Explained: What is Karnataka’s IMA scam?

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IMA and its founder Mohammed Mansoor Khan had a dream run over the last four to five years attracting thousands of investors. (File Photo)

Senior Congress leader R Roshan Baig, who was detained at the Bengaluru airport on Monday night by an SIT probing the IMA Group ponzi scam, has used the political crisis in Karnataka as a card to hedge against his arrest in the case.

In what has come to be known as the IMA scam, a private firm called I Monetary Advisory Group floated a ponzi scheme offering investors dream returns to the tune of 36 to 64 per cent on investments. The investment schemes of the firm were pitched as being in line with Sharia principles of Islam.

The company and its founder Mohammed Mansoor Khan had a dream run over the last four to five years attracting thousands of investors with the majority being middle-class Muslims. The success of the firm, which invested in gold bullion trading, real estate, healthcare and other businesses, also attracted patronage from local politicians.

The firm was viewed in some circles as a means for people to convert black money to white.

Around October 2018, the firm came under the scanner of the RBI and other agencies and also ran into trouble in a slowing economy. Investors began complaining of the firm reneging on payments. Thanks to a lot of the patronage it enjoyed in Karnataka, the firm managed to evade action till June this year despite being accused of siphoning off nearly Rs 4,000 crore of funds for the personal benefit of the owners of the firm.

In June, Khan disappeared as a police investigation closed in on him. He left behind an audio message for the police accusing politicians like Baig, MLA from Shivajinagar, for the fall of the firm. Khan alleged Baig borrowed Rs 400 crore from the firm and failed to return it. He has also accused other politicians and officials of bleeding IMA resources.

IMA fraud: Ties between Mohammed Mansoor Khan, Roshan Baig

Baig has been known to be closely linked to Khan and the IMA Group since IMA funded a government school in Baig’s constituency to the tune of Rs 16 crore under a special PPP MoU signed at Baig’s insistence. Baig is also reported to have aided Khan in trying to resolve the problems encountered by the firm at the government level last year.

Baig’s son is also reported to have close connections with IMA. Baig claimed that his ties with IMA are restricted to the funding of the school in his constituency.

After Khan ran away, Karnataka Chief Minister H D Kumaraswamy ordered the creation of a Special Investigation Team (SIT) to probe the IMA scam.

In a second video released after the IMA SIT was constituted, Khan alleged that he had a list of the people across the state who had borrowed funds from him.

Also read | Bedridden for last 30 days, want to return in 24 hours, says Mansoor Khan in video

IMA scam: Arrests so far by Karnataka SIT

The IMA SIT which is conducting investigations under the Karnataka Protection of Investments of Depositors Act 2004 is trying to find people who have taken funds from the firm in order to return them to investors. As part of its probe, the team has so far arrested a promotee IAS officer B H Vijayshankar, who was the Bangalore Urban district deputy commissioner, and L C Nagaraj an assistant commissioner, for taking bribes to the tune of Rs five crore from IMA to provide positive reports to the government.

Several politicians, policemen and officials are alleged to have been beneficiaries of IMA largesse.

The Directorate of Enforcement (ED) of the finance ministry which has registered a money laundering case in the IMA scam has questioned the Congress minister Zameer Ahmed Khan in the matter.

There is however also a sense that the IMA probe has emerged as a political tool in the hands of the state government which is using it selectively against a few persons.