India Inc. Reflects on the Rise and Fall of Rajat Gupta

The conviction of a high-flying, Indian-born businessman on charges of insider trading in the U.S. has rocked India's corporate fraternity. Some are shocked and dismayed, while others are unsympathetic

  • Share
  • Read Later
Lucas Jackson / Reuters

Former Goldman Sachs board member Rajat Gupta leaves the Manhattan federal court following a guilty verdict in his trial on June 15, 2012

He may not belong to India Inc. — a term used frequently to describe the country’s business community — but Indian-born Rajat Gupta’s conviction last week on charges of insider trading in the U.S. has left many among India’s corporate fraternity “shocked” and “dismayed.” “I’m absolutely stunned, and I don’t know what to say,” Pramod Bhasin, former chief executive of the business-process-outsourcing company Genpacttold the Wall Street Journal. “I always held him as a role model and a mentor, and I still do,” Ashok Alexander, the former head of McKinsey & Co.’s New Delhi operations who now helms the Bill & Melinda Gates Foundation’s India office, tells TIME. “He was a man with an acute sense of right and wrong.”

At the end of a four-week trial in a New York City court, a 12-member jury found otherwise. The 63-year-old former head of consulting firm McKinsey & Co. and former Goldman Sachs director was found guilty of divulging confidential boardroom information about Goldman to hedge-fund manager Raj Rajaratnam. (In a separate trial last year, Rajaratnam was sentenced to 11 years in prison.) While there was little direct proof of the leak — “Where is the beef in the case?” defense attorney Gary Naftalis once asked — the circumstantial evidence was “enough,” the jury’s foreman later said, for any reasonable man to make the connection. “The verdict was based on circumstantial evidence, and that makes it even more difficult for me to understand and to accept,” said Alexander, who took the stand as a character witness for Gupta a week ago. Gupta now faces potential prison terms of up to 20 years on three counts of securities fraud and five years for a single count of conspiracy. He will be sentenced on Oct. 18, though his lawyers have announced they will appeal the decision.

(MORE: Desi vs. Desi: India’s Press on How Preet Bharara Got Rajat Gupta)

“Mr. Gupta has now exchanged the lofty boardroom for the prospect of a lowly jail cell,” Preet Bharara, the U.S. Attorney in Manhattan and Gupta’s nemesis, said after the trial. For many in India, it was his four-decade-long journey from modest beginnings in the eastern city of Kolkata to the pinnacle of corporate America that added to the poignancy of the verdict. Orphaned in his teens, Gupta attended the prestigious Indian Institute of Technology in Delhi before going to Harvard Business School on a scholarship. He then went on to become the first non-American head of McKinsey. This “storybook life,” as one of the jurors put it, which served as a “wonderful example of the American Dream” made Gupta an icon at home. “Every aspiring immigrant looks up to Rajat Gupta,” Shashi Tharoor, an Indian Member of Parliament and a former U.N. under secretary general, tells TIME. Speaking of the verdict, Tharoor says, “It’s a great human tragedy, which in my mind does not diminish, though it may overshadow, his extraordinary accomplishments.”

Many hailed Gupta’s reputation as a community leader and philanthropist. He co-founded the Indian School of Business in the southern Indian city of Hyderabad, now among the foremost B-schools in the country. He also co-founded the Public Health Foundation of India and the American India Foundation, raising millions of dollars for health care and education programs. “I have found Rajat very devoted to various causes that he has taken up, especially to help India’s development and progress,” wrote Adi Godrej, an Indian industrialist, in a testimonial on the website Friends of Rajat, launched to “correct the unfortunate misrepresentation of [Gupta’s] character.” Sujatha Rao, a former Indian Health Secretary, wrote, “Though an American citizen, he never forgot his roots and always felt a sense of gratitude to the country he was born in.”

(MORE: Fallen Icon: Former Goldman Sachs Director Rajat Gupta Found Guilty)

But not everyone in India had words of sympathy or support. “What he did was entirely about greed and avarice,” Suhel Seth, managing partner of Counselage, a New Delhi–based marketing consultancy, told the Financial Times. “But he is still being supported by these people because ultimately everything about India is all about a cozy club. If one of your club members gets caught, you have to rally round. Or you are seen to be unpatriotic or not part of the club.” Twitter too was abuzz with the debate: “Rajat Gupta’s case is like a Greek tragedy: heroic character with a fatal flaw. It’s not about racism, it’s about greed,” wrote Indian actor Kabir Bedi. Sagarika Ghose, a prominent broadcast journalist said via a tweet, “Surely he knew what he was doing, or does dizzying success bring delusions of infallibility?” For Indians outraged by influence peddling and sick of scandal, the question, and the case, hit close to home.

MORE: U.S. Attorney Preet Bharara Is Taking Down Wall Street

0 comments
Sort: Newest | Oldest