World of Finance, Global Corporations and Greed

One of the most successful Indians in the US, the iconic Rajat Gupta, was convicted on June 15 for leaking inside information in the much-awaited case in New York. The case pertains to the sharing of privileged information relating to Goldman Sachs with the hedge fund manager Rajaratnam during 2008. Rajat Gupta was one of the board members in the global investment firm Goldman Sachs during that time.

Srilankan born Tamil American Raj Rajaratnam, who founded Galleon Group, the New York based hedge fund management firm, was a friend of Rajat Gupta. Rajaratnam built up a very successful business and his net worth was reported to be worth $1.8 billion.  He was charged with trading in the shares of several companies with the help of inside information in what was called as the largest hedge fund insider trading case in the US history. He was given an eleven year jail sentence and fined with a civil penalty of more than $90 million in 2011.

It was reported that two of the jurors in the Rajat Gupta case were in tears when they returned to the courtroom to deliver their verdict. It was because they believed that Gupta lived a “story book life” and the “American dream.”  Yes,   Gupta’s life history thus far is an inspiring story for anyone.

Rajat Kumar Gupta was born to a journalist father in Bengal, who moved to Delhi when he was very young. He was orphaned at the age of 18 with his siblings, after his parents died one after another. Rajat completed his engineering in IIT, Delhi and went on to get an MBA from Harvard Business School. Thereafter he joined Mckinsey & Company, the well-known consultancy firm in 1973. He worked hard and was ultimately elected as the Managing Director of the company in 1994. He was hailed as the first chief executive of the company born outside the US. He is also recognised as the first Indian to head a multinational corporation, thus breaking the ‘glass ceilings’ in those days.

He stepped down after being elected to the post for three terms, remaining thereby the chief executive for nine years, the maximum period allowed as per the rules of the company. He continued with the company as a managing partner and later was made senior partner emeritus with a good salary and other facilities including office and staff. Meanwhile after his retirement from active practice, he became associated with many reputed companies, organisations and bodies in different capacities such as chairman, director and   advisor.

He became a member of the board of directors of big corporations, including two multinational firms, namely Goldman Sachs and Proctor and Gamble. He was closely associated with some of the top-notch educational institutions such as Harvard Business School, MIT and Kellogg Schools of Management and University of Chicago in capacities such as member of the board of directors or board of trustees.

He was also involved in the activities of many high profile non-profitable organisations. He was on the advisory board of Gates Foundation, Chairman of the International Chamber of Commerce, trustee on the board of Rockefeller Foundation, founder board member of World Economic Forum, Special advisor on management reforms to the UN Secretary General and a member of the American Academy of Arts and Science.

He was engaged in India related activities also. He founded the Indian Business School, Hyderabad with another Indian American Anil Kumar and was its Chairman. He also co-founded the American Indian Foundation, which is one of the largest American organisations supporting development activities in India. He was also a member of the Advisory Council to the Prime Minister.

Thus Rajat Gupta involved himself in many activities connected with different fields such as business, education and charity. Besides he co-founded companies and non-profitable organizations. He remained a role model for many in the US and India. He is perhaps the only person from India who adorned many organisations at the highest levels in the fields of business and academics in the US. It is a remarkable story of success for a boy who was orphaned during his early years.  

It is very sad to know that this man, who was leading a very successful and happy life, was convicted for securities fraud and conspiracy. He has everything that a human being aspires in life. He has a happy family and all the comforts. His personal net worth was estimated to be more than $100 million. So he does not require anything further in life. The why did he break the law and pass on information to Rajaratnam before it was made public? That is the question for which a clear answer is not forthcoming at the moment. It is believed that he might have expected something in return from the very rich and powerful Rajaratnam in future.

Anil Kumar is another high profile Indian executive who was arrested in 2009 in connection with the Rajaratnam case. This gentleman completed his studies in IIT Mumbai, Imperial College UK and Wharton School, US. He was working with Rajat Gupta at McKinsey and by hard work became a senior partner and director in the company. He is recognized as the one who pioneered the concepts of Business Process Outsourcing and Knowledge Process Outsourcing. With his good social standing, he was also associated with some of the elite bodies. Besides, he was also the Chairman of the Confederation of Indian Industries, US.

He was known to Rajaratnam from his days at Wharton School. In his ambition to go further, Rajaratnam cleverly used some of his connections such as Anil Kumar to get inside information regarding companies and used them for his trading. It is learnt that whatever he gave to Anil Kumar in return was very little. Anil Kumar was also a rich person and had everything in life. The why did he pass on the information?  After his arrest, he pleaded guilty to the charges and was cooperating as a witness to the government. He also settled the amount that he had received from Rajaratnam secretly with the Securities Exchange Commission.

All the three characters discussed above have their qualifications from reputed educational institutions at the international level, were in very good positions earning high incomes and possessing assets worth millions of dollars.  Rajaratnam was considered as the richest Srilankan born person in the world.  Rajat Gupta and Anil Kumar enjoyed a very high status in the society, both in the US and in India. Then, what motivated them to do what they did? In the case of Rajaratnam it was greed. In the case of the other two, it was their hidden desire to amass more. In the case of all the three, there lingers an utter lack of respect for ethics.

Reports note that if Rajat Gupta fails to convince the court in the appeal, the prison sentence could be long, up to twenty years. But many people hope that the sentence would be lesser, based on his background and the fact that he did not get any direct benefit out of his activities. Whatever it is, the damage has already been done. An icon who remained a model to many has failed them.

The latest episode from the US only proves that in the competitive world of global financial markets, the role of greed has not diminished. It also reveals, once again, the ugly side of the high profile executives of the multinational corporations who, with all their wealth, earnings and reputation, are still not satisfied with what they have. But this time they have succumbed to the temptations of a few extra millions and expected benefits, throwing ethics to the winds. 

(Swadeshi  Patrika, Vol.17, No.7, New Delhi, July 2012)