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Friday, October 26, 2012

Rajat Gupta –Hero of a Typical Greek Tragedy?

“There is nothing alive more agonized than man / of all that breathe and crawl across the earth” is what one gets reminded of listening to Rajat Gupta, a former Goldman Sachs and Procter & Gamble board member, and a former McKinsey director, whom the US court held guilty in a case of insider trading.

Reading out his prepared statement to the court just before Judge Jed Rakoff pronounced his sentence, Gupta said: “The last 18 months have been the most challenging of my life since I lost my parents as a teenager … I had the privilege of touching many lives in many fields. I mentored many young people, and many more view me a role model … served on many boards and many advisory positions with institutions … these are extraordinary institutions and outstanding people and I feel terrible that they have been burdened with totally undeserved negative attention … I spent my entire professional career at McKinsey … I am extremely sorry for the negative comments from clients and the press that McKinsey has had to deal with … often thought about three not-for-profit organizations that I was fortunate to help create—the Indian School of Business, the Public Health Foundation of India, the America India Foundation … I regret terribly any potential damage to their outstanding reputations … Finally … Anita and my daughters … they have had to endure a barrage of negative press about [me] … uncertain prospects for their future careers and a host of negative outcomes … Your Honor, as I come before you to be sentenced, the overwhelming feelings in my heart are of acceptance of what has happened … of seeking forgiveness from them all [family and friends].”

Here is a man—Gupta—who, having lost his parents as a teenager, coming to the US with an engineering degree from IIT, India, to acquire MBA from Harvard Business School, typical of the ‘American dream’, had risen to the top of America’s corporate hierarchy with simply no advantage. With the knowledge that he had amassed over the years, he rose swiftly through the ranks of McKinsey and headed the firm for a decade. He was the trusted adviser to the captains of industry, including Henry R Kravis of Kohlberg Kravis Roberts & Co and Peter R Dolan of Bristol-Myers Squibb. He was a major adviser to the philanthropic efforts of Bill Gates and Bill Clinton.

Gupta is the same man about whom the judge who sentenced him, Judge Rakoff, had this to say: “The court can say without exaggeration that it has never encountered a defendant whose prior history suggests such an extraordinary devotion, not only to humanity writ large, but also to individual human beings in their times of need.”

But the Court found this “good man” doing a “bad thing”—based on the evidence of a telephonic call made by him after a meeting of the Goldman Sachs board, in which Gupta was a member, to Galleon Group’s co-founder Raj Rajratnam tipping him about a huge investment Berkshire Hathway was to make in the company, based on which Rajratnam benefited hugely by a last minute set of trades in Goldman Sachs shares that he had made— and having caught him, sentenced him  to two years of imprisonment followed by a year of supervised release and a $5-million fine.

The judgment has, of course, stirred up a debate: Rajat Gupta got off too lightly, for the nonbinding federal sentencing guidelines stipulate roughly eight years for crimes of similar nature. Although some have dubbed it as a case of double standards, there is perhaps, a strong reason behind the Court’s leniency: one, Gupta’s extensive charitable work; two, the fact of his surrendering to the court; three, his not making money from the insider information he was said to have passed on to the hedge fund magnet Rajratnam; and to cap them all, the high-profile campaign launched by giants like Bill Gates of Microsoft and Kofi Annan, the former UNO Secretary, pleading that Gupta—who having had an illustrious career, did not need to commit the crime he was accused of and he had done much to help the needy of the world—be treated differently.  And, another section argues that the words of the learned judge, while awarding the sentence, reflect not only the judgment on the crime but also of the good that Gupta has done, and hence views the two-year jail term as too much.  

That said, what we Indians must appreciate is: much against our known long and winding judicial process, particularly with regard to white-collar crimes committed by bigwigs, that seldom sees the logical conclusion in one’s life time, here is a court that has awarded the judgment in just four years, that too against a defendant whom the whole corporate world rates high. When will we Indians witness such days!

That aside, what is most disturbing to the common man is, Gupta, the “good man” who has had an illustrious career, during the course of which he has no doubt acquired enormous amount of knowledge, could not use it to deter himself from committing a “bad thing”. That is, perhaps, the irony of life, which might have forced Homer to proclaim: “There is nothing alive more agonized than man.”

As Manhattan’s India-born federal prosecutor, Preet Bharara, observed, this one bad deed had tarnished, forever, Gupta’s once sterling reputation that took years to cultivate. How right Aeschylus was when he said: “Call him fortunate / Whom the end of life finds harboured in tranquility.”

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