Millennium Post

The rise and fall of Rajat Gupta

He once headed McKinsey & Co, the world’s most prominent consulting firm, was a director of financial giant Goldman Sachs, was a global board member of FMCG major Proctor & Gamble and the key brain behind the prestigious Indian School of Business (ISB). These are just some of the achievements of Rajat Gupta. Anyone else would have been happy with any one of the above and would be content to lead a happy life of superannuation. But Gupta was no ordinary achiever. He had finance in his blood and few in the world rivalled his business acumen, his knowledge of the markets and their movements and his hunger to ever expand his portfolio of influence. No wonder he had a near-mythic status in US financial markets and any number of corporate giants were keen to have him on board. He was also a mentor to a generation of young business leaders. And till about two years ago he led a life of unparalleled and unquestionable success. He was also of Bengali-Indian origin, which added to his aura, because he came from a community whose business intellect is considered next to nothing.

But then he fell victim to his own intelligence. He was accused of passing information to a hedge fund manager in the heyday of financial crisis. He passed key information about Berkshire Hathaway Inc.’s impending investment in Goldman Sachs to Raj Rajaratnam, who ran the Galleon Group. Raj was accused and found guilty of insider trading and is now serving 11-year sentence in the US. Gupta, his friend and associate, was also implicated in the same case and has been sentenced on Wednesday to a two-year jail term. When the facts came to light about Gupta’s involvement, it shocked the global financial world and to be honest, he was expected to handed down a much more severe sentence. His case was still deemed ‘disgusting in its implications’ and ‘a terrible breach of trust,’ according to Manhattan District Judge Jed Rakoff but perhaps his unblemished reputation prior to the current case went in his favour.

It is still being debated if insider trading is good enough a crime to indict a man of his stature. One must consider that in the US, financial laws are rather strict and unlike in India names and dynasties do not influence judicial probe. So it was easy in the Indian circles to dismiss the case against him. That he got punished for a crime he was found guilty of is reassuring. However, one should not be too quick to call him the fall guy. He has shored too much success against his name to go down in only as a history-sheeter. Instead, we might consider this case as a moral lapse on his part and hope that his name will yet be salvaged by his achievements in a lifetime of building and nurturing great financial and corporate institutions.
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