It was towards the end of August that the police said they were looking for JR Sabarinath, founder of the Total 4U group of companies, which had allegedly cheated a large number of depositors of an estimated Rs 2 billion.

He was arrested on Sept. 1. The police claimed they arrested him from a hideout at Nagercoil in Tamil Nadu. However, media reports said the police had obtained his custody from a gang which had kidnapped him for ransom a few days earlier.

The police tacitly confirmed these reports when they registered a case of kidnapping against a small-time Communist Party of India (Marxist) leader and his associates.

Sabarinath, a 21-year-old who had studied only up to Standard 12, is said to have collected vast sums by way of deposits by offering a fabulous return of 60% in an incredibly short period of three months. He gained the confidence of potential investors by promptly paying Rs160,000 to every person who had deposited Rs 100,000. But, then, he got to a stage when he could not keep his promise any longer.

The Total 4U website ( listed five companies belonging to the group: Consumer Credits and Hire Purchase Limited, Total Asset Management, Nest Investment Solutions, Total Builders and ToT Music.

It claimed that CC and HP Limited, which was engaged in share trading and money lending, had obtained a certificate of registration from the Reserve Bank of India in 2001 to carry on business as a non-banking financial institution.

If the information available about his age and education are correct, Sabarinath was only a 14-year-old school boy when that company obtained the RBI licence. The company law does not allow a minor to found a company. So if the company obtained a licence in 2001 it must have a history that predates Sabarinath's arrival on the scene.

All the other companies of the group mentioned at the website were established either last year or this year.

The group, according to the website, was driven by a set of core values like integrity, transparency, business ethics, corporate social responsibility etc. The transparency claim is suspect. Precise information was provided at the site only about one project, an elite club being built on an area of 4.2 hectares at a cost of Rs15 billion.

From the time the scandal surfaced, there has been speculation that Sabarinath was a front for some influential people. Few believe that a callow youth could single-handedly build a business empire of the size of Total group in one and a half years.

The media and some political party spokesmen insinuated that the sons of two CPI-M ministers were involved in the scandal. However, they could not produce a shred of evidence against anyone.

Last week the CPI-M daily Deshabhimani confounded both party men and critics by publishing a report which implicated the sister-in-law of a senior CPI-M minister in the scandal. The next day the allegation was withdrawn as mysteriously as it was raised.

Even if the original report was correct, it will not be right to cast aspersions on the minister as there is nothing to indicate that he was responsible for the actions of his wife's sister.

An interesting aspect of the Total 4U case is the involvement of many women. At least seven of the accused are women. They include Chandramathi, manager of an emporium of the State-owned Small Industries Development Corporation (Sidco), Hemalatha, assistant manager in a commercial bank, her daughter, Lakshmi, Ramani, a doctor of Kollam, and three employees of Sabarinath's firms.

Sabarinath's clients reportedly included politicians, officials and journalists. The money they deposited in his firms evidently came from dubious sources. The crime branch, which has been entrusted with the investigation, is not making any effort to trace the source of the funds.

Santosh Madhavan, the fake swami who is facing criminal charges, was able to ply his business as he enjoyed political patronage. But the investigators did not go into his links with politicians and police officials. They also did not attempt to trace the source of his funds. By all indications, the Total 4U investigation is moving in the same direction. –Gulf Today, Sharjah, September 29, 2008.

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