Chit Fund Scam Hits Football

The Saradha Group collapse, which destroyed the savings of lakhs of poor investors in West Bengal, has also hit West Bengal’s biggest passion football. Clearly, football in West Bengal is set to suffer as a fallout of the multi-billion chit-fund scam that has rocked the State… 


chit-fund-scam-hits-footabaFootball is expensive and Bengal’s many clubs, the legendary Mohun Bagan and East Bengal included, have been funded over the last few years by a host of multi-level-marketing companies, also known as chit funds. These chit funds have contributed about Rs. 25 crore a year to club football in the State, money that looks set to dry up with Saradha going bust and the Mamata Banerjee Government forced to crack down on such companies. The Sudipta-Sen-owned Saradha had invested both in Mohun Bagan (Rs. 1.8 crore in 2010-11) and rivals, East Bengal (Rs. 3.5 crore since 2010). The mysterious Mr. Sen, now in police custody, had even been gifted a life membership by East Bengal.
Debashish Dutta of Mohun Bagan admits, “This has been a big shock for football. Small clubs will suffer more. Big clubs like us will also suffer because our budgets will definitely come down.” There are 325 clubs in West Bengal registered with the Indian Football Association. Prayag, one of 70 companies against whom the Ministry of Corporate Affairs has received complaints for allegedly running get-rich-soon schemes, sponsors the Kolkata-based United Sports. Annual Budget – 12 to 15 crore. The team’s official, Kuntal Mustafa, says “We hope that this year too we will have a very good football team, a formidable side in India. The Prayag management have assured us of support.”
But Shanti Ranjan Dasgupta of East Bengal too says he foresees problems initially and suggests that the State Government should offer help. Among the many companies that East Bengal lists on its website as benefactors is Rose Valley, a company that runs financial schemes in West Bengal and is being investigated by market regulator SEBI. But then, the East Bengal website also has SEBI’s logo on it.
SEBI has denied sponsoring the club. A bemused Mr. Dasgupta was unable to explain the logo. And since then the logo has been removed. But there is still speculation about how the SEBI logo got on the East Bengal website in the first place. Many say it is perhaps a coincidence but in Saradha chief Sudipta Sen’s letter to the CBI, he specifically mentions East Bengal official Debabrata Das who allegedly took Rs. 40 crore from him by flaunting his connections with SEBI chairman UK Sinha and even Pranab Mukherjee.
After consortium Saradha group went bust, causing a loss of thousands of crores of investors’ money, other such firms have come under pressure. It directly affects club football as many teams receive funding from these collective investment scheme companies.
Take for instance the Janbazar Athletic Club, a team that recently was promoted to the top division of the Calcutta Premier League. The team is funded by Tower Group, another chit-fund driven company which finds itself in financial trouble and under immense pressure from its investors. If Janbazar can even field a team next season remains to be seen.
The scam has affected football in this State. across divisions, including the ones right at the top. Saradha Group was one of Mohun Bagan’s co-sponsors in 2010-11 and the firm invested crores of rupees in the team as well as in their cross-town rivals East Bengal. Bagan also have NVD as a co-sponsor, but haven’t received the sponsorship money from them for the last few months. The club is now mulling on introducing a salary cap for the players next season.

No checks
“We go to different companies for money to run the club,” Bagan Finance Secretary Debashis Dutta said. “It’s not our job to know their whereabouts, because we have no authority. The tie-up is a case of pure demand and supply. Now, suddenly there’s a possibility that these companies might disappear, and in that case we have to act accordingly. We can no longer pay the players in millions.”
Besides a salary cap, Dutta also said he would put forward a proposal in front of other Kolkata I-League clubs to have a overall budget cap as well. “This is the only escape route,” he said. Kolkata have three I-League clubs  Bagan, East Bengal and United Sports. It will be four next season after Mohammedan Sporting’s promotion to the top division.
UB Group is the title sponsor for both Bagan and East Bengal and has given close to Rs. 8.5 crore each this season. But the football budget for the clubs goes beyond Rs. 15 crore  the balance was where chit-fund companies came into the picture.

United in Fall?
The hardest hit of the top clubs could be United Sports. They built a star-studded team this season, roping in centre-half Gourmangi Singh (reportedly for Rs. 1.2 crore), goalkeeper Subrata Paul (Rs. 1 crore), striker Ranty Martins (Rs. 1.3 crore) and former Costa Rica World Cupper Carlos Hernandez (Rs. 1.2 crore). A tie-up with Prayag Group helped them build such a strong team. The group is one of the 70 companies against whom the Ministry of Corporate Affairs has received complaints.
“We haven’t faced any problems yet,” Nabab Bhattacharya, an official with United Sports, began confidently, before adding: “But you never know, the budgets of all the clubs will come down drastically next season but the top priority for us and also the players at the moment is survival. The monthly salary of the players is no longer guaranteed.
“A premier division club needs at least Rs. 1.5 crore annually to run its football team. There’s every possibility that the companies will stop financing the clubs and survival will be at stake.”

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The football connection
Mohun Bagan: One of Bagan’s co-sponsor is NVD Solar Limited. Contract amount for the ongoing season, Rs. 2.5 crore. According to the club, has given only 30 lakhs.
East Bengal: Has Rose Valley as a co-sponsor that had their Collective Investment Schemes (CIS). Sponsorship amount undisclosed. The club also has Bluechip Projects as another co-sponsor – a company that deals in construction business and looks after East Bengal’s age-group teams. Sponsorship amount for this season is less than Rs. 1crore.
United Sports: Has Prayag Group as their title sponsor. Has provided more Rs, 8 crore for the football team this season.
Mohammedan Sporting: Their title sponsor is Emta Group  a company that reportedly has control over the third largest chunk of coal reserves in India. Sponsorship amount for the ongoing season is Rs. 2 crore.
Other clubs: Smaller clubs like Bhawanipore, Aryan, Janbazar Athletic Club and a few others are hugely dependent oncompanies that deal in multi-level-marketing.
– NDTV/IE

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