Passed on info to Rajaratnam after he taunted me: Ex-McKinsey exec

New York: An Indian-American former McKinsey consultant has told a US court that he “committed a crime” by passing on secret information to convicted hedge fund founder Raj Rajaratnam after the Sri Lankan “chided and taunted” him for not knowing enough about what was happening at various firms.

Anil Kumar, 53, is a government witness in the insider trading trial of his mentor and fellow Indian native and ex-Goldman Sachs director Rajat Gupta.

Kumar, an IIT Mumbai and Wharton Business School alumnus, has pleaded guilty to criminal charges of passing inside information to Rajaratnam and had testfied at the Galleon founder’s trial last year.

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[caption id=“attachment_334065” align=“alignleft” width=“380” caption=“Convicted hedge fund founder Raj Rajaratnam. Lucas Jackson/Reuters”]  [/caption]

A Chennai native, Kumar is hoping to get a lenient sentence for his charges in return for cooperating with the government in its crackdown on insider trading on Wall Street.

During testimony earlier this week against 63-year-old Gupta, Kumar told jurors in a Manhattan courtroom that he gave inside information to his Wharton batchmate Rajaratnam after the Sri Lankan taunted him for not knowing enough about companies, including regarding chipmaker Advanced Micro Devices (AMD), despite working as a partner at McKinsey.

Rajaratnam “taunted and chided me and said that he knew more about AMD than I did. I tried to show him I had more information about AMD and other companies and committed a crime,” Kumar said in his testimony.

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In a 2008 telephone conversation between Gupta and Rajaratnam, the hedge fund founder says that he is giving Kumar “a million dollars a year for doing literally nothing.”

During Rajaratnam’s trial last year, Kumar had admitted accepting $1.75 million from him and said he tipped the onetime billionaire on deals involving McKinsey clients including AMD.

In his testimony earlier this week, Kumar termed Gupta as a “calm” man who did not easily get “ruffled.”

However, Kumar said the former McKinsey managing director was “very annoyed, frustrated and emphatic” after Rajaratnam lost $10 billion of Gupta’s investment in the Voyager fund during the financial crisis.

Gupta had visited Kumar at his home and had complained that Rajaratnam was being “evasive” and not answering his questions or explaining about how he lost the money.

Gupta had described Rajaratnam’s conduct as “dropping the ball” and was upset with him for not managing his money well.

Kumar said Gupta told him that he had enough evidence to sue Rajaratnam and believed that the Galleon founder had taken the money behind Gupta’s back for his own benefit.

Gupta was “quite a calm man generally. He intended not to get ruffled. But he was frustrated, very annoyed and emphatic with Rajaratnam’s handling of his money in the Voyager fund. That was unusual for him (to get so upset),” Kumar told the court.

Gupta had even asked Kumar to talk “some sense” into Rajaratnam and convey Gupta’s concern and annoyance to him.

Gupta’s investment in Voyager went from $10 million to zero and “I construed that anyone who had lost that kind of money would be unhappy,” Kumar said.

PTI