Indian-American businessman Rajat Gupta who spent 2 years in jail after being convicted of insider trading pleads his innocence in a newly published book, but is ready to move on
Rajat Gupta, former McKinsey Chief and board member of corporations like Procter & Gamble and Goldman Sachs was the toast of New York's corporate elite. He was also at the centre of one of the biggest insider trading cases in history. Charges on which he was indicted revolve around his phone calls to hedge fund manager and Sri Lankan-American billionaire Raj Rajaratnam, revealing insider information about Berkshire Hathaway's 5 billion dollar investment in Goldman Sachs and Goldman's impending losses. Having served time in prison, Gupta continues to maintain he is innocent. He didn't testify during his trial but has now written a book, Mind Without Fear (published by Juggernaut), that tells his side of the story.
Edited excerpts from an interview.
Do you see your book as a comeback vehicle, or a means of preserving your legacy?
Neither. I see it as a way of writing an interesting story. I hope people can learn lessons from it. Also, I see it is as the closing of a chapter in my life. It was difficult to write, a cathartic experience.
What are your plans for the future?
I'm not one to sit around at home. I'm connected with the institutions I founded. I advise them. I mentor a lot of people. I've started doing some work in public health — maternal and child health — in Gujarat, which has been going on now for a year and will grow. And I've started doing some work on the criminal justice system in the US, prison reform. And, I hope to do something completely different. I don't know what it will be.
What are the key learnings from your career at Mckinsey?
To lead from behind. You have a servant-leader model. Because it's a partnership and your job as Managing Partner is to read what the partnership wants and help them achieve it, not so much to say, "I know all the answers. Follow me." The other thing is that it's a client service firm so you have to serve clients. I think I was the first Managing Partner who didn't stop serving clients even after I got elected. Also, it was very important to establish a global footprint in my time because our clients had become very global so we had to be at least as global as our clients, perhaps more. So we opened lots of offices all around the world.
You've maintained that all the evidence against you is circumstantial. How do you explain the timing of the phone calls between you and Raj Rajaratnam? The calls occur right after board conference calls and trades are conducted immediately after...
First, let me address the idea that I would call Rajaratnam right after the board meeting. They played up that it was 16 seconds after, or whatever… Most board members I know, when the board meeting is over, or when there's a break, they go out and make phone calls. Secondly, I didn't call Rajaratnam. I called my secretary. I had called Rajaratnam in the morning that day to ask for some papers which he was avoiding sending me. So I called my secretary and asked if Rajaratnam had sent the papers. And she said she hadn't got anything as of yet. So I said, "Get me Raj." I actually don't even remember if I had spoken to him or not. It was a very short call. The reason I say I don't remember is that two hours later I called him again and left a message to the effect of "I'm trying to catch up with you" or I forget what the exact phrasing is. This message is recorded.
Rajaratnam's statement later on is a little vague. He said, "Somebody said something good is going to happen." But the Goldman stock had started going up as soon as the meeting was set, from one o'clock in the afternoon. So, I don't know what he was looking at. He could have been looking at the (stock) ticker. In the call that occurred in October, which was another one cited, you have to understand the context of the board meeting. On that day there was a Wall Street Journal headline that said Goldman is firing 10% of its staff. Now, Lloyd (Blankfein) had not even informed the board that he was going to do this. So he must have panicked and said, "I should have informed the board." So he called a board meeting. And this was all about the firing. I don't recall any discussion of financial results. Rajaratnam next day says he heard from someone at Goldman that they're going to lose 2 dollars a share. This wasn't even true. But what the prosecutors did was, they rehearsed Blankfein for hours to go around that problem by saying, "Oh I don't remember whether it was discussed or not but it's generally my practice." I had a long conversation with Rajaratnam after the board meeting. But it had nothing to do with the board meeting. It had to do with recovering funds of Voyager.
What insights did prison leave you with?
You meet some fascinating people and one of the lessons you learn is that, while someone may be a convicted criminal, they're human beings at the end of it and they have very different backgrounds but are interesting people and in many ways good people. So many people were helpful to me and I tried to be helpful to all of them. I interviewed 40 prisoners on what their life story was, how they got into trouble, what happened. And I saw the injustices. At least 25% of them, I don't think should have ever been there.
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