When life takes a turn for the worse in a seemingly uncontrolled manner, responsibility for one’s own actions which caused the turn in life cannot be wished away. One has to ultimately bear the cross. There is simply no escape – may be there is escape in India, but not in the United States of America.
Yes, you guessed it right – this post is about Mr Rajat Gupta, former global head of McKinsey, who was sented to two years in prison for an insider trading case last week. It is a huge fall from grace and a loss of all reputation for a very powerful man – a global consultant who was the first Indian to head McKinsey and by virtue of his role and consulting prowess, became a trusted advisor to many CEOs around the world.
Should we bother about this case simply because he is an Indian ? Because he is a philanthropist ? Because he helped set up the Indian School of Business in Hyderabad ?
No. There is no reason really to empathize with his situation – though many of the world’s global business leaders wrote to the Judge overseeing his case, supporting a lenient approach in sentencing him. The family members of Mr Gupta wrote to the Judge, and those letters make an appealing reading of a man devoted to his family and public causes close to his heart.
All the effort by various folks involved in Mr Gupta’s life surely had an impact on the Judge. Instead of going for the 8 years suggested by the sentencing guidelines, the Judge decided that 2 years in prison and a USD 5M fine would do.
Like most people, I have been tracking the case closely because the U.S. Government’s case was initially considered to be weak, and Mr Gupta was supposed to get through the charges as there was no direct evidence against him. So, I was sympathetic and hoped that he would eventually win against the Government.
But as the trial progressed, it became apparent that Mr Gupta violated the trust placed on him as a Director on the Board of Goldman Sachs by a publicly traded company. Here’s what the Judge had to state during the sentencing: “The proof of some of these tips was not only overwhelming, it was disgusting,” Judge Rakoff said on Wednesday. “A terrible breach of trust.” [Quoted from NYTimes coverage “Ex-Goldman Director to Serve 2 Years in Insider Case” By PETER LATTMAN dated 24 October 2012].
A shocking observation, validated by the Jury a few months ago based on the circumstantial evidence placed in front of it by the U.S. prosecutors.
Why Mr Gupta did what he did is for someone to speculate and come to some kind of conclusion. I think it is a tragedy that Mr Gupta forgot his roots and his experience and chose to disclose non-public information to a hedge fund manager who happened to be his close friend on the way to making millions.
All this shows that it is not an uncommon practice in Wall Street – the investment bankers should be seriously worried about the capability of the financial task force which prosecutes white collar crimes, looking for malpractices and having successfully prosecuted 70 people on Wall Street so far in the past 3 years. They are smart people, and so they probably thought they are smarter than surely the government blokes.
So, in conclusion, I think Mr Gupta got less than what he deserved for committing a financial crime. It does not matter how big or how large-hearted one is – ultimately, even in a “victimless crime” like this case is purported to be, trust cannot be thrown away to the winds. People who backstab will not go unpunished – history and the right conscience of society will eventually catch up with the folks who belie the trust placed on them. Letting a friend make money quickly before the stock market closes is as serious a crime as if one committed that crime by oneself, if the information is based on a confidential conference call with the board members of a large financial institution (or for that matter any non-public information which can be leveraged in the market).
Will this sentencing happen in India ? Unlikely, though there have been cases in the past which had taken a long time to come to sentencing. Quick movement and closure is the key in finding justice in such cases.
28th October 2012