Smoke in Cyberspace

Public memory is proverbially short. But Lucknow (and for that
matter, the entire country) is unlikely to forget the promoters of Cyberspace
— the Joharis. From the city of Nawabs to the financial capital of the
country, their journey to fame has all the twists and turns of a Bollywood
masala movie. CBI investigations reveal that the tainted stockbrokers had 23
firms and 150 bank accounts across the country, some of them under fictitious
identities.

The Johari brothers, 39-year-old Anand Krishna and
42-year-old Arvind Mohan, inherited accounting acumen from their father, GN Johari, who had served as an accountant in the UP Housing Board. The two also
worked as small-time LIC agents for a while. Their tryst with numbers began as
early as 1980 when Arvind decided to make a foray into the stock markets and
floated Century Consultants Ltd (CCL). His sharp business sense changed the
family’s fortunes as the firm carved a niche for itself on the stock markets.
By the mid-nineties, its market worth was between Rs 25 to 30 crore.

Money matters

The lure for big bucks then drew Arvind towards the financial
capital, Mumbai. His uncanny knack for business again won admiration in the
broker community at the Bombay Stock Exchange. Big deals and money automatically
followed. The shares of CCL, which had hit the primary market in 1995 were
converted to Cyberspace Infosys Technologies Ltd in 1998.The shares of
Cyberspace were priced at Rs 10 each and the company had not charged any premium
while issuing them. The shares of the company were oversubscribed.

Arvind also diversified into banking and set up the City
Co-operative Bank (CCB) in 1996. His younger brother Anand Krishna was shunted
off to the bank as one of its directors and all financial dealings and
transactions of the bank were the sole prerogative of the Joharis. The bank had
an impressive investor base of 17,000, when it had to shut down after a scam in
March 2001.

The real test came in 1999 when the Joharis bid for the
setting up of a software technology park in Lucknow–the first private STP in
UP. A committee set up to finalize investors for the STP chose the Delhi-based
Usha Group over Cyberspace because the latter did not have any experience in the
software business. But friend and close aide Anil Gupta, secretary of the state
DoE, rejected the committee’s recommendations and forwarded Cyberspace’s
name for the STP and a prominent piece of land was allotted to the company.

The Midas Touch

Incidentally, Uptron invited hthe Joharis for a joint venture
meant for construction of STPs. Cyberspace went on to grab a huge 74% in
Cybertron, the joint venture. UPTRON managed a meager 26%. The shares of
Cyberspace started shooting up in 1999 when the news of its negotiations
regarding the development of STPs in UP hit the headlines. According to sources,
insider trading by CCL played a major role in it and the share prices registered
a multifold rise at BSE. The shares of Cyberspace started shooting up and on
January 10, 2000, it was being traded at Rs 855. Within a span of two months,
the shares of Cyberspace crossed the Rs 1,000-barrier and on March 21 last year,
they were traded at Rs 1,190.90.

Arvind was seen as the man with the Midas touch. It seemed as
if nothing could go wrong for the high profile stock broker whose fortunes were
soaring on the crest of IT wave. The last big acquisition deal of a US-based IT
company UII Corps came in January 2001. It was a $6-million deal and Arvind paid
Rs 1 crore to KPMG to clinch it.

Rahul Gupta CNS in Lucknow