Photo:AFP
Photo:AFP

Opinion | Why can’t Rajat Gupta accept he is guilty of insider trading?

Despite being convicted, the former McKinsey head has continued to appeal his innocence

Last week, a US federal appeals court declined to throw out the 2012 insider-trading conviction of Rajat Gupta, the former worldwide head of McKinsey & Co., the world’s most glamorous management consultancy firm. Gupta, the first non-American to head McKinsey, and once the most respected Indian in the global corporate world, had been sentenced to two years’ imprisonment and has served his time. However, he has continued to appeal his innocence. This was his second appeal and the second time his case has been rejected. His name has not been cleared. His reputation remains tarnished.

Gupta has had an extraordinary life (disclosure: I have written a book on him, Fallen Angel). He was orphaned in his teens with two younger siblings. He entered the Indian Institute of Technology Delhi with a double-digit all-India rank, and not only did he excel in studies, but was also very active in sports, theatre and student government. He even made time to woo and win the only girl in his batch.

“How on earth did you manage all this, with two siblings to take care of, at such a young age?" I had asked him once. We were speaking over the phone and there was a tiny pause before he replied, utterly calmly: “I suppose it was all a matter of prioritization."

He got a full scholarship to Harvard Business School, something unheard of in India then, and when McKinsey rejected him for a job, one of his professors was so aghast that he called up the firm and told them that they had made a terrible mistake. McKinsey came back and hired him, and some two decades later, he was heading it.

However, everything came crashing down when he was charged with passing on privileged information to Raj Rajaratnam, the Sri Lankan-born head of investment fund Galleon Group, who had already been convicted for the largest insider-trading scam in US history. The evidence against Gupta was all circumstantial, but it was overwhelming. For example: Gupta was a director on the board of investment firm Goldman Sachs Group Inc. In a September 2008 board meeting, the directors were told that Warren Buffett’s Berkshire Hathaway was investing $5 billion in Goldman Sachs. A minute after the meeting ended, someone called Rajaratnam from Gupta’s phone. The next day, Rajaratnam, through quick trading, was richer by $800,000.

There were several other incidents like this. Federal Bureau of Investigation (FBI) wiretaps of Rajaratnam’s phones also revealed that though Gupta had not made any money from Rajaratnam, he clearly expected to make loads of it in the future.

Gupta vehemently denied any wrongdoing. However, the jury found him guilty. Gupta’s friends, from Kofi Annan to Mukesh Ambani to New Age guru Deepak Chopra wrote to judge Jed S. Rakoff, pleading for leniency. While sentencing him to two years in prison, Rakoff said: “He is a good man. However, the history of this country and the history of the world is full of examples of good men who did bad things."

In jail, he was sent to solitary confinement for a few days for stealthily obtaining an extra pillow for himself.

When I was researching for my book The IITians, in 2002-03, I met a galaxy of extremely successful Indians. Later, going through my notes, I realized that of all these people, Gupta, then head of McKinsey, was the one man I had totally failed to fathom. All the others let down their guard at some point of time—they joked, reminisced, digressed. Not Gupta. Though I had spent several hours talking to him, face-to-face and on the phone, I knew nothing about him as a person. Either he was the perfect guy—highly intelligent, unfailingly courteous, never a hair out of place—or he had built an impenetrable wall around himself. I could not get the slightest glimpse of what could lie behind it.

Years later, for my book on Gupta’s downfall, I spoke to many people who had known him at various stages of life, and not one of them believed he was not innocent. They did not want to believe. But I had gone through the FBI wiretaps and the court transcripts and I believed he was guilty like hell.

Since his release from prison, Gupta has been attempting a return to normal life. Wealthy Indian-Americans have hosted parties for him. In his country of origin too, old friends have welcomed him home. However, McKinsey, the firm he led for nine years, has removed his name from the company’s alumni directory. That is the cruellest cut.

Gupta is now writing his autobiography. In a press release, his publisher Juggernaut Books said: “Candid, compelling and poignant, Gupta’s book promises to be an extraordinary human story—of a man who had it all before he lost everything." Gupta said: “My life has had many ups and downs and in this book I want to talk about my struggles and how I’ve found solace, strength… I hope the youth in particular will benefit from the learning in my journey."

Yes. Like, when you have everything, don’t stay greedy and commit petty thefts and let down all the people who saw you as an inspiration.

Sandipan Deb is a former editor of ‘Financial Express’, and founder-editor of ‘Open’ and ‘Swarajya’ magazines

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