IFB Agro case shows how ‘informal extortion’ from industry continues under Mamata govt

In an extraordinary move, IFB Agro notified NSE about an attack on its South 24 Parganas plant. Opposition leaders say this is just ‘tip of the iceberg’.

Illustration: Soham Sen/ThePrint

Kolkata: On 25 June, IFB Agro Industries Ltd, one of India’s biggest distiller and spirit-makers, was forced to shut down its Noorpur facility in West Bengal’s South 24 Parganas district after a group of around 150 “armed” goons attacked its employees and vandalised the plant.

In an extraordinary move, IFB Agro notified the National Stock Exchange about the attack the next day. The company said its CCTV cameras, computers, and medical room were damaged in the attack and its employees were asked to vacate the factory at “gun point”.

IFB Agro went on to say that the police appeared to be “helpless” in the situation, adding that Chief Minister Mamata Banerjee’s intervention was sought. Its employee union wrote to the district magistrate saying the company may wind up its business in the state if such attacks are “spared”.

On 3 July, the IFB Agro told the NSE in another notice that it reopened the plant with police protection.

This incident may seem one-off to many outside Bengal, except it’s not, stress opposition leaders in the state. They say IFB Agro’s choice to put the attack on record signals that “extortion” from industrial units has become deeply entrenched under the ruling Trinamool Congress (TMC).

The company’s move also revealed the manifestation of the menace that has ailed Bengal’s industry and businesses for long, causing “flight of industry” in a state that has been trying to secure investments and improve its image through business summits for the last few years.

There is a growing discontent among small and medium businesses in the state too, owners tell ThePrint, but they seem reluctant to speak against the ruling dispensation.

The IFB Agro case is not going to create a favourable situation for the industry even as the TMC government claims that it was “blown out of proportion”.

‘Open secret’

Adhir Ranjan Choudhary, Congress MP from Bahrampur in West Bengal, said what happened with IFB Agro is an “open secret”, holding the Mamata Banerjee government responsible for the flight of industry. He said this case is “just the tip of the iceberg”.

“Businesses never antagonise the ruling party and always try to manage things at their level. But one can imagine under what circumstance a listed company informed the stock exchange about the attack. It earned a bad name for the state. It took seven days to reopen its unit with police protection,” he added.

Sujan Chakraborty, leader of Left Front’s legislative party said the distillery unit falls under the Diamond Harbour constituency of Abhishek Banerjee, the CM’s nephew. “From the employees, we got to know that the Trinamool Congress goons attacked the plant as the company refused to pay money. With CM’s intervention, the plant opened,” he said.

IFB’s employee union didn’t mince its words about the vandalism either. Shamik Lahiri, president of IFB Workers’ Union, wrote to the district magistrate concerned.

“Nearly 300 workers and staff are engaged in this factory. If such vandalism is spared by the Government, the company may wind up its business from our state. You must be aware that many industries have left our district and West Bengal due to the vandalism and extortion sponsored by the ruling party,” he said. ThePrint has seen the letter.

West Bengal Governor Jagdeep Dhankhar, who had said last year the state must enforce rule of law to stop the flight of industrialists, has sought an explanation from the government. He is yet to receive a response.

“Such kind of vandalism in broad daylight in the presence of police personnel is a reflection on the industry situation in the state. IFB is a listed company and has national presence. If they are facing this harassment, then I must say, industrial security in the state is far worse than this,” he told ThePrint.

But the ruling party shrugged off its responsibility, calling the company “corrupt”. TMC MP Kalyan Banerjee told ThePrint that the issue was “blown out of proportion” intentionally.

In a tweet on 29 June, he called Dhankhar a Bharatiya Janata Party (BJP) agent, who tried to “become a spokesperson of corrupt industrialists”. He claimed that it was a central agency that raided the IFB plant. However, the date and time mentioned in the IFB note differs from the one mentioned in the document shared by Banerjee.

The raid was conducted at IFB Agro Industrial Limited office by the DG GST Intelligence Hqrs New Delhi on the basis of a warrant issued by the appropriate court. Why @jdhankhar1 you are interested to save the industrialist who indulge criminal activities. (1/2) pic.twitter.com/GejuWUXAse

— Kalyan Banerjee (@KBanerjee_AITC) June 29, 2020

Extortion and threats

The 25 June incident has opened a can of worms for the TMC government as tension is palpable among business owners in the state.

A Kolkata-based industrialist who has jute units across North 24 Parganas district alleged that his company shells out lakhs of rupees every month to at least five different factions of the ruling party.

“There is no central command in Trinamool. They do it locally. Unlike the CPM, which used to have central control on its cadres, Trinamool has many factions and all collect money. At times, they ask companies to sponsor their events or programmes. It works like that,” said the industrialist, who did not want to be named.

Another businessman, who runs a construction company, recounted how his team had to leave a work site in Rajarhat-Newtown area in the same district in 2018 following “continuous extortion threats by a local syndicate backed by a senior TMC leader in the area”. The company resumed work after months.

There are few instances of businessmen lodging FIRs. One serious complaint came as far back as 2014, when steel major Shyam SEL shut down its plant in Asansol following an extortion bid by local leaders allegedly backed by the TMC. In another case, sub-contractor companies stopped work at a state thermal power unit in 2015 in Murshidabad’s Sagardighi following extortion demands by local leaders.

A December 2017 study on “State Finance of West Bengal” conducted by the Indian Institute of Management, Calcutta (IIM-C) with funding from the Centre, pointed out the existence of such “informal extortion” rackets in the state.

“…press reports pointed out to the existence of informal extortion rackets in the real estate sector in West Bengal, such practice also has an adverse impact on revenue generation by the state,” said the report, adding that there had been “a steady decline in manufacturing” in the state.

Senior CPM leaders say the industry never faced such an extent of extortion during the three-decade Left rule until 2011. “Nobody heard about extortion from industry during the Left regime. Instead, our government tried to bring major industry to the state, it was initiating industrialisation,” said Mohammad Salim, former CPM MP.

Noted economist Anup Sinha said the industry started leaving during Left rule itself but the reason was not “extortion”.

“Under CPM rule, it was militant trade unionism leading to labour unrest that forced industries to leave Bengal. But it was not necessarily extortion. CPM used to collect money from industry but they had a technique. It used to be a single sourced collection, not multiple like the present regime,” said Sinha, who is a former IIM-C professor.

Investment and growth?

The Mamata Banerjee government has tried hard to shed the image of a laggard state with investment and growth figures, but analysts say the growth is “not visible” on the ground.

According to official figures, Bengal Global Business Summit 2019 generated Rs 2.84 lakh crore of investment proposals and a total of 86 memoranda of understanding (MoUs) were signed. Proposals received included Rs 7,000-crore investment from the JSW Group, Rs 1,700 crore from ITC Ltd, and additional investment of Rs 10,000 crore from Reliance Industries Ltd (RIL). However, no update is available on the status of the proposals received in 2019 and past summits.

The West Bengal Industry Development Corporation (WBIDC) website states that the state received proposals worth over Rs 12 lakh crore across five business summits since 2015, held with much pomp and show in Kolkata. Last year, RIL chairman Mukesh Ambani announced that his company would invest in Jio Fibre in the state. Work on this is currently on, according to a senior official of the industry department.

The budget documents of the state show a significant growth in industrial contribution to the state gross domestic product too — growing four percentage points in four years to reach 28.82 per cent.

Graphic: Ramandeep Kaur/ThePrint

However, Sinha said the impact of these figures is “not visible” on ground. In the economic review (2019-20), West Bengal’s GSDP (at current prices) is estimated to grow at a 14.6 per cent in 2019-20 as compared to national growth of 7.5 per cent.

“In the budget documents, the state mentions many figures and also claims how Bengal’s GSDP is higher than India’s average. But, these figures are hard to believe. As a citizen we do not see much activity happening on ground and it is bound to bring some scepticism in mind,” said Sinha.

ThePrint reached Bengal’s Commerce and Industry Minister Amit Mitra and Industry Secretary and WBIDC MD Vandana Yadav via texts and emails but there was no response till the time of publishing this report.