Ex-McKinsey MD Rajat Gupta says worst part of imprisonment in insider trading case was 'not being there for family'
I have been fighting to this day that I am not an insider trader, that I do not fit the definition of an insider trader, says Rajat Gupta
Indian-American businessman Rajat Gupta was convicted for insider trading in June 2012; he has written about the case and his time in prison in a new book, Mind Without Fear.
In the book, Gupta writes about some of the more personal aspects of his life, such as his time at IIT and the story of how his daughter visited him in jail after her first break-up.
I thanked Raj Rajaratnam for not testifying against me even after the government offered him five years off in exchange, said Gupta.
Indian-American businessman Rajat Gupta, the first foreign-born person to hold the office of managing director at McKinsey & Company, was convicted for insider trading in June 2012. He was released in January 2016, and from house arrest in March later that year. Three years later, his book Mind Without Fear, published by Juggernaut Books, is going to be released.
In it, Gupta writes about how he was seen as a caricature of 'Wall Street greed', his state of mind while in prison, his days at college and how they shaped him, and his relationship with the company McKinsey, and Raj Rajaratnam. In this conversation with Firstpost, Gupta talks about how the book is a way to tell his story, and why he decided to write about the more personal aspects of his life.
It has been three years since you got out of prison. You have only now chosen to speak to the media. Has there been a process to this, to the way you contemplated coming back out? Why did you want to do this at all?
Let us put it this way, the primary purpose of this book is not to talk to the media. And in the very beginning of the book I talk about why I am writing it. Because it is about telling my story. Even if I take my name away, I think it is an interesting story. In that sense, I told myself, why not write this interesting story? It started in prison really, when a friend suggested I write this story. I found the process both difficult and cathartic.
In many ways, I wrote the book for myself. In many ways I want to write because I have mentored a lot of people, who felt let down by what happened; a lot of people who though they might not have met me, cared about me just as much. Saying it from my perspective, the intention behind this is not to re-litigate the case. I have already taken that as far as I could, and I lost. I don’t look at talking to the media as a risk; risk of what, really. I just wanted to write a book that people could relate to. I thought it could be useful, my story.
You mention in a chapter that you were seen as a ‘caricature of Wall Street greed’. This is an impression that has taken over, owing to popular culture. How true or false is it on the inside?
It exists. If you think about the financial crisis, it was certainly driven by the greed of the bankers. But to characterise me as that caricature, I felt, was bizarre. If I were that greedy, I would have led a very different life. Not do the kind of things I have tried to do with global health, philanthropy and institutions. I have spent more than half my time on non-financial initiative, really.
The prosecutors made that part up, even though I gained no money in all of this. They had to, of course, explain why I would have done something like it. It simply doesn’t add up. But we can’t of course deny that not only was there Wall Street greed, but that none of the actual people behind it were caught or addressed.
You say in the book that the financial crisis was one crucial catalyst for a non-case, the other being your identity as that of an outsider, an Indian. Could this litigation have been different if it had taken place before the crisis?
I don’t think there would even have been a case had the financial crisis not happened. There was no real evidence, as it was. They even tried me in absentia, a week before the Rajaratnam case, even though they waited years for it. It tells me they wanted to see what impact it would have on public opinion. It was a deliberate strategy, to try me when I could not even defend myself. I wasn’t there, my lawyers could not object.
As for identity, I think there is a little bit of an issue, with the way immigrants are looked at. The idea that ‘here is a successful immigrant, he must have done something wrong’. Even the jury was consisted of one person who understood the business, the opinion of the rest would then naturally be coloured by this idea.
You mention a lot of candid, even personal details in the book, such as meeting your daughter in prison after she had had her first breakup. Why?
You know, I wanted the book to be authentic to be able to tell what I was feeling. It really hurt me to not be there for her when she was obviously going through a difficult time. She came to me in prison, crying. We talked for a few hours and then she left. I wasn’t there for her that evening, or the next morning. It struck me, you know. Those were the things that I missed most. Not the part that I lived in a comfortable house, or that I was sleeping on terrible mattresses. It did not bother me. What bothered me was being unable to there for my daughters and my family.
A large part of the book is about your days at IIT, politics in college, even a few things about your father. What were you looking for in all of these aspects, when you looked back?
It makes you who you are. I write at length about a strike in the IIT. I was convinced by my own politics at the point. We were able to make some changes in the campus because of it. But I don’t tell these stories because I think the results they achieved were important. For example, I tell the story of Walmart, one of the biggest clients that Mackenzie wanted. Eventually, I did get Walmart as a client, but to me the story was in the patience, the work I had to put in to get the client. The key here is not that I accomplished something, but that I kept trying, at times to even fail.
Your reticence, you admit, has played a significant role in your life, maybe even in the litigation for your defence. Has it been for good or bad, this reticence, considering you achieved success despite it?
I believe it is both ways. I was a bit of an introvert but I was also actively leading people from an early age. I was head of the student body in IIT, in my third year. Maybe it was culturally built in that I did not speak until spoken to, but I wasn’t exactly laidback. I wasn’t shy, but I was perhaps not loud either. I made it a point of expressing my differences.
As for the rise, perhaps the fact that I was a brown Indian was also attractive to the Americans. When I was stationed in Scandinavia, the people there were fascinated by the brown skin itself, because they had hardly seen men like me. By definition I was exotic. Also, at that time, there was a great reputation for the IITs and IIMs in America. It was automatically assumed, they were smart, regardless of whether they were or weren’t.
Which of the independent initiatives was the hardest to execute, and how can you get rich people to ‘contribute’ — something not many have been able to, to the extent that you did?
In some ways the hardest was PHFI (Public Health Foundation in India). It struck me after a meeting with the Dean of the Harvard School for public health, who told me that if you really want to do something, start a school for public health. It got me thinking; clearly nothing could be done without the involvement of the government. So would be the private sector where we would raise money, so would be the many NGOs who look at health. I looked at building a coalition of these business leaders, representatives of the government and others.
It wasn’t easy to do. It is a hard sell in the health ministry to say ‘you will be part of this but cannot run it, or cannot interfere with it.’ It is always difficult to do that. For the private sector, the question is always ‘why should I give money to this’. I believe businesses work with the permission of society, and eventually, if you don’t do your share, even businesses will go down.
The problem then is they all want to own it, control it, put their name on it. I was certain I didn’t want to anyone to own it….
How do you get these people to pay anything then…
I think it was my reputation back then. People believed if anyone could do it, it would be me.
Coming back to the book, when one reads through it, it is near impossible to believe a man of so much experience and know-how could admittedly make the mistakes he eventually did. Do you think about that as well?
Depends on what you mean by mistakes, I guess. I have been fighting to this day that I am not an insider trader, that I do not fit the definition of an insider trader. If the question is about making the mistake of giving insider information then the answer is 'No'.
But if the mistake is that I should have perhaps testified, or that I should have not associated with these people or not venture into the financial investing world that I did not know much about at the time, then, yes, there were mistakes.
Has the treatment by McKinsey hurt?
It hurt me the most. It was like a kick in the face. It was a firm I dedicated my life to building and expanding. Yes, it hurt.
You met Raj Rajaratnam again in prison. It is something you only briefly touch upon in the book. What did you two talk about? What did you feel when you saw him after years?
The discussion we first had was about his health. He wasn’t looking good. He was a diabetic like I am. After that there were two hard parts to the discussion, and one part that I thanked him for. The hard part being, I still fail to understand why he did what he did. He was a very rich man. I trusted him, but he claimed he had the right to do with the Voyager fund as he pleased. I did make the point that I was there because of him. He is not the kind who would apologise, but he acknowledged it through his body language.
I thanked him for not testifying against me even after the government offered him five years off in exchange. That takes character. We spent our time playing bridge and chess.
Have you forgiven him?
Yes. I don’t want to hold any anger against anyone. It is a lesson I learned from my father.