India-born former McKinsey chief says the jury that convicted him was “suspicious of immigrants”
After years of reticence, Rajat Gupta has a lot to say—and some regrets about what he wishes he’d said sooner.
The former managing director of consulting firm McKinsey & Company, who was convicted in a high-profile insider trading case in 2012, wishes he had testified in court during his trial. He shares this regret, and more, in his memoir Mind Without Fear, published yesterday (March 24).
Gupta’s legal fate intertwined with that of Raj Rajaratnam, a hedge-fund billionaire currently serving an 11-year sentence for conspiracy and securities fraud. The former McKinsey chief was the most prominent of the 25 individuals—21 of whom pleaded guilty—convicted of being part of Rajaratnam’s network of informants. Seventy-year-old Gupta, however, always maintained his innocence, and still does, well after his 2016 release following his two-year prison sentence.
Prosecutors pursued Gupta for a 2008 phone call that he, then a director of the investment bank Goldman Sachs, made to Rajaratnam in the seconds after a board meeting ended. The prosecution claimed Gupta had passed along key corporate secrets. Gupta said he had called the hedge-fund titan only to follow up on a soured business partnership.
Gupta’s conviction sent ripples through the Indian community in the US, as some felt a pioneering figure of theirs had fallen from grace. His nine-year stint as managing director of McKinsey, which began in 1994, made him the first Indian to lead a major American company. He has done extensive work in India as well, helping co-found major institutions, including the Indian School of Business, the Public Health Foundation of India, and the American Indian Foundation.
Quartz spoke with Gupta last month about his book and some of the topics raised in it, including his time in prison, the details of his case, and even what he thinks of Preet Bharara, the federal prosecutor who led the charge against him and who was recently fired by US president Donald Trump.
What do you wish you could’ve conveyed by testifying in court? Why didn’t you do so?
Taken out of context, things seemed far more insidious than they actually were. The prosecutors had complete disregard for truth and kept repeating what they knew was untrue, just to influence the jury. For example, they kept saying that I owned 15% of Galleon International (Rajaratnam’s firm), but they never had any proof. Maybe I would’ve been able to correct that. And I’m the only person who could have really told the story because I knew the whole story, nobody else knew it. I always wanted to (take the stand)—I was even rehearsing. Until the very last weekend when we were supposed to decide, my lawyers kept saying no, no, you should not testify. By that time, I had sat through three weeks of the trial and it was very dispiriting. Momentarily, it was a lapse in judgement. I lost my will to fight.
Do you think your race had any bearing on your case?
The jury was 12 individuals who were (from) mainstream America, who were naturally a little suspicious of immigrants. They don’t know anything about business—they’re schoolteachers, beauticians, this and that. And here they see an immigrant who came from India, who is very successful and very wealthy. So their natural assumption was okay, he must’ve done something wrong. Some people in the jury must’ve thought that. But I’ve, in general, never encountered racism.
You wrote that you think the climate surrounding the 2008 crisis affected your case—that people were ready to believe anyone accused of a financial crime was guilty. Do you think that would be true today too?
No. I don’t think this case would have even been brought today. There was no real evidence. I think, right after the financial crisis, there was legitimate anger. People had lost houses, people had lost jobs, their pensions were going down. The problem was that the prosecutors could never bring any cases against the real culprits of the financial crisis. No housing finance, no banking CEOs or senior executives were brought to justice. And while Preet Bharara was pretty good at publicity and was on the cover of Time magazine saying he’s busting Wall Street, he didn’t even make a dent. Now people are saying, “What did he do?” They fined all the banks—the shareholders paid that—and the executives who perpetrated the meltdown got away scot free with their big bonuses.
What did you think when Preet Bharara was fired by Trump?
It is normal, customary when you change presidents that everybody resigns, and then you’re either reappointed or you’re not reappointed. Preet Bharara is a media hog. He refused to resign. So he wanted to be fired because then he could make headlines—“Trump fired me.”
What was prison like for you?
When I went to prison, I sort of said, “I’m going to a monastery, I will try to improve in every dimension.” And I designed my stay around that. Of course, circumstances happen to you—I was sent to solitary confinement for a long time. I was fortunate to have the Bhagavad Gita with me and another book called Light on Pranayama, which is (BKS) Iyengar’s book on pranayama (a yogic discipline focused on breathing). And I studied the Gita cover to cover. I thought I carried myself with dignity. Solitary was very tough, but in general, the other parts of the prison were quite enjoyable. I had to be in prison—I wouldn’t wish that on anybody—but I constructed a nice time.
Have you seen the recent reports on McKinsey—in particular, the New York Times one about the firm’s work supporting authoritarian regimes? What was your reaction?
I was very sad to see those articles. There are also some articles about conflicts and pension funds, some bankruptcy cases that McKinsey consulted on. And South Africa, which was a different corruption case. So around six or seven different things have come up. I have some insight on one or two cases because former McKinsey partners have talked to me about them, but with most, I don’t know anything about the context—I read the New York Times article just like you did. The number of (cases) says that there is something amiss.
And what struck me was the irony of when they take such a holier-than-thou attitude in my own case, and then don’t really behave. They didn’t buy into the principle of innocent until proven guilty (in my case). So now they’re crying wolf against The New York Times because people are assuming they’re guilty. I thought that the double standard was interesting.
One of the Indian organisations you co-founded, the Public Health Foundation of India (PHFI), has had a rough couple of years, losing its FCRA (foreign funding) licence in 2017 and getting it reinstated a year later with riders attached. What’s your take on that?
It took a very concerted effort to get the government to reverse its perspective. I think there was pressure from, perhaps, the tobacco lobby—I don’t exactly know. Tobacco is one of the biggest health hazards, and jointly with the health ministry, PHFI did some work on that.
A significant part of PHFI’s funding came from outside India, and we had FCRA permission to do it (raise funds). (After the government revoked the FCRA licence), 75 global institutions like the Harvard School of Public Health, Johns Hopkins, or the London School of (Hygiene &) Tropical Medicine, wrote letters to the prime minister saying this is an institution of national importance, you cannot let it die. And I think that had an influence on their stance.