Gupta: roller-coaster fall from grace
Last year, Rajat K Gupta delivered a commencement speech at the Indian School of Business in Hyderabad that he helped start.business Updated: Oct 28, 2011 02:00 IST
Last year, Rajat K Gupta delivered a commencement speech at the Indian School of Business in Hyderabad that he helped start.
“Try to make other people successful,” said Gupta. “If you work on making other people successful, they will in turn make you successful beyond your dreams.”
On Wednesday, US federal prosecutors said that Gupta had tried to make other people successful — illegally.Gupta is accused of leaking corporate secrets about the bank to his friend Raj Rajaratnam, the head of the Galleon Group hedge fund. Rajaratnam was sentenced to 11 years in prison this month for orchestrating a huge insider trading conspiracy.
Gary P Naftalis, a lawyer for Gupta, has denied the accusations.
Regardless of the case’s outcome, the charges punctuate a stunning fall from grace for Gupta, whose personal story reads like a caricature of a Horatio Alger tale.
Orphaned at 18, Gupta, a native of Kolkata, received an engineering degree from the elite Indian Institute of Technology. He earned a scholarship to Harvard Business School, graduating at the top of his class and securing a prized posting at McKinsey & Company.
He rose rapidly at the consulting firm, making his mark running its Scandinavian office, once considered a backwater at the firm. He expanded McKinsey’s presence in that region and became known for his low-key, dignified manner.
Gupta became a McKinsey lifer, taking on more and more responsibility until 1994, when, at the age of 45, his partners elected him to run the firm. He became the first non-American-born executive to run the firm.
Under his tenure, McKinsey expanded its global reach, aggressively moving into emerging markets such as India and China.
After stepping down from McKinsey in 2003, Kofi Annan, former secretary-general of the UN, appointed him to advise the international organisation on management reform. Some of America’s top companies recruited him for their boards, including Procter & Gamble; AMR, the parent of American Airlines; and Goldman Sachs.
“Over his 32-year career, Rajat Gupta has been a valued source of counsel to institutions, governments and business leaders around the world,” said Lloyd C Blankfein, Goldman CEO, in a November 2006 statement announcing Gupta’s election to the board.
Gupta’s directorship at Goldman was part of his aggressive push away from management consulting and into Wall Street. In 2007, he started a private equity firm, New Silk Route, that focused on Indian investments. One of his original partners on the deal was Rajaratnam.
On July 29, 2008, with the financial crisis entering its most serious phase, Gupta called Rajaratnam. Rajaratnam asked Gupta about a rumour that Goldman might look to buy a commercial bank. Gupta told Rajaratnam that Goldman was weighing a purchase of Wachovia and the AIG.
It is therefore ironical that Gupta spoke about the issue of reputation last year. “Don’t take the shortcut,” he said. “Have your sense of values, your compass, and follow that.”
First Published: Oct 27, 2011 23:31 IST