By ERIKA KINETZ, Associated Press
MUMBAI, India (AP) — First they were stripped of their utensils, furniture, mobile phones, televisions, ration cards and heirloom gold jewelry. Then, some of them drank pesticide. One woman threw herself in a pond. Another jumped into a well with her children.
Sometimes, the debt collectors watched nearby.
More than 200 poor, debt-ridden residents of Andhra Pradesh killed themselves in late 2010, according to media reports compiled by the government of the south Indian state. The state blamed microfinance companies — which give small loans intended to lift up the very poor — for fueling a frenzy of overindebtedness and then pressuring borrowers so relentlessly that some took their own lives.
The companies, including market leader SKS Microfinance, denied it.
However, internal documents obtained by The Associated Press, as well as interviews with more than a dozen current and former employees, independent researchers and videotaped testimony from the families of the dead, show top SKS officials had information implicating company employees in some of the suicides.
An independent investigation commissioned by the company linked SKS employees to at least seven of the deaths. A second investigation commissioned by an industry umbrella group that probed the role of many microfinance companies did not draw conclusions but pointed to SKS involvement in two more cases that ended in suicide. Neither study has been made public.
Both reports said SKS employees had verbally harassed over-indebted borrowers, forced them to pawn valuable items, incited other borrowers to humiliate them and orchestrated sit-ins outside their homes to publicly shame them. In some cases, the SKS staff physically harassed defaulters, according to the report commissioned by the company. Only in death would the debts be forgiven.
The videos and reports tell stark stories:
One woman drank pesticide and died a day after an SKS loan agent told her to prostitute her daughters to pay off her debt. She had been given 150,000 rupees ($3,000) in loans but only made 600 rupees ($12) a week.
Another SKS debt collector told a delinquent borrower to drown herself in a pond if she wanted her loan waived. The next day, she did. She left behind four children.
One agent blocked a woman from bringing her young son, weak with diarrhea, to the hospital, demanding payment first. Other borrowers, who could not get any new loans until she paid, told her that if she wanted to die, they would bring her pesticide. An SKS staff member was there when she drank the poison. She survived.
An 18-year-old girl, pressured until she handed over 150 rupees ($3) — meant for a school examination fee — also drank pesticide. She left a suicide note: "Work hard and earn money. Do not take loans."
In all these cases, the report commissioned by SKS concluded that the company's staff was either directly or indirectly responsible.
Caught in the despair of poverty, tens of thousands of impoverished Indians kill themselves every year, often because of insurmountable debt. The supportive structure of the microfinance companies was supposed to change that.
But Davuluri Venkateswarlu, director of Glocal Research in Hyderabad, which conducted the industrywide investigation, said in an interview that he told SKS executives there was "clear involvement of SKS personnel" in some suicides.
SKS continues to deny all responsibility for the deaths and says it never commissioned an independent inquiry. SKS spokesman J.S. Sai, who flew to Mumbai from the company's Hyderabad headquarters to discuss the AP findings, said the company stands by its September 2011 affidavit before India's Supreme Court. In that affidavit, chief executive M.R. Rao says SKS "is neither the cause of nor responsible for any suicides in the state of Andhra Pradesh."
The deaths came after a period of hypergrowth leading up to the company's hugely successful August 2010 initial public offering.
Originally developed as a nonprofit effort to lift society's most downtrodden, microfinance has increasingly become a for-profit enterprise that serves investors as well as the poor. As India's market leader, SKS has pioneered a business model that many others hoped to emulate.