Rajat Gupta, Indian American former McKinsey CEO and Goldman Sachs director, discussed his 2012 conviction on insider trading charges, his 16 months in prison, his legacy at McKinsey and plans for the next chapter of his life in an exclusive interview with India-West June 15. (Som Sharma/India-West photo)

Rajat Gupta, released from prison in 2016, is comfortably back in the limelight, cruising through vaunted speaking circuits in India and the United States. With his memoir ‘Mind Without Fear’ published by Juggernaut Books, Gupta is re-writing his narrative in our post-truth world. He paints himself as an innocent victim of circumstances, manipulated by the devious intent of others, failed by the judicial system of a country to which he gave his all. Despite overwhelming evidence to the contrary, fingertips away in publicly available documents, few are taking him on. In interviews that have recently flooded television, print and online media, Gupta proclaims his innocence, and is quoted verbatim by reporters with increasing domino effect. It’s time we step back, review his case, examine his pronouncements critically.

Tall Claim #1: ‘I was a scapegoat of the financial crisis’

Gupta refers repeatedly to the 2008 subprime mortgage meltdown and the subsequent economic fallout where hundreds of thousands of Americans lost their homes and livelihoods. He posits that none of the banks or mortgage lenders responsible for the crisis were brought to justice, instead it was people like him who faced the national wrath. That’s like saying someone else robbed the bank, but an innocent bystander was framed for the crime. Certainly, the insider trading arrests and trials were a product of their time, set against the outpouring of public anger against corporate greed and the occupy wall street movement. However, it isn’t as if the U.S. government, Department of Justice and the attorney’s office were out on some conspiratorial limb to protect higher vested interests, they simply went after crimes they could prosecute.

The reason why no CEOs of banks and mortgage companies were held accountable is that there were loopholes in the system that had been successfully exploited. However morally corrupt and unconscionable their role in handing out mortgages which were not AAA rated, it was, ironically, not illegal to make those loans, charge interest on them, and make more money by betting against repayment. Insider trading was illegal, the difficulty was of a different order – it was impossible to prove prior to wiretaps.

Tall Claim #2: ‘I am innocent of wrongdoing’


Let’s step back and remind ourselves of the crimes Gupta was charged with and convicted of. As a board member of Goldman Sachs and Proctor and Gamble, he had signed confidentiality agreements with the companies they represented. Yet, he’d given out secret, material, non-public company information to others. The prosecution never made the charge against him of profiteering from insider information – they went after him for “egregious breach of trust.” So by repeatedly saying he never made a dollar himself, Gupta is deflecting the issue. He complains of being poorly treated by Goldman Sachs and McKinsey, the companies who were victims of his breach of fiduciary duty. Is it surprising that they would want to distance themselves from him?

Tall Claim #3: ‘The evidence against me was purely circumstantial’

When Gupta repeats this in interview after interview, it behooves the reporter to revisit the evidence. Let’s take just one example: McKinsey’s phone records show Gupta calling into a Goldman Sachs board meeting on Sept 23, 2008 at 3:13 pm. At this meeting, Blankfein discusses a 5 billion dollar investment from Berkshire Hathaway. 19 seconds after the meeting, calls are clocked going from Gupta’s line to Rajaratnam’s at the Galleon office at 3:54 and 3:55 pm. The call runs 30 seconds. Minutes before markets close, Galleon purchases 43 million dollars worth of Goldman stock. Next morning, the Berkshire Hathaway investment is announced and Galleon (which has purchased a whopping 18% of all Goldman stock traded the previous day) makes a 1.2 million dollar profit. It’s common sense. It’s certainly possible that Gupta called Rajaratnam seconds after a board meeting to discuss the weather, or to row over the Voyager Fund on which Rajaratnam had allegedly swindled him. But, is it probable?

And that wasn’t a one-off phone-call, there’s solid evidence of others. Gupta was on Rajaratnam’s elite phone access list, one among only 5 or 10 people whose calls his secretary was authorized to put through no matter what. Logically, would Rajaratnam grant that kind of access to someone he’d swindled 10 million dollars from, whose calls he supposedly didn’t return?

Tall Claim #4: ‘They recorded months of calls, they got nothing on me’

Wrong. Gupta has been caught on wiretap. There’s a call between Rajaratnam and him in July 2008 where Gupta volunteers information on a Goldman Sachs meeting where the purchase of Wachovia and AIG were discussed. An interviewer recently questioned him about that recording. Gupta hemmed and hawed, said he mentioned Goldman Sachs in error, that it was, hear this, a mere “figure of speech.”

It’s important to note that wiretap authorizations are not easily given as they contravene the 4th amendment of the U.S. constitution, an individual’s right to privacy. In what was its first authorization in the realm of white collar crime, it wasn’t as though months of calls were indiscriminately recorded across lines. On the contrary only certain lines could be tapped and for certain lengths of time, only certain content could be recorded and made admissible in court. Judge Holwell, who presided over the Rajaratnam trial, called insider trading “a telephone crime.” No wonder both Rajaratnam and Gupta fought hard to suppress the wiretaps. If Gupta was innocent, why would he care?

Besides, Gupta clearly knew that Rajaratnam was paying millions of dollars to his protégé Anil Kumar, then managing director of McKinsey. Didn’t he know Kumar had a fiduciary duty to McKinsey, that this was blatant conflict of interest? Rajaratnam tells Gupta, “I’m paying him (Kumar) millions of dollars a year for doing absolutely nothing.” “Yes, I know,” Gupta is heard saying, “you are being very generous….sometimes he should say ‘Thank You’ you know.”

Tall Claim #5: ‘I had nothing to gain, no possible motive’

Judge Rakoff opined in his sentencing memorandum, “Mr. Gupta did not in any direct sense receive one penny.” But let’s not overlook the indirect benefits. Gupta had invested his own money in Galleon. If Galleon does well, Gupta as a stakeholder does well. Gupta was Chair of a newly established 1.5 billion private equity firm called New Silk Route. Rajaratnam was a major investor in NSR contributing 50 million dollars to the new firm. Besides, there was much talk in the industry of Gupta’s rising ambitions, moving from “the multi-million dollar circle” to the “billion dollar circle” as Rajaratnam put it. Rajaratnam had appointed Gupta Chair of the newly formed Galleon International Fund of Funds. Had the arrests not taken place in 2009, Gupta would have received 15% of the Fund’s performance fees well into his future.

Tall Claim #6: ‘An overzealous prosecutor cared only about winning’

Certainly Preet Bharara was an ambitious prosecutor, with one eye set firmly on the media and his own professional and political advancement. Every prosecutor wants to win a case. But winning at the expense of the truth is a tall stretch on Gupta’s part. Gupta has shown himself no less media savvy than Bharara. He casts himself as an innocent lamb whose only mistake was he didn’t listen to his wife and keep away from the wolves on Wall Street. He posits himself as the ‘real’ Indian, son of the soil, versus ‘fake’ Indian, Preet Bharara, who didn’t so much as know when Diwali was when he sent out for his arrest. This insider/outsider narrative is being cleverly pitched in the homeland where Bharara’s handling of the Devyani Khobragade case in 2013 made him singularly unpopular, no matter that truth and justice were on his side.

Tall Claim #7: ‘This happened to me because I’m an immigrant’

Stupefying is this claim, given that it comes from someone who is a legendary example of the realization of the American dream. Gupta’s is the iconic immigrant success story, a graduate from India’s IIT to the Harvard Business School, the youngest CEO of international origin to head the global consultancy firm McKinsey, board member of American corporate staples like Proctor and Gamble and American Airlines, holding court with the likes of the Clintons and the Gates. Is Gupta seriously casting himself as a victim of racism, racism that’s encountered daily by African American and Hispanic populations who make up 28% of the United States while disproportionately occupying 56% of its prisons?

Is that the prison reform Gupta says he wants to devote his life to? Apparently not. He’s annoyed by cooperating witnesses, by the plea deal Anil Kumar gained for himself that induced him to testify against his mentor. He’s upset by the makeup of the standard jury that consists of ordinary Americans and not some hand-picked white collar elite team more likely to be sympathetic to corporates.

What’s more, the elitism that Gupta represents worked favorably for him in his final sentencing. He had more than 200 letters of support from luminaries including the likes of Kofi Annan and Bill Gates. Instead of the 78-97 months of imprisonment sought by the prosecution, Judge Rakoff gave him 24 months, of which he was released in 19 for good behavior. The court recognized “the history and characteristics of the defendant,” extolling “Mr. Gupta’s big heart and helping hand in handing out a reduced sentence.” With what credibility can Gupta cast himself as a victim of racial injustice and a flawed judicial system?

Tall Claim #8: ‘I never had a chance to tell my side of the story’

Gupta voices few regrets for his past actions, one regret he does have is that he didn’t take the stand himself. All very well to say this now, but in following his lawyers’ advice, Gupta did not err. White collar defendants are advised by their lawyers not to take the stand as they’re unlikely to cut sympathetic figures to a jury largely consisting of lower and middle class citizens whose entire annual salary can be made in a few seconds worth of insider trading. Had Gupta taken the stand he may well have landed closer to the 8 year sentence his lawyers fought hard to avoid.

Besides, the Securities and Exchange Commission had held closed door meetings and called Gupta in to testify – why did he refuse to answer every one of their questions then? Every time he pleaded the 5th, claiming the right to remain silent and not perjure himself. Gupta says he did this on the advice of his lawyers. He fears it made him look guilty. He’s right. It did.

Tall Claim #9: ‘Rajaratnam and I were never friends

Gupta has tried hard to distance himself from the disgraced Rajaratnam, has spoken of being “misled” and “manipulated” by him while making haste in pointing out that before the arrests Rajaratnam was highly respected in the field. While one cannot conjecture on the nature of their friendship, a rarely known detail is interesting to note here: while Rajaratnam was on home arrest awaiting the start of his 11 year prison sentence, the FBI had apparently approached him with an offer: provide information on Gupta for a potential reduced sentence. Rajaratnam had refused. Gupta refers to this incident, calling it a testament to his innocence, to the fact that Rajaratnam had nothing on him. An alternative view suggests itself – that this was a testament to their friendship, or that Rajaratnam, unlike his ilk, proved a better friend.

No doubt Rajaratnam has his own memoir ready and waiting to hit the press. He’s had plenty of time in prison to work on it. His 11 year sentence is up in November 2022 but with good behavior he could be out as early as May next year. It’ll be interesting to see what Rajaratnam has to say about Gupta. No doubt they will agree in gunning for Bharara.

Tall Claim #10: ‘I was pre-judged by the media’

Gupta claims it was the bad press surrounding the Rajaratnam trial that never gave him a fair chance. Gupta cannot claim that the jury had already made up its mind. The American jury system ensures that jury members are unaware of a case. Those admitting familiarity with a case are rejected. Gupta was actively involved in his jury selection, hiring jury consultants alongside four teams of lawyers, striking anyone off the list who might have reason to be prejudicial. The 12-member jury reached a unanimous decision on Gupta’s guilt in just over a day. Yet there were tears, some openly confessed they wanted him to walk. They liked him. He had done so much good in his life. It was the evidence that clinched the case.

Gupta could have written a different memoir. One where a global icon and philanthropist, one of the most respected names in the Indian American business community, takes a candid look at his life, highlights the pressures, motivations and temptations that came his way, and the human frailty that beset him leading to disastrous choices. Genuine soul-searching could have brought Gupta the redemption he seeks. His memoir could have served future generations instead of only serving himself. He would still have done the rounds of the vaunted speaking circles. Everyone loves a contrite sinner.

But ‘Mind Without Fear’ is not that book. And I do have one last quibble. The title.

“Where the mind is without fear

and the head is held high

“Where knowledge is free…”

(Knowledge, sadly, is never free. In the world of insider trading, knowledge is expensive.)

“Where words come out from the

depths of truth;

“Where tireless striving

stretches its arms towards perfection…”

Mr. Gupta, let’s not sully the words of our Nobel Laureate who isn’t alive to reclaim his poem or the meaning of ‘truth’ and ‘perfection’.

(Nilita Vachani is a documentary filmmaker, writer, and teacher. Her long form investigative piece, “Inside Story: The Woman who was Sacrificed to Nab Raj Rajaratnam,” was Caravan’s cover story in November 2015 and won the Asia Media Foundation’s inaugural prize for investigative journalism in 2016.)

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