New York: To US prosecutors, former Goldman Sachs director Rajat Gupta is a Wall Street insider who fed secret tips to his business partner Raj Rajaratnam so the fund manager could reap millions in illicit profits.
According to www.friendsofrajat.com, Gupta, who goes on trial on Monday in Manhattan federal court for securities fraud, is a man of great integrity, a philanthropist and a victim of prosecutorial overreach. Author Deepak Chopra and Mukesh Ambani, India’s richest man, are among those who have taken to the website to praise him.
“I have known Rajat Gupta for 25 years and am pleased to call him my friend,” Chopra said in an email. “Rajat has devoted many hours working in fields that are close to my heart—particularly in promoting global health through the eradication of infectious diseases,” said Chopra, the best-selling author of The Seven Spiritual Laws of Success who is also on Gupta’s witness list.
Trial begins: Rajat Gupta undergoes a security check before entering the federal courthouse in New York on Monday for the hearing on the insider-trading case. Eduardo Munoz/Reuters.
Friends of Rajat is different from sites for defendants such as Martha Stewart or Rajaratnam because it was created by Gupta’s bold-face-name friends and associates, some of them billionaires. The roster of endorsers reads like a guest list from the World Economic Forum’s annual meeting in Davos, Switzerland, which Gupta once frequented. And they’re speaking out.
Those who have signed up on Friends of Rajat also include billionaire Adi Godrej, chairman of Godrej Consumer Products Ltd; billionaire K.P. Singh, chairman of DLF Ltd, India’s largest developer; Y.C. Deveshwar, chairman of ITC Ltd, India’s biggest tobacco company; Analjit Singh, founder and chairman of Max India Ltd, which sells health and life insurance and owns hospitals; and Rajendra Singh Pawar, chairman of NIIT Technologies Ltd, the computer services provider.
“He’s like a dolphin caught up in a tuna net,” said Atul Kanagat, a former McKinsey and Co. principal, who manages the website. “The government refuses to admit it’s a dolphin and not a big fat tuna, and they’re not going to give up. That’s what my website is trying to do, tell the story about the other Rajat.”
Gupta is accused of leaking information about New York-based Goldman Sachs and Cincinnati-based Procter and Gamble Co., where he was also a director. He is charged with one count of conspiracy and five counts of securities fraud, which carries a maximum term of 20 years in prison.
Plutocrats and friends
The website offers a glimpse into Gupta’s world, where his supporters—some plutocrats, some lifelong friends—point to the millions of dollars he raised for education and healthcare.
In interviews, they said they know Gupta from the Indian School of Business in Hyderabad, which he co-founded, or from his fund-raising efforts for victims of an earthquake that struck Gujarat in 2001. Others know him from his time as chairman of the Global Fund, an initiative to fight AIDS, tuberculosis and malaria.
“Rajat has done a lot for India—he went out of his way, and it’s unfortunate he’s got into this imbroglio,” said Godrej, who has known Gupta for about 20 years.
“It’s good to bring out the positives in a person,” Godrej said in an interview.
“Rajat has always been a person of great integrity and clarity of purpose,” Godrej wrote on the website.
A posting on the website attributed to Ambani, who controls Reliance Industries Ltd, the world’s largest refining complex, praised Gupta’s ethics. “He always followed a Hindu creed: You are only entitled to do your duty, not to the fruits of that duty,” according to the posting.
Ambani didn’t return emails sent to his office seeking comment about Gupta. Tushar Pania, a Reliance spokesman, also didn’t return an email seeking comment.
The Kolkata-born Gupta came to the US as a graduate student at the Harvard Business School in 1971 and became a US citizen in 1984. Kanagat, 57, said he has known Gupta since 1987, when they were both at McKinsey. Gupta went on to lead the consulting firm for nine years. Kanagat said the idea for Friends of Rajat arose when a group of South Asian friends gathered at a party soon after Gupta was charged in October. Gupta, who is free on $10 million bond, wasn’t present, Kanagat said.
‘What’s going on’
“The party wasn’t intended to be about Rajat, but people stood up and said, ‘Is anyone else troubled by what’s going on?’ Kanagat said in a phone interview. At least 30 friends and colleagues decided to create the site to help show a different man than the one portrayed in the indictment, Kanagat said.
Stewart, founder of Martha Stewart Living Omnimedia Inc., started Marthatalks.com after she was charged with obstructing justice. Stewart, who was convicted in 2004 and served five months in prison, used the site to keep fans and journalists updated on her case. Marthatalks.com now directs visitors to Martha Stewart Living Magazine’s website and offers a free tote bag with a subscription.
Rajaratnam, the co-founder of Galleon Group Llc, was convicted last year and is serving an 11-year sentence. He put up Rajdefense.org soon after he was charged in 2009. The site remains a legal defence clearinghouse, offering documents related to his case, including briefs and hearing transcripts.
“More people are using websites to get their message out in criminal and civil litigation,” said Lou Colasuonno, who was a spokesman for Stewart’s co-defendant, former Merrill Lynch and Co. broker Peter Bacanovic. “It can help as a vehicle for reaching all kinds of audiences, from potential jurors to others,” said Colasuonno, who represents Transocean Ltd, the drilling contractor that was sued after the 2010 Gulf of Mexico oil spill. “It could also affect, if there is a hung jury, whether the government decides to retry someone.”
Also, said Colasuonno, a website can be the only way to fight back when a defendant is being defined by prosecutors and the press.
Fighting back is exactly what Gupta’s friends and associates are doing, online and in interviews. They scoff at the prosecutors’ allegation that Gupta tipped Rajaratnam to enhance the holdings of a fund the two had invested in.
“Rajat is too smart—he’s not stupid to do something foolish, as what has been alleged,” Max India’s Singh said in an interview. “He knows better.”
Clients become friends
Singh said he has known Gupta since 1998, when his company became a McKinsey client and the two became friends working on the executive board of the Indian School of Business. Singh said he posted to the site as a way of giving back to Gupta.
“I cannot but emphasize the unrelenting and tenacious and persistent efforts by Rajat to do things for India,” Singh said.
For younger men such as Sabeer Bhatia, 43, co-founder of the email service Hotmail and chairman of Sabse Technologies Inc., Gupta is a mentor.
“Everybody looked up to him,” Bhatia said in an interview. Gupta advised Bhatia when he wanted to start a school in India and on a later business venture, the Hotmail co-founder said. Never once did Gupta seek personal gain, said Bhatia. “He actually followed through,” said Bhatia, who has known Gupta for 14 years. “He is a very gentle-mannered person, a man of integrity who lived up to his word.”
There’s a chance that some of these plaudits will make it into the courtroom. While jurors are instructed to not research cases on the Web, many do, said Andrew Stoltmann, a Chicago securities lawyer who represents investors and isn’t involved in the Gupta case.
“This is a fascinating, low-cost and effective means to influence the jury, the press, the public and the judge,” Stoltmann said. “For Gupta, his greatest strength going into the trial is his background and his reputation. It will have appeal to jurors during the trial.”
How much the jury will hear in court about Gupta’s philanthropy was a topic of debate at a 16 May hearing. While the US has fought to block such testimony, Gupta’s lawyer, Gary Naftalis, argued that it was crucial to the defence. “Here you have a man by everybody’s lights who has lived a wonderful, blameless life and then one day, out of the blue sky, he decides to become a criminal in the seventh decade of his life?” Naftalis said.
US district judge Jed Rakoff, who’s presiding over the case, expressed scepticism about the relevance of such evidence.
“If Mother Teresa were here charged with bank robbery, what the jury would still have to determine is whether the evidence showed that she had committed the bank robbery,” he said.
Rakoff ruled that Naftalis could give jurors a quick sense of Gupta’s good works and background. If Gupta testifies, the information can be amplified, the judge said. Naftalis declined to say whether his client will take the stand.
If he’s convicted, judge Rakoff will be taking these things into account, Stoltmann said. He said judges can consider a defendant’s good works when passing sentence. That’s when Gupta’s good deeds and stellar reputation will come in the most handy, he said.
Naftalis declined to comment on the website. Ellen Davis, a spokeswoman for Manhattan US attorney Preet Bharara, whose office is prosecuting the case, also declined to comment.
Kanagat, meanwhile, blames Gupta’s woes on Anil Kumar, the former McKinsey managing director who pleaded guilty to passing tips about clients to Rajaratnam and who testified against Rajaratnam last year. Kumar is listed as a potential government witness. Kumar introduced Gupta to the Galleon co-founder, Kanagat said.
“That’s what got him into trouble with this Galleon thing,” Kanagat said. “He looks past people’s faults. I asked him, ‘How could you hobnob with these guys?’ And he said, ‘I thought they were respectable.’”
Mehul Srivastava in New Delhi, Ruth David in Mumbai and Saijel Kishan and David Glovin in New York contributed to this story.