There hasn’t been a more compelling cautionary tale for our times than Rajat Gupta’s abrupt downfall after his fairytale rise from the portals of IIT and Harvard. It’s a question many have asked: why did he throw it all away by sharing privileged information with Sri Lankan Raj Rajaratnam, head of Galleon hedge fund? The entire saga has been captured brilliantly by business journalist Anita Raghavan in her book The Billionaire’s Apprentice. She took some questions from Sunit Arora. Excerpts:
In business circles in India, there has been an often bewildered reaction to Rajat Gupta’s conviction. Now that everything is done and dusted, what would you say to them?
I think Indians who attribute Rajat Gupta’s conviction to racism fundamentally misunderstand America and its justice system. Firstly, the threshold for conviction in a criminal case is “beyond a reasonable doubt”; it is not “beyond any doubt”. Secondly, in America, no one is untouchable. Remember, more than a decade earlier, Rajat Gupta’s friend, President Bill Clinton, faced an impeachment trial and, while he was ultimately acquitted, he will always be remembered as one of two sitting presidents who came close to being impeached. Then, every insider trading case that had been brought in the US before this one was based on circumstantial evidence—well-timed phone calls followed by prescient trades. Exactly the same kind of evidence was used to convict Gupta.
Part of the criticism of the Rajat Gupta verdict stems from a feeling that this is how business is done in India and elsewhere. But Rajat Gupta knew the rules in the US, didn’t he?
Yes, I think Rajat Gupta had to have known the rules in the US. He came to America when he was 22 and was part of the American aristocracy. He studied at Harvard Business School and spent his entire career at the blue-blood consulting firm McKinsey. In his role there, he would have been in the position of advising countless boards of directors and would have certainly in that capacity known the rules on divulging inside information and the penalties for breaking them.
When Raj Rajaratnam told Suketu Mehta in an interview that he had been “done in” by the Indians, do you think he had a valid point?
That remark, much like a lot of what Rajaratnam said, is not entirely accurate. While two Indians, Anil Kumar and Rajiv Goel, cooperated with prosecutors and provided damning testimony at Rajaratnam’s trial, a central pillar of the case against him was the testimony of a former Galleon trader and protege of Rajaratnam’s, an American named Adam Smith. Ultimately, though, I think Rajaratnam was “done in” by his own words that were vividly captured on hundreds of hours of wiretapped recordings and painted a picture of a hedge fund manager who revelled in breaking the law and obstructing justice.
One criticism of your book I’ve repeatedly heard is that it is too gossipy, and that you have been unkind to Rajaratnam by showcasing the sordid side of his life...
Firstly, the book is supported by 50 pages of footnotes which detail sources for much of the information in it. What is not attributed in the footnotes can be traced to sources that have been legally vetted. Secondly, this is a book about people and their motivations for engaging in questionable behaviour. I don’t think you can really understand people through hard, empirical data. Rather, their behaviour is best explained through a collection of well-sourced stories. As for Rajaratnam, he said with great satisfaction in one of the wiretaps: “I am a rogue”. All I did in the book was portray him as he saw himself.
The undoing Rajat Gupta leaving court. (Photograph by AFP, From Outlook 07 October 2013)
Your portrayal of Rajaratnam’s classmate and Gupta’s protege Anil Kumar intrigued me the most, as it does appear he has moved on and internalised his role in the case....
Publicly, Kumar has certainly internalised his role in the entire case but privately I think he is surprised by how difficult it has been to move past this incident. When he agreed to cooperate with the government, I think he believed he would be able to testify in the Rajaratnam trial and get on with his life. That has not happened, much to his chagrin. Even though he escaped prison, he is now dubbed a traitor by his old school friends who decry him for testifying against his mentor, Rajat Gupta.
Do you feel Gupta’s two-year sentence is too much or too little?
It is not my place to comment on Rajat Gupta’s sentence. However, I would point out that I think the judge in the case made an important point about the seriousness of his crime. Gupta had a fiduciary duty to keep the corporate confidences of the boards he sat on and he violated that duty. I think that is the main reason members of the American corporate elite who at one time sought out Gupta now keep their distance.
On the book cover, you talk about the rise of the Indian American elite, but actually it’s entirely about the banking and finance crowd. So, can one generalise on the impact of Rajat Gupta’s fall on the entire Indian American community?
The book touches on the Indian diaspora in many parts of American society—banking, technology and law. And while people have seized on my focus on Gupta to suggest I am pessimistic about the status of Indians in America, it is quite the opposite. If you have read the book, you will know that I devote as much time to Gupta as I do to Sanjay Wadhwa, the underpaid, hard-working civil servant who joins government just as Gupta is leaving a storied three-year term as managing director of McKinsey. Wadhwa, despite limited resources and a lot of stonewalling, builds an unprecedented case against Rajaratnam and Gupta. It is quite stunning but Wadhwa in America has accomplished what few Indians can do in his position in India. Keeping law and order is one of the most important functions of a developed society and the fact that Indians today are in positions of handling such responsibility in the US underscores their strength.
Do you think Rajat Gupta and others have let down the IIT network? Will they still be welcomed by the alumni network in the future?
I am not sure it is just the IIT network that has been hurt by the actions of Gupta and others. At a talk I gave at the Asia Society this summer, a South Asian consultant who had at one point worked for McKinsey stood up and said that Gupta’s actions have cast a shadow over Indians across the firm—their prospects for advancement don’t seem as promising as they did a decade ago. I think one of the reasons the Indian corporate elite in America finds this whole story so distasteful is that it takes the shine off a glittering tale of accomplishment and success. Alumni networks are very sturdy. I noticed at Gupta’s trial many of his supporters—the people who came regularly to court on his behalf—were his old friends from IIT. It was these same friends who jumped into action when he was indicted and set up the ‘Friends of Rajat’ website. So, no, I don’t think Rajat will be shunned by the IIT alumni network.
Finally, you’ve written that the IITs are a beacon of excellence in an India otherwise bedevilled by cronyism and back-scratching. But isn’t that what the Raj Rajaratnam and Rajat Gupta saga is all about?
In the book, I was talking about how the iits’ early focus on meritocracy made them unique among Indian educational institutions. The character of all organisations ultimately sits with the people who are its members. While the case involving Gupta is unfortunate, I think it would be a mistake to generalise about the IIT system as a whole. In my reporting of the book, I heard from a broad cross-section of IIT alums; some were very supportive of Gupta but there were others who were highly critical of his behaviour. The best thing that can happen from this sorry story is for there to be a vibrant debate about how to prevent something like this occurring in the future.
Apropos of the Anita Raghavan interview (‘In the US no one’s untouchable...’), why air this muted suggestion that Rajat Gupta’s conviction has racist undertones? What about his rise to the head of McKinsey? Was that American racism too?
Can the US or India ever stem this rot? The thing is, we perhaps want more accountability, but we don’t want to be accountable to others.
Aditya Mookerjee, Belgaum
What the Rajat Gupta trial did was start a debate on the judicial system in various countries, India and the US to be specific. And the fact is, the difference is stark: Gupta’s trial took less than a year in the US. Compare that with the vacillations of the Indian system which took 19 long years to put Laloo behind bars.
C. Chandrasekharan, Madurai
Response to Post 7: Why is Rajat Gupta relevant, today? It seems, he earned vast amounts of money. The amount of money that he earned, he didn't spend on himself. He furthered his professional interests. What does this imply? That he wasn't personally corrupt. How is corruption relevant, in this context, if Boeing wants to sell their aircraft, and wants Airbus to not sell the volume of aircraft to their own buyer, and asks the United States govt. to intervene? Delta Airlines, and all other U. S. airlines never bought Airbus aircraft, and bought either Boeing, or McDonnell Douglas, it appeared even to me, when I was a small boy.
Do people understand, that govt.'s look really foolish, when they frame laws like this, which will be ruled by Supreme Courts? These laws don't apply to ministers, or administration officials, and what if Airbus ask that the U. S. trade department officials face what Mr. Rajat Gupta faced in court? People were, and perhaps are, saying in India, that Dr. Manmohan Singh is corrupt, when he is the most not corrupt person, probably to me. He doesn't want to be Prime Minister, he was probably asked to be Prime Minister by Ms. Sonia Gandhi. He wanted to be finance minister, perhaps, when he was asked to be. People are blaming what they see as bad business practices to the govt. in India, because they are bound to these practices, apparently.
Anita Raghavan's book has evoked a comparitive analysis over the legal and the judicial system of various nations.The similarity of the judicial system being observed both in China and in US is striking in that the celerity with which the legal process comes to an end with acquittal or conviction as the case may be is commendable. It took less than six months for Bo Xilai to face the music. The socialist nation took no time to attach all the illegal money from him. Similar is the pace with Rajat also. We do not know whether US attached the ill-gotten money of Rajat. Contrastingly, the Indian judicial system had to shilly-shally for 19 long years to incarcerate Lalu. The huge disconnect between 40 crores, which he alleged to have amassed illegally with the penalty of 25 lacs lays bare the lenience our political system has with the big shots. Is time we take leaf out of the above.
I think, if Jhumpa Lahiri, speaks of life in the U. S., then Harper Lee spoke about what was relevant to her. It seems, that people in society who behave either as they deliberately don't want to care, or deliberately that they don't know why, are fighting others, and experiencing the same thing. The journalist Ms. Raghavan is saying that her experiences were not savoury when she wrote the book. Why is she speaking like a woman worker, and I don't mean an ethnic South Asian Indian, and complaining about anyone, when Hillary Clinton doesn't get any hearing for being a woman, when she speaks to an Iranian delegate, and she probably felt that Iranians were male chauvinists, and Americans are not, when speaking to other delegates from other nations?
In the US nobody is untouchable. Yet when you see only a desi journalist in America writing about fellow desis living in America, you wonder if desis exclude themselves from the general American life and find subjects only that they are exposed to. Why do desi writers in America only write about themselves? Jhumpa Lahiri for example continues to write on desi immigrants. Is it because they still do not have much exposure in America to the life or society in general? Or like Rajat Gupta and fellow immigrants the author's own network includes only the fellow desis?
If Anita Raghavan's expertise to write this book is assumed from her familiarity of South Asians because of her South Asian descent and not because of her journalistic research skills then there certainly is a sense of racism here - call it exclusion or segregation or otherwise.
BTW, as far as the US is concerned Rajat Gupta was another former director of P&G or another former chief of McKinsey who like another erring hedge fund manager Rajaratnam displayed lack of ethical standards and code of conduct. Americans didn't have any biases toward desis for accepting Gupta or Rajaratnam at high offices, nor would they have any biases for rejecting them after the guilty verdict. A reviewer of this book in an American publication wrote that judging the either the rise or fall of Indian Americans based on Rajat Gupta's rise and fall would be a sweeping generalization. But then desi journalists' world begins and ends with their subject matter - all about only themselves.
Can the U. S. stem the tide? I mean, people are becoming really silly, and cynical at the same time. I don't think much of the world cares about what happens in the U. S., or India. They don't want to care, and nor should the U. S., and India. We perhaps want more accountability, not to be accountable for others. We say, be accountable, because we want you to be, that is how you are. The U. S. won't welcome the poor and needy from anywhere. They want the best people the world can offer as professionals. Their reason for being a credible, free nation in the past was, they wanted the poor and the needy, and those who were really poor and needy. Unless one faces persecution, it is difficult for such a one that is poor and needy to get any immigration status. And, people in CNN are making programs to feel good about America, feel justifiably bad about unfortunate people, and celebrate helping people, whom some U. S. citizens aren't helping, but hindering, according to the United States helper.
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