Book Explores Downfall Of An Indian-American Business Icon

Jun 4, 2013
Originally published on June 4, 2013 8:10 am

Rajat Gupta was one of the wealthiest and most successful men in America and an icon of the Indian-American community. Today, he faces two years in prison for insider trading, convicted of passing corporate secrets to his billionaire friend and Galleon Group founder Raj Rajaratnam.

Gupta was already a wealthy man; what was the motive for his crime? In The Billionaire's Apprentice:The Rise of the Indian-American Elite and the Fall of the Galleon Hedge Fund, journalist Anita Raghavan tries to answer that question.

As Raghavan recounts in her book, in the fall of 2008, in the middle of the global financial crisis, Gupta took part in a conference call among Goldman Sachs board members. During that call, he learned that Warren Buffett was going to put a huge amount of money into Goldman Sachs — the kind of good news that would drive Goldman's stock price up.

A minute after hanging up from the Goldman board conference call, Raghavan writes, Gupta's secretary called Rajaratnam, a friend of Gupta's at a Wall Street hedge fund. And shortly after that brief call, Rajaratnam started shouting at his traders: "Buy Goldman Sachs! Buy Goldman Sachs!"

Raghavan's exploration of Gupta's motivations took her back to India and to previous generations of the Gupta family. Raghavan joins NPR's Linda Wertheimer to talk about why she finds Gupta so interesting, how profound his betrayal was, and how the Indian-American community has responded to the scandal.


Interview Highlights

On why her book focuses on Rajat Gupta, a secondary figure in the Galleon Group scandal

"I just thought that Gupta was far more fascinating, because I wanted to know why someone like Rajat Gupta, who had been elected three times to lead McKinsey by his partners, who was friends with Bill Clinton and Bill Gates and Kofi Annan — why someone like him would end up with a brash, street-fighting, short-term trader like Raj Rajaratnam."

On her dramatic portrayal of the moments after Gupta's call to Rajaratnam

"The circumstantial evidence was just so powerful at the trial, and even though Gupta had always maintained that he had had a dispute with Rajaratnam during this period — why would he tip off someone he was in a fight with? — it was just hard to ignore the timing of the phone calls and the powerful witness testimony."

On how Gupta's insider trading was a total betrayal of trust

"Judge [Jed] Rakoff, when it came time to sentence Gupta, described it as the functional equivalent of stabbing Goldman Sachs in the back. Here was a board member whose sole job was to protect the secrets of the boardroom, and by tipping off Rajaratnam, of course, he fell down in his job."

On how the Indian-American community responded to Gupta's downfall

"Rajat Gupta was an icon to the Indian community. He was different from many of the Indians in the community in that he was assimilated — he waltzed out effortlessly between India and America, business and philanthropy. And I think it was a great disappointment to many that someone of his stature fell so low. When I was starting on the book project, I was at a gala and a very prominent Indian-American came up to me, and he said, 'Why, Anita? Why this book? If you're going to write a book about the Indian-American community, why do you want to write a book that paints such a sobering picture of one of its greatest heroes?' "

On her answer to that question

"I wrote about [Gupta] because in a way, as I learned more about Rajat Gupta and his journey in the United States, it so reminded me of my father's own journey. And I wanted to understand how someone like Rajat Gupta, who came with the same high hopes and great dreams like my father, how that story went awry."

Copyright 2014 NPR. To see more, visit http://www.npr.org/.

Transcript

LINDA WERTHEIMER, HOST:

The ongoing government crackdown on insider trading has brought down two of the wealthiest people in this country. Among them, a former CEO of the McKinsey Consulting firm.

(SOUNDBITE OF NEWS BROADCAST MONTAGE)

UNIDENTIFIED BROADCASTER #1: Prosecutors say they have busted the inside man in an inside trading case.

UNIDENTIFIED BROADCASTER #2: Rajat Gupta was convicted today...

UNIDENTIFIED BROADCASTER #3: ...was ordered to reimburse Goldman Sachs $6.2 million.

WERTHEIMER: Rajat Gupta was one of America's corporate elite and a symbol of success for the Indian-American Diaspora. His fall from grace captivated financial writer Anita Raghavan. She explored his unlikely relationship with the hedge fund billionaire at the center of the investigation, Raj Rajaratnam, for her new book, "The Billionaire's Apprentice."

Our conversation is today's Business Bottom Line.

ANITA RAGHAVAN: I always thought it was fascinating how someone like Rajat Gupta, who had been elected three times to lead McKinsey by his partners, who was friends with Bill Clinton and Bill Gates and Kofi Annan, why someone like him would end up with a brash, street-fighting, short-term trader like Raj Rajaratnam.

WERTHEIMER: They were very different, different in how other people regarded them and different, I think, in how they regarded themselves.

RAGHAVAN: That's right. That's right. You know, Gupta was more of a statesman. Raj Rajaratnam, of course, was a portly, you know, garrulous hedge fund manager. In a way, his very appearance seemed to epitomize all the excesses of the hedge fund world. And this was really a marriage of convenience, of mutual interest: Rajat Gupta stepping down from the helm of McKinsey in 2003 and casting about for a new future, and Raj Rajaratnam - you know, sort of like Iago in Othello - presenting himself as the way to that future.

WERTHEIMER: Let's talk just for a second about the actual crime that appears to have brought down these two. In the fall of 2008, Gupta took part in a conference call among Goldman Sachs' board members. A minute after Gupta hung up, Gupta's secretary dialed Rajaratnam's direct line, and then soon after that telephone call, Rajaratnam starts shouting to his traders, buy Goldman Sachs, buy Goldman Sachs.

RAGHAVAN: Right. You know, the circumstantial evidence was just so powerful at the trial, and even though Gupta had always maintained that he had had a dispute with Rajaratnam during this period - why would he tip off someone he was in a fight with - I think it's a bit naive to think that someone who spent a whole career counseling corporations would find it appropriate to discuss inside information with a short-term trader.

WERTHEIMER: They way you portray Gupta is somewhat sympathetic, like the fallen hero or the person who sort of wrecked his own life for tragic and mysterious reasons.

RAGHAVAN: Well, as I approached the Gupta story, the one thing that struck me is that here was a man who had lost his parents before he was 18. He grew up in an Indian family where, when your father dies, all responsibility falls to the eldest son. And from the time he started his life, he felt he had to do more. So I think the beginnings of his life put a tremendous amount of responsibility on him.

And, you know, even at the end of his life, when he clearly had more than enough money for his family, he suddenly felt the need that he had to amass more of it.

WERTHEIMER: One of the most interesting things about this whole story is how many people from the group that you sort of lump together as the Indian-American elite, how many of them are involved? The prosecutors, for example, are Indian. And then here you are writing about it, another member of the Diaspora.

RAGHAVAN: That's right.

WERTHEIMER: Do you think the Indian-American community felt a serious loss when this man turned his back on everything that he had done and lost everything?

RAGHAVAN: Absolutely. Rajat Gupta was an icon to the Indian community. He was different from many of the Indians in that he was assimilated. He waltzed out effortlessly between India and America, business and philanthropy. And I think it was a great disappointment to many that someone of his stature fell so low.

When I was starting on the book project, I was at a gala, and a very prominent Indian-American came up to me, and he said: Why, Anita? Why this book? If you're going to write a book about the Indian-American community, why do you want to write a book that paints such a sobering picture of one of its greatest heroes?

WERTHEIMER: Anita Raghavan is a financial journalist. Her book is called "The Billionaire's Apprentice: The Rise of the Indian American Elite and the Fall of the Galleon Hedge Fund." Anita Raghavan, thank you so much.

RAGHAVAN: Thank you, Linda. Transcript provided by NPR, Copyright NPR.