Political business
By Praful Bidwai

A major scandal has broken out in West Bengal involving the collapse of a business group called Saradha, comprising 120 firms, promoted by upstart entrepreneur Sudipta Sen. The crash has wiped out the savings of an estimated 400,000 investors, many of them small and poor. Thousands have become paupers overnight, including daily wage-labourers, who invested in Saradha’s dodgy saving scheme known as chit funds. Several people have committed suicide.

The scam has turned into the greatest-ever political crisis for the Trinamool Congress (TMC) government, led by the mercurial Mamata Banerjee, which is about to complete two years in office. So intimate and brazen is the connection between Sen and TMC leaders that the public considers them inseparable and identical in their culpability. Trinamool MP Kunal Ghosh was the CEO of Saradha’s media group. Another MP and actress, Satabdi Roy, was its brand ambassador. Also close to Sen were the state sports minister, Madan Mitra and other senior TMC leaders.

Sen ran a range of newspapers and TV channels in Bangla, English, Hindi and Urdu to promote the TMC. Party MLAs canvassed support in small towns and villages for Saradha’s Ponzi schemes which promise impossibly high returns to investment on the assumption that investors would multiply geometrically. But the chain breaks down and the scheme collapses.

Sen has documented his close links with the TMC leaders in an 18-page letter to the Central Bureau of Investigation. He reportedly spent Rs1.86 crores to buy Mamata Banerjee’s amateurish paintings and showered expensive gifts on her government. Trinamool leaders extorted crores from him in return for ignoring his shady activities including building-rule violations. Nothing could be a starker example of politician-business-media collusion.

To lure innocent people to invest their hard-earned money, Sen had to pretend that he was a successful businessman who owned a massive land-bank and many factories. He kept a ghost motorcycle factory running as a showpiece for investors. It stopped production in January 2011, but Sen continued to employ workers and pay them for appearing to be operating conveyor belts. Gullible investors thought their money would soon multiply.

To invest in Saradha’s schemes, people withdrew savings of Rs12,000 crores from public sector banks and post offices within a year. This set off an alarm in the state bankers’ committee, which recommended corrective measures. Banerjee ignored the warning.

Sen’s media operations in Kolkata, and also in Assam and Odisha, were meant to give him clout and respectability. They all ran up losses. Journalists’ salary payments stopped in January. On April 15, Sen switched off his phones and vanished – till he was arrested in Kashmir.

Saradha repeats West Bengal’s bitter experience with the Sanchayita chit fraud of the early 1980s, where no investor got his or her money back. But many more people are involved in Saradha, including collection agents, journalists, and white-collar staff, besides investors who probably hold the TMC and Saradha equally guilty.

Since the investors’ wrath is trained on it, the TMC’s political credibility is in tatters. How this gets reflected in local body elections, due soon in West Bengal, is a matter of speculation. But it would offer a godsent opportunity to the Left Front – which is still licking its wounds from the assembly election rout of 2011 – to rejuvenate itself.

Revolting as the Saradha scam is, it has major implications for the Indian media. It exposes the many pathologies that afflict it, including interference by business interests via ‘paid news’; prevalence of mercenary considerations in the newsroom; and passing off advertising and political promotion as news. The media increasingly fails to play its legitimate role as a chronicler of events, a forum of public debate and a whistle-blower. Its integrity and reliability are in steep decline.

The bulk of India’s corporate-controlled media no longer has anything to do with social relevance, truthfulness or pluralism. Rather, it promotes tawdry glamour, titillation and sensationalism. Indeed, much of the media doesn’t independently generate news content so much as get it from corporate sources and public relations agencies, as the Niira Radia tapes clearly showed.

Top-level editors increasingly act like and are designated as managers. Many are mere hatchet-men for businessmen. Most journalists feel insecure because they are employed on contract in breach of the Working Journalists Act. Outright racketeering and corruption rule among newspaper editors and TV anchors, who act as fixers for their employers and other businessmen. The Zee News scandal involving allegations of a Rs100-crore extortion demand is a case in point

The media situation has deteriorated significantly in recent years as the integrity of those who hold positions of authority has declined. Pressures to sacrifice the quality of news coverage and pluralism in the comment pages have grown as increases in advertising revenue slow down (from 17 percent in 2010 to nine percent last year), and predatory pricing becomes the norm, squeezing out small and independent publications.

Under predatory pricing, a newspaper that costs Rs20 to produce is routinely sold for Rs3 or Rs4. Only the top-selling papers can make up this under-recovery through advertising and sponsorship; the rest lose money and market-share. This practice is common, but palpably unfair and illegal. It also undermines diversity – with deplorable consequences for a 1.2 billion-population society.

Television is even more sordid as far as relevance, independent content generation and ethics are concerned. Most of India’s 300-odd news channels make losses and are dependent on dubious cross-holding arrangements, black money infusion and dodgy private equity investors, both foreign and Indian. The channels are inclined or forced to adopt unethical methods.

Two other factors have made matters worse: the incursion of Big Business into the media, and growing cross-media ownership, both of which lead to concentration and market dominance, and work against competition and media freedom. Thus, the Reliance conglomerate is investing Rs2,600 crores in the Eenadu group, which runs some 30 regional TV channels, besides the TV-18-CNN-IBN network. The Aditya Birla group already has a 27.5 percent stake in the India Today-Living Media company, and wants to raise it to 51 percent. None of this is conducive to independence and integrity, as distinct from corporate-media collusion.

Cross-media ownership is an unhealthy phenomenon, and is severely restricted in many countries, including the US, UK, Germany, France and also South Africa. But in India there are no restrictions. The Administrative Staff College of India (ASCI) and Telecom Regulatory Authority of India (TRAI) have both examined cross-ownership. ASCI found that 11 of the top 23 TV networks had stakes in print and radio; the remaining had interests in at least two media platforms including television. Four networks (Sun, Anil Ambani’s ADAG, Essel-Zee and Star) had vertical linkages in cable/DTH broadcasting.

TRAI found that as many as 15 media companies had such cross-holdings. The ‘conflict of interest’ arising from this, it says, manifests itself in ‘paid news’, ‘corporate and political lobbying’, ‘biased analysis and forecasts’, and ‘irresponsible reporting’ and ‘sensationalism’. This is ‘even more lethal where the ownership/control rests with entities which have both business and political interests’

Sen was a small-time fly-by-night operator, who crashed out. But successful control of the media by Big Business would be much more damaging. That’s why media regulation is imperative.

The writer, a former newspaper editor, is a researcher and peace and human-rights activist based in Delhi. Email: prafulbidwai1@ yahoo.co.in