CORPORATE PSDA 2

BOOK AND INTERVIEW REVIEW ON RAJAT GUPTA

BY- NEHA DERWAL
02816503818
B.A.LLB 19-24
3 year (5th semester)

Gupta was living, in his account, the story of the success of the immigrants.
Born in Calcutta in 1948, and an orphan at the age of 19, he moved from India
in 1971 to Harvard Business School. Gupta flourished at HBS and with the help
of an influential Professor got a job at McKinsey. Combining vignettes of his
early years in America and his work at McKinsey - one of his assignments was
to help AT&T Corp. to deal with the problem of the '70s of lost phones as
people travel — Gupta describes his rise to prominence, charging his slow rise
with colleagues, then Scandinavian office manager and later Chicago and
finally, in 1994, was appointed the first foreign-born advisor to lead. company.
During the administration, the Guptas also opposed McKinsey's global
expansion plans, pushing the company to China, South Africa, Dubai, and
expanding its history in India, overseeing an unprecedented growth period as
the company grows its customers, revenue., and its benefits.
But what Gupta remembers best these days is his dramatic collapse in
October 2011, when Manhattan prosecutors accused him of fraud, accusing
him of telling his friend Raj Rajaratnam, the founder of a New York-based
investment company, the Galleon Group. company secrets he has collected
as a director on the boards of some of America's largest companies — among
them Goldman Sachs and Procter & Gamble.
The Guptas' misconduct caused shock to American companies. McKinsey
advises the world's largest companies — a business model built on trust —
but here is its chief executive who ignores the most sacred financial
agreements. The heart of the state case, in fact, was built near a tent
agreement built during the financial crisis, in September 2008, when
prominent investor Warren Buffett agreed to immerse $ 5 billion in Goldman
Sachs. The deal became a major step in boosting confidence in Wall Street,
which was hit by the collapse of the Lehman Brothers last week. Prosecutors
said that one minute after the Goldman board ratified the agreement, the
Guptas called Rajaratnam. The conversation between the two lasted about
35 seconds. Five minutes before the market closed, Rajaratnam bought
Goldman's $ 35 million stock, making huge profits from the trade.
(Rajaratnam is serving an 11-year sentence in the same prison where Gupta
was detained until 2016.)
As the country grapples with deep financial crises, Sri Lankan-born
Rajaratnam and Gupta and Gupta, an Indian, have become corporate greedy
corporations. It is a picture the Guptas are trying to change with his new book,
which is said to be published this week.
While in prison and since his departure, he has tried to help fellow inmates,
who write letters, help organize family visits, and even lend businesses they
want to start by writing business plans and, in some cases, investing. "These
people never look after so much money," he said of his financial support. "It's
like someone starting a bakery, it's a small thing." He has started, with fellow
inmates, two lower-level organizations to help liberate re-entry of prisoners
into a normal life. (Gupta, who first shared a cubicle in a prison camp “with a
big, white boy with shaved head and tattoos on all visible areas of the skin,”
says he remembers his time in prison “happily.”)
But while Milken's rehabilitation seems to be based on his past thinking,
Gupta seems unwilling to examine it in any meaningful or honest way. The
Guptas' letter shows a lack of remorse, a lack of gesture, and a strong refusal
to defend themselves. He ends up blaming others freely but ignores the
severity of his wrong actions. He jokes about Anil Kumar, a close associate of
McKinsey who was also arrested for selling inside and testifying to the
government in the Gupta case. He blames Goldman Sachs for leaving him
despite remaining loyal to the company during the financial crisis by staying
on its board. He writes: “Standing up to Goldman during a time of need
seemed like the right thing to do. I never thought they would do the same
when my hour came.
The Guptas dismissed any notion that he had betrayed Goldman, who
promised to pay him for oodles to keep his hopes alive. In an unidentified
moment, he admitted that "I was finally paid nothing to sit on Goldman's
board." This is because, during his legal crisis, Goldman took $ 2 million of the
stock prizes he had given him between 2006 and 2010. "I trusted them
completely," said Gupta. "I have left them money." Goldman, on the other
hand, has paid an estimated $ 42 million for the Guptas' legal costs through
the insurance of directors and officers. In his letter, Gupta states that when
he saw Goldman's alleged legal debts, his suspicions were confirmed that at
that time the former Goldman C.E.O. Lloyd Blankfein was highly trained to
testify in his case. (Representative Goldman Sachs declined to comment.)
Gupta insists that his request to Rajaratnam, on the afternoon of September
2008, was to hand over the documents to Voyager Capital of Rajaratnam,
which is Gupta's worst investment fund. This would have been clear to the
judge if his best friend Ravi Trehan had testified about the times when the
Guptas learned of a huge withdrawal from Voyager's fund by Rajaratnam. It
was Trehan, said Gupta, who informed him of the outflow of water in the
spring of 2008. But the Guptas think the Fed came to Trehan. "I have never
read what they found against Ravi to use as a basis and assure him not to
represent me, but I have no doubt that they had something," he writes in his
letter. “Why did one of my old friends leave me at such a difficult time?”
Gupta also made amends with the prosecutor who imprisoned him, Preet
Bharara, then a former U.S. attorney in the Southern District of New York.
During his tenure, Bharara boasted of an almost complete financial crime. The
Guptas' contempt for the former prosecutor appears on the pages. "He is a
world-class businessman who is close to industry and politics - that would
look good from the start," Gupta wrote. "That I, like many of those he
intended, was an Indian who was working to destroy the aura of his strong
young man." (Barara, who released his book last week, writes that he was
outraged by the controversy in the tribal press regarding his “hateful practice
of persecuting the American Indians.”)
Trehan's episode made Gupta even more convinced that the criminal justice
system was broken. The problem “is that some of the tactics used by
prosecutors are similar to the tactics they say are illegal,” he told me in our
interview. "Something they did with Ravi; I would say is offensive to the
witness." ("Unfortunately, Mr Gupta is deceiving himself," said Reed Brodsky,
an attorney for the Guptas' case at Gibson Dunn & Crutcher.
The Guptas said that by criticizing internal trade and by cracking down on
hedge fund managers, Barara was able to quell the public thirst for banking
executives after a financial crisis "without following serious charges and
jeopardizing his conviction record." This criticism is understandable from
Gupta's point of view, but it is not new. Two years ago, Jesse Eisinger, a
Pulitzer Prize-winning journalist for ProPublica, wrote an entire book on the
subject, underlining the title “The Chickenshit Club,” which James Comey
used to describe prosecutors who regularly saw their convictions because.
they live without serious cases. Only one banker — one under the C-suite —
has been jailed for money-related offenses, notes Eisinger.
But most surprising is Gupta's attitude towards Rajaratnam, the man who put
him in this mess in the first place. The two had an altercation one day while
Gupta was in Massachusetts prison. “I said, ‘Raj, you are the reason I am
here,’” said Gupta, who said Rajaratnam did not say anything in response.
Then, he said, he thanked Rajaratnam "for not falling into the trap of
prosecutors and taking a request to testify against me, and do something and
get five years" his sentence.
In one of the most revealing books of the book, Gupta described Rajaratnam
as a bustling man. “Raj had a method of fishing for information — he just
brought out what he had heard, just wanted confirmation or other details
while showing that he still knew the facts.” But if Gupta, a clever strategist
who advises companies on their next chess move, was smart enough to see
that, how did he fall into Rajaratnam tactics? What hurt the most was the July
2008 televised speech when Rajaratnam questioned the Guptas about
rumours that Goldman might buy a commercial bank. "It was a different
discussion on the board," Gupta replied.
Writing in his book, Gupta asserts that “the conversation was not ‘informative
and non-public information ’and led to the issue being irrelevant. My
comment was wrong, but it is illegal.” As a specialist in dividing people, the
Guptas still do not understand that the evidence they have collected has led
to judges finding him guilty of three counts of fraud and one count of
conspiracy. (She was released on two other charges.)
Later, when Gupta was taken to a large prison, he was reunited with
Rajaratnam. The two took the initiative to discuss the matter, affecting the
Guptas' investment in the Voyager fund held by Rajaratnam. "It was clear I
would not apologize to her - she is not just that kind," wrote Gupta. “From
then on, we lived together, playing card games, chess, or Scrabble. We never
talked about this case again.”
Gupta's life story is confirmed by the time he spent in solitary confinement,
during which he was given ample time to examine himself. He reflects on the
big thoughts: “Now that my worldly possessions were gone, some part of me
felt that the forced downturn in the prison system might give me a chance to
get back on track,” he writes. “Was this a message from God that told me to
change my lifestyle? Was I being bullied, too busy, too focused on making a
big impact? "
His knowledge of these times is limited, and those who translate Gupta's
book before his fall will find little trace. But another theory, which I noted in
my book The Billionaire's Apprentice: The Rise of the Indian-American Elite
and the Fall of the Galleon Hedge Fund, states that Gupta grew up at a time
when hedge funds and private equity gazillionaires were investing., which
makes his McKinsey money seem small compared to. Gupta insists that
avarice has never been a promoter, but why if he resigns from McKinsey with
tens of millions of dollars in his name, he is seeking a $ 5 million-a-year position
at the private company Kohlberg Kravis Roberts & Co. a collection of highly
profitable board positions? Even more bizarre, why would he become a friend
and get into the business of investing with Rajaratnam, describing him as
having "supernatural spirits" and a mental framework "always about
money"? Gupta's declared desire to become more commercial and to support
his cause in public service is meaningless. During one wiretapped
conversation, Rajaratnam described Gupta as dreaming of belonging to the
billionaire’s club.
Gupta, now 70, still retains his capacity for imagination. In Abu Dhabi, Gupta
told me, he and Milken chatted for about an hour in a conference room.
Milken, however, remembers the meeting quite differently. According to a
spokesperson, “Mike politely answered a few questions from Mr. Gupta” for
approximately 10 minutes in the hallway, as Milken shuttled from one panel
to another.
Nor has he lost his entrepreneurial hustle. Gupta told me he is not “100
percent sure” how busy he still wants to be. And yet, in the three years since
leaving prison, he has written a book, gotten reconnected with the Indian
School of Business, which he founded, and assumed the role of chairman of
Wheels Global Foundation, a not-for-profit entity focused on improving
conditions in rural communities. At its November 2017 gala, Wheels raised
money by auctioning off a one-on-one dinner with Gupta and another
prominent Indian-American.
Gupta has found a warm reception among the Indian community, many of
whom, like him, came to the United States after studying at India’s famed
breeding ground for chief executives, the Indian Institutes of Technology.
Berkshire Hathaway executive Ajit Jain, a graduate of the IIT system, hosted
a welcome-back party for Gupta in June 2016 at his gated house in Rye, New
York, overlooking the Long Island Sound. And, in India, Analjit Singh, the
founder of Max Group, a diversified conglomerate focused on health care and
insurance, fêted Gupta at his home near Delhi’s fashionable Golf Links area
during one of his visits to India.
More recently, he has spoken to former McKinsey partner and ex-Enron chief
executive Jeffrey Skilling, who was released from prison this year. “He is
doing well,” says Gupta. “He is thinking of starting some businesses.”
But if Gupta is to pull off a revival of Milkenesque proportions, he will have to
find a new pet project (he has one, and it’s predictable) and think big. He is
considering asking his close partner in philanthropy, Bill Gates, for money to
lobby for criminal-justice reform. His brush with the U.S. justice system has
convinced him that it is plagued with problems of prosecutorial overreach
and a win-at-all-costs mentality. Gates has funded many causes, like global
health and education, Gupta noted, “so he may not have the appetite for
another big issue.”
“I know Bill very, very well,” he added. “If I wanted to be involved with the
Gates Foundation, I am sure he will welcome it. I hope he will welcome” it, he
continued. “I don’t know. I think he will—very much.”