The memoir comes just months after a federal appeals court declined to throw out Gupta’s 2012 conviction.
Rajat Gupta, feted business guru turned convicted felon, says he should have trusted his wife’s instincts about tangling with the world of high finance.
“These aren’t our people,” the former McKinsey & Co. managing director and former Goldman Sachs Group Inc. director says his wife would tell him. “You’re too trusting and you think everyone will be nice to you. Financial people are different than consultants. They’ll eat you for lunch!”
The incident is part of Gupta’s memoir, “Mind Without Fear,” titled after a poem by revered Indian Nobel laureate Rabindranath Tagore, whose work also lends a name to Gupta’s firstborn, Geetanjali.
In it, Gupta returns time and again to the theme of misplaced trust. He rues his unpreparedness for the winner-takes-all realm of finance that he says was so different from the sheltered life he led at McKinsey. Through this lens, Gupta explains how one of the most influential men in corporate America found himself convicted for insider trading in the throes of the financial crisis.
The memoir comes just months after a federal appeals court declined to throw out Gupta’s 2012 conviction. Gupta had argued that U.S. prosecutors failed to prove he got a personal benefit for passing tips to his friend, billionaire hedge fund manager Raj Rajaratnam. A federal jury had found Gupta guilty of passing tips about Berkshire Hathaway Inc.’s $5 billion investment in Goldman Sachs and the bank’s financial results. While Gupta has already served his prison term, a ruling in his favor would have cleared his record.
In his book as well as an interview in New Delhi in February, Gupta said he didn’t share anything of consequence with Rajaratnam. He alleges that the main prosecutor, Preet Bharara — a “fellow immigrant” — worked the press to darken public opinion and the jury against Gupta as a cover for Bharara’s failure to punish bankers in the wake of the global financial crisis.
“If going after the big banking executives was too difficult, he needed another way to appease the public’s desire for convictions. Hedge funds were an ideal target,” Gupta says in the book. “They carried the aura of Wall Street greed and excess, but were not enmeshed in the global financial markets or in politics the way the big banks were. They also lacked the political muscle to defend themselves.”
In a quirk of fate, Bharara also published his memoir March 19, in which he scoffs at accusations that his office targeted South Asians. Bharara denies that federal prosecutors were too scared or motivated by political considerations to go after individual bank officials, and says they were held back by lack of evidence of criminal intent, according to published excerpts.
One finance executive who comes in for criticism in Gupta’s memoir is Lloyd Blankfein, Goldman’s former chief executive officer who testified for the prosecution over three days. During the trial, while Blankfein couldn’t recall specific details about meetings or calls with Goldman directors in 2007-2008, he reportedly testified that it was his practice to estimate off the estimate and also to inform the board about the bank’s expected profit-and-loss statements. The judge ruled that custom and practice was admissible evidence and these proved to be critical points in respect to the charges against Gupta, according to Gupta’s book. At the time, Gupta’s lawyer had assailed Blankfein, calling him “ a man with no memory of anything” and “less than candid.”
“Privately, I wondered what had incentivized Blankfein to dedicate so much time to the case,” Gupta writes. “I knew him well enough to know he doesn’t give favors freely — there had to be something in it for him or for the bank. In the years to come, as Goldman remained seemingly untouchable amidst the ongoing recriminations following the financial crisis, my questions only persisted.”
During the interview with Bloomberg, Gupta said there were early signs that Blankfein possibly resented Gupta’s “global network that was in many ways far greater” than his.
He pointed to a Goldman meeting in Moscow, where Blankfein tried to introduce a Russian minister to the board, only for Blankfein to be ignored in favor of Gupta, who’d known the minister for a decade.
Distrust about the financial sector is a thread that runs through Gupta’s memoir and parallel to his belief in the ideals of McKinsey, which he joined at 24 and retired from three-and-a-half decades later. “The financial industry is a little of a zero-sum game, and they are much more skilled at trying to figure out how to protect their own interest,” Gupta said. “At McKinsey, you learn about client interest and you don’t think ‘I have to protect myself.’”
Gupta concedes his wife is probably right in saying he romanticizes the firm. But, this was the scene of some of his greatest victories — where the orphaned son of a socialist freedom fighter from India rose through the ranks to become, he says, “the first Indian to ever lead a global company of McKinsey’s stature.”
He had achieved the quintessential American dream, until it unraveled.
Now a slightly stooped 70-year-old, Gupta said he hadn’t believed that he could be taken advantage of. Still charming, soft-spoken and impeccably dressed in a sharp navy suit and striped tie, he said his years at McKinsey sheltered him because the firm’s stature ensured you never got ordered around even while rubbing shoulders with CEOs.
Even now, it’s apparent he feels most comfortable around corporate honchos. Identified explicitly as “friend” in the book are Mukesh Ambani, Asia’s richest man, billionaires Sunil Mittal and Shiv Nader, and new age guru, Deepak Chopra, who would often meditate with Gupta. Reading between the lines, though, is the apparent desertion by the American corporate establishment.
This includes McKinsey, which stripped Gupta of the use of the company’s email address, a privilege normally afforded to former managing directors. His business card today carries the Seventh Avenue, New York, address of The Chatterjee Group, run by an Indian-origin family friend.
Gupta maintains a small office there, he said, where he focuses on his charity projects. He’s the chairman of the Indian offshoot of the U.S.-based Wheels Global Foundation, created by alumni of India’s top technology schools. It received a $2 million donation last year from Chirag Patel, the founder of Amneal Pharmaceuticals LLC.
Gupta’s also forming a not-for-profit focused on reducing recidivism and another called Rise and Step with a Haitian journalist he met in prison that will help the families of prisoners. During his time in jail he interviewed about 40 prisoners about their cases and, armed with “this big spreadsheet,” is considering writing for The Marshall Project about the U.S. criminal justice system.
Gupta took a personal hit of about $26 million from fines and restitution because of his conviction, he said, but the greatest costs were the lost opportunities. He regrets not testifying at his trial — a decision he attributes to his lawyers, wife, and a chat with Frank Quattrone, a powerful American technology investment banker, who was prosecuted for obstruction of justice and later cleared by an appeals court.
“In the end, the prosecutor told a good story — not a true story, but a believable one, given the climate of the time,” Gupta said. “And in my silence, I did not offer a better story.”
In ‘Mind Without Fear,’ he’s finally able to write his own.