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COVER STORY: UTI CRISIS
The Untold Story Of Cyberspace
How the promoters of the Lucknow-based company used
contacts with politicians and bureaucrats to swindle the Uttar Pradesh
Government
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HAND IN HAND: (From left) Shastri and Vajpayee with Tandon and
Jauhari
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The Rs 32.8-crore
loss that it suffered by investing in Cyberspace shares may have been
loose change for the Unit Trust of India (UTI) which has sunk Rs 386 crore
in 285 vanished companies since 1964. But the mode and scale of fraud
perpetuated by the Lucknow-based promoters of the company has made it
the most talked about of all dud investments of UTI. India Today dug deeper
into the modus operandi of Cyberspace to uncover how its promoters, the
Jauhari brothers, Anand Krishna and Arvind Kishore, used politicians and
bureaucrats to cheat the state exchequer. The Jauharis' first link to
the ruling BJP in Uttar Pradesh was a person called Pradeep Narain Mathur.
A senior member of the state wing of the RSS, Mathur was the executive
director of Century Consultants Limited, a stock-broking firm owned by
the Jauharis. Mathur also helped his employers establish two other group
companies, Kamal Infosys and Century International Finance Limited.
The real test of the Jauharis' contacts came
in 1999 when they bid for setting up a software technology park (STP)
in Lucknow-the first in Uttar Pradesh. A committee set up to finalise
the investor for the STP chose the Delhi-based Usha group over Jauhari's
Cyberspace because the latter did not have any experience in the software
business. But the secretary of the state's Department of Electronics,
Anil Gupta, rejected the committee's recommendations and forwarded Cyberspace's
name for the STP. Gupta has recently been served a show-cause notice by
the state Government asking him to explain his conduct. Gupta's defence
is that all his decisions were cleared by state's electronics minister
and the then chief minister Kalyan Singh. The Housing and Development
Ministry, which is headed by Lalji Tandon who is supposed to be close
to Prime Minister A.B. Vajpayee, allotted a prominent piece of land in
the city for the STP. The foundation stone was laid by Vajpayee in January
2001 in the presence of Tandon and state Governor Vishnu Kant Shastri.
The Jauharis soon swung another deal with the
state Government. Kamal Infosys signed an MoU with the UPDC to establish
computer training centres in the state. About a dozen centres were opened
in 2000. But once the Cyberspace scam broke out and the Jauharis fled
the city, the Government cancelled the MoU. The Jauharis also swindled
the state of several crores of rupees that were deposited by different
state offices in the City Cooperative Bank, yet another firm floated by
the dubious duo.
—Subhash Mishra
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