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- Former McKinsey leader Rajat Gupta was one of the biggest names facing criminal prosecution after the global financial crisis, as he was tied to the billionaire hedge-fund manager Raj Rajaratnam’s insider-trading case.
- In a book released earlier this year, Gupta still proclaimed his innocence, blaming his conviction on the political environment in the country after the housing crisis, an aggressive federal prosecutor, and his “biggest regret of his life”: not testifying at his own trial.
- The book, called “Mind Without Fear,” details Gupta’s life, from his childhood in India to Harvard Business School, McKinsey, the United Nations, and, eventually, a federal prison in Massachusetts.
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Even before a jury’s decision in summer 2012, Rajat Gupta had lived a life that was worth writing about.
The former leader of the consulting giant McKinsey had advised billionaires like Bill Gates and the Swedish heir Sam Wallenberg, knew former Presidents Bill Clinton and George W. Bush, served on the boards of Goldman Sachs and P&G, and addressed the UN General Assembly.
But his book “Mind Without Fear” does not begin with a story about any of these people or even his childhood in India, where he was raised by a Bengali freedom fighter, or his time at Harvard Business School, when he was one of the few people of color at the school. It instead begins with him inside a federal prison in Massachusetts, on his way to serve the first of his two stints in solitary confinement for what he called a minor breach of rules (tardiness to a roll-call count).
Gupta was found guilty of insider trading, with prosecutors saying he tipped off the disgraced hedge-fund manager Raj Rajaratnam with news of nonpublic information about Goldman, including Warren Buffett’s $5 billion investment into the bank during the financial crisis. In the book, which was released earlier this year, Gupta still adamantly denies he did anything wrong.
Instead, he blames a host of factors for why he ended up spending two years in prison: former US Attorney Preet Bharara’s aggressiveness, the political climate against executives after the financial crisis, Goldman Sachs’ former CEO Lloyd Blankfein, and his decision not to testify in his defense.
In interviews with media outlets around the release of the book earlier this year, Gupta strikes the same tone, pushing back on any inkling that he helped Rajaratnam gain access to inside information.
“Bharara couldn’t do what he was put in the job to do,” Gupta said in an interview with the Financial Times in March. “How can you have the perpetrators of the financial crisis, which is all the banks and the housing finance companies, and he couldn’t bring one person to justice?
“I can tell you that basically the incentives are misaligned. Most prosecutors have political ambitions. They want to win at any cost … if an innocent person is proven not guilty or the jury say not guilty, it’s a win for the prosecutor. They shouldn’t take it as a loss. What they did to spin a story which they knew was wrong.”
The book however details much more than just his side of the trial. It dives into the executive’s life in prison, the people who stuck by him, and his feelings toward his old employer and Goldman.
His biggest regret
Gupta wrote in his book that he wanted to testify and was planning on testifying, even in the face of advice from his lawyers telling him not to.
What convinced him not to was listening to his daughters and his wife talk to his lawyer on the phone about how scared and concerned they were for him to testify. It ended up being his biggest regret, he wrote in the book.
“I was tired and defeated. I did not have the energy or confidence in myself to go against the advice of my lawyers, my wife, and my daughters,” he wrote.
While he did not take the stand, his oldest daughter, a trained attorney, did.
“A strange mix of pride and shame overwhelmed me as Sonu took the witness stand, so poised and articulate. I was grateful she was doing this, but it should have been me up there, not her,” he said.
When he was found guilty of four of the six charges against him, Gupta wrote that he believed the jury “did not want to find me guilty.”
“They simply had not been given a good enough reason not to,” he wrote.
Beef with Bharara and Blankfein
Gupta remarkably is not angry with Rajaratnam, he wrote. They were briefly in the same prison — Rajaratnam was convicted of insider trading in 2011 and released two years early this summer — and Gupta wrote that he had forgiven him.
The two biggest names that got most of his ire, in both the book and subsequent media interviews, were former Goldman Sachs CEO Lloyd Blankfein and former US Attorney Preet Bharara.
Blankfein, Gupta told FT, was willing to testify for the prosecution to curry favor with the Justice Department. The bank told FT the allegation was “absurd.”
Gupta’s book cites more instances of what he perceives as Blankfein’s underhandedness, including when Blankfein revealed to the rest of the board why he was resigning before the charges had been made public. While he was on the board, Gupta was considering taking a senior-adviser role at the private-equity firm KKR, which Blankfein said would require him to resign from Goldman’s board.
The former Goldman CEO “was adamant I could not do both. Finally, during a board dinner with our spouses, he leaned across [Gupta’s wife] Anita, who was sitting between us, and told me loudly, ‘It’s one or the other: Goldman or KKR. You have to choose.'”
His anger with Bharara, though, was more personal. Gupta believed he was unfairly attacked by a fellow Indian American, something Bharara dismissed as “comical” in his own memoir. The biggest example from the book was Bharara deciding to arrest Gupta on Diwali, a Hindu holiday.
“That I, like many of those he targeted, was a fellow Indian only served to burnish his tough-guy aura,” he wrote.
Gupta’s poor timing
Gupta naturally got a lot of big news. And every time he did, it seemed he was either boarding an airplane, unable to talk, or seriously ill.
He was constantly traveling throughout his legal proceedings. When he first learned a case was being built against him, from a call from Goldman’s general counsel, he was boarding a plane in Detroit. Later, when he got word of further developments in his case, he was at a cricket game in India and boarding a flight to India.
Even for good news, calls seemed to come at the worst time for Gupta. When he was first made partner by McKinsey, he had just had dental surgery, forcing his wife to talk on the phone with his boss who had called to give him the good news because his mouth was still numb.
When he was alerted that he was made McKinsey’s managing director, the consulting firm’s version of CEO, he had to put off starting the job for a couple weeks because of a surgery.
And the most unfortunate timing for Gupta was that of the global financial crisis. He was planning to leave Goldman’s board — before he ever was accused of leaking secrets to Rajaratnam — to join KKR, but Lehman crashed before his resignation was announced publicly.
In order to show a more united front, Goldman asked him to stay on, he wrote — a decision that changed his life.
Gupta’s famous friends and preprison fabulous life
Decades of rubbing shoulders with the most powerful people in the world left Gupta with an impressive list of contacts.
He toured earthquake damage in his native India with then-President Clinton, playing Scrabble with him on the plane in between stops. He was given an award by Bush for his charity work. And he counted Gates, Larry Summers, Hank Paulson, former UN Secretary Kofi Annan, and more as friends and confidants.
After his arrest, he wrote that his circle contracted significantly, but several big names supported him, publicly and privately. Clinton and Summers both called after the conviction to wish him well, he wrote, and Gates, Annan, and former Bristol-Myers CEO Peter Dolan all wrote letters to the judge about Gupta’s character.
Before the legal battles, Gupta lived a life fitting of a member of the global elite. McKinsey executives paid for an elephant to come to his retirement party. He had several vacation homes, and, before he went to jail, took weeklong trips with each of his four daughters in different parts of the country. He would make investments for millions of dollars in friends’ businesses and hedge funds.
Prison did not care about his past
A two-year stint in prison opened Rajat Gupta’s eyes.
He wrote about the unfairness and arbitrary nature of many of his fellow inmates’ sentences, many of whom were serving time for drug offenses. He was sent to solitary confinement twice, once for seven weeks, for what he described as minor infractions. He wrote of the dehumanizing process of stripping in front of guards and being given food through a slot.
He also enjoyed the community however, writing about making friends with people across ages and socioeconomic backgrounds. He taught a group how to play bridge and led a tournament, and when he left prison, he said he was in the best shape of his life thanks to a routine that had him walking the outdoor track for miles a day with push-ups in between.
The first person to tell him to write the book, he said, was a fellow inmate who was Haitian and writing a column for a Haitian newspaper while in prison.
That said, he was clearly angered by the randomness of the guards’ punishment and the angry responses they had to what he believed were innocent mishaps.
“You don’t really like it here, do you” one of the guards asked him once. Gupta couldn’t believe that was even a question.
“I wasn’t aware we were supposed to like it here. And no, I did not exactly like it here,” Gupta wrote.
He spent pages citing statistics on the US’s high incarceration rate compared with other developed countries, as well as reports on solitary confinement as a form of torture.
“What also struck me, over and over again, in the stories of my fellow inmates, were the terrible flaws in the justice system. So often, there was rampant prosecutorial overreach, and the misuse of plea-bargaining,” he wrote.
Leaning on his faith, thinking about his father
His second time in solitary confinement — known as the SHU at the federal prison in Devens, Massachusetts — was spent mostly reading and rereading the Bhagavad Gita, the Hindu holy book, in both English and Sanskrit.
Gupta wrote that he was able to push through that time, which lasted nearly two months and was for having an illegal pillow, because he channeled the same karma yoga his father did for his whole life.
Gupta’s father is well-known in Indian history, serving time in prison during India’s fight with the British for independence. Ashwini Gupta contracted tuberculosis in prison, which eventually led to an early death while Rajat Gupta was still a teenager.
The younger Gupta wrote that he felt like political prisoner like his father was, despite the massive differences in circumstances (Ashwini Gupta left prison, with a long scar down his back and a serious illness, only after India won its independence), which Rajat Gupta acknowledges.
“In many ways our situations could not have been more different — he was jailed for a noble cause and a high-minded ideal; I was jailed for alleged personal gain, for a fabricated white-collar crime, and, at most, a careless mistake,” he wrote.
“Yet one of the lessons he taught me was that while we cannot always control what happens to us, we can control our attitude in response.”