A political and constitutional crisis broke out in Kolkata in Sunday evening as West Bengal Chief Minister Mamata Banerjee began a public dharna to “save the Constitution”, accusing Prime Minister Narendra Modi of launching a coup against her state. The controversy was sparked when officials from the Central Bureau of Investigation, controlled by the Union government, attempted to question the head of the Kolkata police, which is controlled by the West Bengal government, about two ponzi schemes allegedly involving senior politicians.

Some CBI officials were detained by the Kolkata police for a few hours. This resulted in paramilitary forces being called out to protect the offices of the Central Bureau of Investigation.

At the time of publication early on Monday morning, Chief Minister Banerjee had not abandoned her protest.

What happened on Sunday evening?

At around 6 pm on Sunday, a 40-member strong team of the Central Bureau of Investigation turned up at the residence of Kolkata Police Commissioner Rajeev Kumar to question him about the progress of investigations into the Saradha and Rose Valley ponzi schemes that have hurt tens of thousands of small investors. However, Kumar’s guards refused the Central Bureau of Investigation team entry.

A scuffle broke out between the two forces and eventually the Central Bureau of Investigation team was detained by the Kolkata Police, the Press Trust of India reported.

A little later, a West Bengal police team surrounded the CBI office in Kolkata, in what seemed to be a tit-for-tat move. However, the police soon left, to be replaced by paramilitary forces controlled by the Union government.

Within a few hours, the Central Bureau of Investigation officers detained by the Kolkata Police were also released, bringing to a close Act I of this drama.

Claims and counterclaims

The West Bengal government claims that the Central Bureau of Investigation team that went to the police commissioner’s residence had no warrant and was part of a “secret operation”.

The Central Bureau of Investigation, in turn, refuted this allegation, claiming it did have the necessary documents. The agency also accused Commissioner Rajeev Kumarof trying to destroy evidence as well as obstructing the course of the case. The Central Bureau of Investigation will approach the Supreme Court on Monday to continue its investigation.

West Bengal chief minister Mamata Banerjee addressed the media on Sunday after the stand-off, blaming Prime Minister Narendra Modi, Bharatiya Janata Party chief Amit Shah and National Security Advisor Ajit Doval for orchestrating the action. She also announced that she would organise a sit-in in the Esplanade area of Kolkata city in order to “save the country and the Constitution”.

Kolakata Police Commissioner Rajeev Kumar(extreme left) with West Bengal chief minister Mamata Banerjee sitting on a dharna in front of Metro station at Esplanade in Kolkata on February 3.(HT Photo/Samir Jana)

What are the Saradha and Rose Valley scams?

Saradha was a chit fund that operated across eastern India, with a concentration in West Bengal. Depositors could invest as little as Rs 100 with the promise of disproportionately high returns of up to 50% per year. It was a classic ponzi scheme: payouts for old investors were generated by investments from new ones. Since no assets were created, the scheme collapsed when, inevitably, new investors dried up. In 2013, market regulator Securities and Exchange Board of India ordered Saradha to stop its operations.

The people who ran the Saradha group were thought be close to the ruling Trinamool Congress in West Bengal. A Trinamool MP headed the fund’s media division and the chief minister herself inaugurated two Saradha offices. This helped the scheme become popular with consumers.

Rose Valley followed the same model: a ponzi scheme that benefited by being seen as linked to powerful people. Rose Valley financed Bengali films and even sponsored the Kolkata Knight Riders Indian Premier League cricket team before going belly up in 2015.

An ebbing and flowing investigation

The Central Bureau of Investigation case into the two schemes has seen highs and lows. As elections, approach, however, the Central Bureau of Investigation has stepped on the gas. In December, Suman Chattopadhyay, editor of the Ei Samay newspaper, was arrested in connection with loans he had taken from three chit funds, including Saradha. On January 24, the Central Bureau of Investigation arrested Bengali film producer Shrikant Mohta in connection with the Rose Valley scam.

On February 2, India Today ran a report quoting anonymous sources that said that Kolkata Police Comissioner Rajeev Kumar was about to be arrested by the Central Bureau of Investigation and was absconding. The next day, Banerjee said that reports of him absconding were “lies” and the Kolkata police said that they would take action for this “defamation” by media houses.

Even as the Central Bureau of Investigation accuses the Trinamool of having a role in the chit funds, the party in turn accuses the Central Bureau of Investigation itself of being a vehicle of partisan politics on behalf of the BJP. In November, West Bengal withdrew its “general consent” to the Central Bureau of Investigation from conducting inquiries in the state. As a consequence, the CBI would require permission from the state government to proceed with investigations, except those ordered by the courts.

What is the politics driving this?

This bitter rivalry between the West Bengal and Union government is driven by the competition between the Trinamool Congress and the BJP. Even as the BJP hopes to win a substantial number of seats in the state in the upcoming Lok Sabha elections, Banerjee is attempting to head a coalition of Opposition parties to dislodge the saffron party from power at the Centre.

West Bengal Chief Minister Mamata Banerjee, Samajwadi Party President Akhilesh Yadav, Karnataka Chief Minister HD Kumaraswamy and Dravida Munnetra Kazahagam President MK Stalin seen at the "United India" rally in Kolkata on January 19, 2019. Credit: PTI

On Sunday, Banerjee wasted little time in converting the Central Bureau of Investigation raid in agitational politics, deciding to begin a sit-in in a busy area of Kolkata. All other major Opposition parties, with the exception of the Communist Party of Indian (Marxist), expressed their support for Banerjee. On January 19, Banerjee had hosted a “United India” rally in Kolkata with Opposition leaders from around the country. On Sunday, she claimed that the Central Bureau of Investigation raid was connected to the rally. The BJP, in turn, accused Banerjee of corruption in the chit fund case, alleging that police commissioner Rajeev Kumar had destroyed evidence that proved her involvement.