Rajat Gupta: A honcho’s fall from grace
26 Oct 2012 5:18 AM IST
A US court held Gupta guilty in June this year of providing insider information to Galleon hedge fund founder and friend Raj Rajaratnam, in one of America’s biggest insider trading cases.
Gupta’s downfall began when his billionaire friend Rajaratnam, a Sri Lankan, was charged by federal prosecutors of running one of the biggest insider trading scams in US history.
Gupta had met Rajaratnam through another Indian-American McKinsey partner and ISB co-founder Anil Kumar.
Rajaratnam had made an anonymous contribution of a million dollars to ISB and in 2006, Gupta and Rajaratnam served as founding partners of a private equity fund called New Silk Route.
Gupta became the Chairman of the fund with a large ownership stake. The two became friends and occasionally had lunch together.
However, federal prosecutors, who had Rajaratnam on their radar, used wiretaps and listened in on telephone conversations between Gupta and Rajaratnam as the two talked about boardroom discussions.
A 29 July 2008 telephone conversation between Gupta and Rajaratnam provides an “extraordinary window” into Gupta’s state of mind and willingness to breach his duties to please Rajaratnam, prosecutors have said.
In the conversation, after being asked by Rajaratnam about a rumour concerning Goldman’s strategic plans, Gupta “casually and without any hesitation or reservation” disclosed to Rajaratnam the deliberations of the Goldman board meetings. Rajaratnam is currently serving an 11-year prison term for making millions of dollars in profits and avoiding large scale losses thanks to confidential information he received.
The prosecutors played the telephone conversations between Gupta and Rajaratnam at Gupta’s trial this year and presented incredulous evidence of frantic phone calls by him minutes after crucial board meetings.
The jury convicted Gupta of substantive securities fraud counts relating to his tip on September 23, 2008 regarding the USD 5 billion capital infusion by Berkshire Hathaway in Goldman and Gupta’s tip on 23 October 2008 regarding Goldman Sachs’s negative interim financial results. Gupta had denied any wrongdoing and deployed every arsenal in his armour to avoid jail time. He turned to his expansive network of important friends in high places to garner support for him.
From former UN chief Kofi Annan, Nobel laureate Amartya Sen to Microsoft Co-founder Bill Gates, about 400 acquaintances, former colleagues and friends wrote to US District Judge Jed Rakoff detailing Gupta’s philanthropic work, his otherwise unblemished career and his track record of making significant contribution to charitable causes like AIDS/HIV, malaria and public health.
Gupta’s downfall began when his billionaire friend Rajaratnam, a Sri Lankan, was charged by federal prosecutors of running one of the biggest insider trading scams in US history.
Gupta had met Rajaratnam through another Indian-American McKinsey partner and ISB co-founder Anil Kumar.
Rajaratnam had made an anonymous contribution of a million dollars to ISB and in 2006, Gupta and Rajaratnam served as founding partners of a private equity fund called New Silk Route.
Gupta became the Chairman of the fund with a large ownership stake. The two became friends and occasionally had lunch together.
However, federal prosecutors, who had Rajaratnam on their radar, used wiretaps and listened in on telephone conversations between Gupta and Rajaratnam as the two talked about boardroom discussions.
A 29 July 2008 telephone conversation between Gupta and Rajaratnam provides an “extraordinary window” into Gupta’s state of mind and willingness to breach his duties to please Rajaratnam, prosecutors have said.
In the conversation, after being asked by Rajaratnam about a rumour concerning Goldman’s strategic plans, Gupta “casually and without any hesitation or reservation” disclosed to Rajaratnam the deliberations of the Goldman board meetings. Rajaratnam is currently serving an 11-year prison term for making millions of dollars in profits and avoiding large scale losses thanks to confidential information he received.
The prosecutors played the telephone conversations between Gupta and Rajaratnam at Gupta’s trial this year and presented incredulous evidence of frantic phone calls by him minutes after crucial board meetings.
The jury convicted Gupta of substantive securities fraud counts relating to his tip on September 23, 2008 regarding the USD 5 billion capital infusion by Berkshire Hathaway in Goldman and Gupta’s tip on 23 October 2008 regarding Goldman Sachs’s negative interim financial results. Gupta had denied any wrongdoing and deployed every arsenal in his armour to avoid jail time. He turned to his expansive network of important friends in high places to garner support for him.
From former UN chief Kofi Annan, Nobel laureate Amartya Sen to Microsoft Co-founder Bill Gates, about 400 acquaintances, former colleagues and friends wrote to US District Judge Jed Rakoff detailing Gupta’s philanthropic work, his otherwise unblemished career and his track record of making significant contribution to charitable causes like AIDS/HIV, malaria and public health.
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