The arrest came a day after the Islamabad High Court ordered the arrest of Gen Musharraf for not cooperating with police officials investigating a case registered against him for detaining dozens of judges, including Supreme Court Chief Justice Iftikhar Chaudhry, during the 2007 emergency
Former Pakistan president Pervez Musharraf was on Friday arrested in a case relating to the imposition of emergency rule in 2007 and was presented before a magistrate, becoming the first former army chief to face such action.
Police officials arrested the 69-year-old former military strongman this morning and took him to the court of judicial magistrate Muhammad Abbas Shah.
The police officials informed the magistrate that they did not need physical custody of Gen (retd) Musharraf and he could be placed in judicial custody.
However, lawyers for several persons who have filed petitions against the former army chief for imposing emergency in 2007 and detaining over 60 members of the superior judiciary contended that he should kept in police custody.
They also questioned why the General had not been handcuffed by police after his arrest.
Gen Musharraf’s lawyer Qamar Afzal argued that his client should be kept in judicial custody as there were serious threats to his life. The magistrate reserved his verdict in the matter and Musharraf left the court complex after waiting for some time for a decision.
Footage on television showed Gen Musharraf being led into the magistrate’s small office by dozens of policemen and paramilitary personnel. Musharraf looked shaken and was wearing a waistcoat over a shalwar-kameez.
Sources said that authorities had asked for him to be placed in judicial custody as this would allow the administration of Islamabad to declare his farmhouse at Chak Shahzad a ‘sub-jail’ and detain him there.
Authorities have been focussing on this measure as officials are not keen on holding Gen Musharraf at a jail due to threats to his life.
The arrest came a day after the Islamabad High Court ordered the arrest of Gen Musharraf for not cooperating with police officials investigating a case registered against him for detaining dozens of judges, including Supreme Court Chief Justice Iftikhar Chaudhry, during the 2007 emergency.
However, immediately after Justice Shaukat Aziz Siddiqui revoked his pre-arrest bail and ordered police to detain him, Gen Musharraf and his security detail fled from the Islamabad High Court complex and drove to his farmhouse.
Gen Musharraf’s lawyers were unable to file an appeal in the Supreme Court on Thursday as they were unable to complete certain formalities before the court closed for the day.
Earlier this week, Musharraf was disqualified from contesting next month’s general election, effectively ending his ambitions for a political comeback. Authorities have also barred him from travelling out of Pakistan.
A strong campaign by Moneylife through its website and its social media properties gets quick justice for a 79-year old man with an ailing wife. IndusInd Bank officials had deceitfully persuaded him break his fixed deposit with the bank and invest in a wrong product
Yesterday, there was another knock on 79-year old Mangelal Sharma’s door. Once again, the visitors were IndusInd Bank officials from his branch. But this time, it was not to mis-sell. The bankers came—at 11.30 in the night—bearing a demand draft of Rs7 lakh covering the amount he was persuaded to withdraw from his fixed deposit and invest in DWS’s mutual fund scheme with a 5-year lock in period.
The bankers also came with a letter wanting Mr Sharma to transfer the mutual fund units to the bank. This time, he was careful to read the letter and after some modifications, signed a release “without prejudice”. However, as he says, with great relief, “I want to close this chapter and move on”. We agree.
The bank’s rare capitulation, despite Banking Ombudsman dismissive attitude, was the result of Moneylife’s aggressive stance on mis-selling of banks, specifically making a campaign of this utterly disgusting case of mis-selling. In a first reaction to our report (Read Mr Sharma’s story here: ), the bank invited Mr Sharma to visit the bank at 10 am on Wednesday. Mr Sharma, wearing his T-shirt saying, “BEWARE IndusInd Bank is a cheat. It has cheated me and may cheat you too” landed up at the Preet Vihar branch in Delhi with Veeresh Malik, activist and Moneylife’s consulting editor in Delhi to lend him support.
But the bank had no intention of giving in so easily. It initially refused to allow Mr Malik to be a part of the meeting, did not want the conversation recorded and would not part with Mr Sharma’s documents or give him a copy of the cheque he had signed.
Readers may recall that bank officials visited Mr Sharma at his residence to persuade him to invest in what they said was a Development of Wealth Scheme (DWS), a branded fixed deposit of the bank, carrying higher returns. He was even persuaded to break an existing fixed deposit to put together Rs7 lakh for the investment. It is only when he received his first statement that he realized that he has been made to buy the DWS Hybrid Fixed Term Fund Series 10 Growth, which is sold by Deutsche Asset Management India Pvt Ltd (DWS) and has a 5-year lock in.
“Why would a 79 year old man, with a wife who needs surgery and who is living on his savings, willfully invest in a risky mutual fund with a 5-year lock-in”, asks Mr Sharma. But shockingly, the Reserve Bank of India’s (RBI) Ombudsman did not ask this basic question, or give him benefit of doubt and dismissed his complaint. Mr Sharma then decided to resort to Gandhigiri. Moneylife, which has been writing about gross mis-selling by banks, decided to campaign for him.
Mr Sharma’s fault was that he trusted the bankers of IndusInd Bank and allowed them to fill in the details of the scheme instead of checking the documents himself. The fact is, most people do trust their bankers implicitly and this has been ruthlessly exploited by modern day banksters to con persons who are not financially savvy. Senior citizens and women have been big targets of such systematic mis-selling. While Mr Sharma’s story has a happy ending, the rampant mis-selling of financial products remains a serious issue and Moneylife Foundation (our not-for-profit entity) will continue to push the RBI to rein in banksters, who exploit the trust of customers and sell them dubious derivative products, insurance or induce them to invest in portfolio management schemes which trade in risky commodity products.
RBI says these are beyond its jurisdiction, SEBI has made some efforts to control them, but these finance companies use local courts to ignore orders. But now big companies, like Saradha group have started defaulting. Is it the beginning of the end of dubious finance companies in West Bengal which have been close to both the Left Front and Trinamool Congress?
Saradha group, one of the biggest finance companies in West Bengal is on the verge of collapse and according to news reports, the state government has issued an order for arresting Sudipta Sen, chairman and managing director (CMD) of the company for default on repayments. The Saradha group is just one of the many deposit-taking companies that sprouted and flourished in West Bengal under the garb of legitimate businesses such as real estate, agro products and tourism.
Over the past few years, West Bengal has seen the emergence of quite a few chain-marketing companies. Among them Rose Valley, Icore Group, MPS Group and Saradha group are the most visible ones. They are all about a decade old and claim to be highly diversified conglomerates today. Amazingly, these groups are all Bengali-owned when there is hardly any example of Bengali entrepreneurship of any kind.
While the Reserve Bank of India (RBI) has maintained that the deposit-taking companies does not fall under its jurisdiction, market regulator Securities and Exchange Board of India (SEBI) tried to rein in such companies in the past under its collective investment schemes (CIS) regulations. However, these companies managed to subvert the SEBI orders and continued to flourish with political patronage. But more about it later.
According to a newspaper report, SEBI's action against deposit-taking companies from West Bengal has so far failed due to intervention by district courts. As many as six district courts passed injunctions last year on SEBI’s cease-and-desist order against MPS Greenery Developers, the newspaper report said, quoting an official from SEBI. The market regulator even approached the Supreme Court against these deposit-taking companies, but this effort too could not produce any result.
Last month, SEBI requested the finance ministry to appoint a separate regulatory body for regulating deposit-taking companies and CIS operators.
Collectively, CISs operators are whispered to have raised over Rs20,000 crore, mostly from lower-middle class people in West Bengal, once ruled by the communists and Tripura, which is still under the red flag. With that money, they have bought media space and acquired legitimacy. Rose Valley has been a big advertiser with the Ananda Bazar Patrika (ABP) group. ABP has gone out of its way to promote them and celebrate their ‘entrepreneurship’.
Saradha group was one step ahead of other similar businesses. Since 2010, it acquired or launched several newspapers and TV channels. Unfortunately, over the past few weeks at least 10 media organisations of Saradha group shut shop due to financial issues.
According to media reports, about 200 commission agents of Saradha group met Trinamool Congress leaders demanding immediate intervention from the state government for recovering money from the group. The agents claimed that Saradha group has started defaulting on repayments since January and it is they who have to face the brunt of depositors.
“The state government assured them (agents) that it will take necessary steps to seize all assets of the Saradha Group by the weekend, the agents said after their meeting with Roy (Mukul Roy—general secretary of Trinamool Congress). Even so, they fear the state may not be able to recover anything from the 100-odd companies that the group ran. The group’s management had already started liquidating assets and there may not be much left on the books of its firms, they said,” the newspaper report said.
A common (surprising) factor among all deposit-taking companies is their phenomenal growth. For example, Rose Valley started as some kind of insurance and small-savings scheme, but it has now expanded into a long list of sectors such as hotels (Hotel Rose Valley), foods (Taste Me), amusement parks (at Agartala and Kolkata), resorts, media (Ruposhi Bangla, a Bengali entertainment channel, and News Time, a news channel) and garments (RV Fashions). Rose Valley's representatives claimed that the company had 10,000 acres of land all over India, 14 regional offices, 500 branch offices, 5,000 employees, and so on. Rose Valley claimed it was setting up many housing projects, hotels and hospitals. As of March 2012, Rose Valley Hotels and Entertainment had public deposits worth Rs2,900 crore, while MPS owes Rs1,320 crore to its around 16 lakh depositors.
Almost all of these finance companies have collected money by assuring huge returns from businesses like real estate, agriculture to some unheard of. For example, Sumangal Industries offers an annualised return of 15.6% on seven-day deposit by claiming to invest the money in potato bonds or warehouse receipts issued by cold storages!
Another interesting aspect of all deposit-taking companies is the source of money. Nobody knew exactly where the money was coming from for these companies, but everybody suspected that it was some kind of a pyramid marketing scheme, made infamous 30 years ago by the failed Sanchaita Investments. Sanchaita Investments went bust in 1980s leaving behind a long trail of ruin and suicides by number of agents and depositors in West Bengal.
So far, all deposit-taking companies, chit funds and CIS operators have received patronage from politicians across the party lines. Especially in West Bengal, the ruler got changed but patronage has remained the same. The CID and state finance department officials had once raided Rose Valley's office in Tripura, but to everyone's surprise, no arrests were made. Many people had attributed the outcome to Rose Valley's cosy relations with the Left Front.
The Saradha group is reportedly known to be close to Trinamool Congress leaders and the government.
Is it is the beginning of the end for deposit-taking companies in West Bengal? Or will they again find political patronage? We will know the answers in coming months.