Rajat Gupta – An Insider’s Perspective

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Digital depiction of a Royal Tsunami by Ashok Malhotra




Rajat Gupta graduated in Mechanical Engineering from the Indian Institute of technology or the IIT as popularly known along with this author in 1971. At the time, unlike today, there were only five IITs spread across India and their intake was limited. Students were admitted through a rigorous countrywide examination. Many aspired to enter these well-funded and foreign monitored institutes but only a few of the brightest made it. Disciplines such as Mechanical Engineering, because of their general appeal, were the most sought after. Therefore, those who joined that discipline were the cherries that sit on top of the cream. Rajat Gupta was one of them and so was this author with the grace of the Almighty. During their studies, students were obliged to live together for five years on a closely-knit campus. Therefore classmates became more than friends- akin to members of a family. They got to know each other as well as brothers might.

Subsequent to graduation the graduates of IIT spread across the world to work in diverse areas. This author need not enumerate their contributions to the world here. These are as diverse as the email service hotmail to guiding the Eastern European economies out of communism as a Vice President of the World Bank. Some of these graduates manage to keep in touch with each other after graduation whereas others only learn about each other from the media. However, amongst the various classes of IIT there is one that has maintained close contact even after forty years have elapsed. The fifty odd members of this class exchange communications regularly and meet from time to time, most often in summer in the US and winters in Delhi, places where most of this class now resides. Their communications range from feisty debates, birthday greetings and ribald jokes along with leg pulling that remind them of their younger days. It is not surprising to find binge drinking, ridiculous dancing and loud laughter when this class gets together for their annual reunions that is not just a one dinner event but spreads across three days. Not a single such reunion has been missed over the last ten years. Rajat Gupta too participates in these events. It is not that members of this class have failed to grow up. These are some of the leaders of society today. One of them just recently made a six million dollar philanthropic donation to the school he graduated from in US (link) where he studied after IIT. You may have guessed which class of IIT this is by now. It is the class that Rajat Gupta and this author belonged to, the 1971 Mechanical Engineering class of IIT Delhi popularly known as the Mech71ers.

It has been noted that the standards of ethics are somewhat higher amongst IIT graduates then the population at large. Therefore whereas India is famed for its bureaucratic corruption, the IIT graduates from amongst them are famed for losing their lives due to whistle blowing and opposing such corruption. Two of them - Kiran Bedi and Kejriwal now lead an anti corruption movement (link) in India that has moved millions of Indians to the street over the last year. Another one – Chetan Bhagat supports this movement from behind while he continues with his ribald jokes in his now famous novels (link) (just as this author did too in his flop novel, link). Those who are clean of heart and carry no unnecessary baggage can afford to be frank, light-hearted and unpretentious; and amongst this ethical lot there was one who has been known to his friends as even more ethical than the rest. It is little wonder then that he climbed to the top of the corporate ladder in this world and used that clout to found and fund charitable initiatives. You may have guessed again who this more than ethical person is – Rajat Gupta. This certificate is not being given by a casual blogger but a respected academic who has been a faculty member and Professor at IIT as well as two other leading universities around the world , over the last four years a distinguished director of two of the leading constituent institutes of two technical universities of India, and who holds a doctoral degree in engineering from the University of British Columbia rated amongst the top 100 universities of our world – this author.

But wait, what is this we hear of the shocking news that Rajat Gupta is being arrested and prosecuted. The news shocked many not least his close friends and this author. Insider trading? What ever was being put out in the media was hard to swallow. Friends wondered if there was another explanation. Ever since the news broke out in the media the Mechanical Engineering class of 1971 debated it furiously. The issues at hand were debated with inside information from a group of close friends and conclusions were drawn as to what the hidden truths might be.

It is well known that when a human becomes a successful public figure his most minor indiscretions can raise a storm. All of us continue to mix up on words as this author has likely done in this article but if a President Bush does it, the gaff is analyzed for its impact on the state of the nation. Some such thing has apparently happened in the case of Rajat Gupta. A few unguarded remarks of his in a private conversation with a friend may have led to the friend pasting that information on a fat round mosaic of information and profit from it behind Rajat’s back. Even the worst of critics of Rajat Gupta are not claiming that Rajat himself has illegally benefited from the privileged information he had access to as a consultant and board member. Instead, it is being alleged that he enabled a friend (who is now behind bars) to do so by sharing such information. In the opinion of this author much hullabaloo has been made about something that deserves to be properly understood for what it is. Another sad fact of life is that those who are more than successful in life, as Rajat was, must face the undesirable consequences of envy.



In order for a legal offence to take place the prosecutors have to show that Rajat benefited from the exchange of information. Not even the prosecutors are saying that. It seems what they are saying is that Rajat hoped to benefit. Since when have hopes become crimes? It has never happened in the history of mankind except when lynching is involved due to other hidden agendas such as racism or envy. If a man were to visit MacDonald with a hidden hope of killing a person but returned home with a drink of coffee after saner judgement prevailed then can he be charged for attempted murder? Mere hopes even if they exist do not make a crime.

It is the opinion of this author, an opinion this author has made known to Rajat , that his only mistake may have been in the choice of some of his friends and associates. Rajat has always had a kind and open heart that embraces persons of all shades. It has been argued that persons occupying positions of responsibility must exhibit a greater degree of caution in their acts of commission and omission. If they transgress, they must be held to account and bear the consequences. If that were the case than it is the humble opinion of this author that Rajat Gupta has already been punished far more than appears to be necessary. Not only has he given up his positions as the Chair of the International Chambers of Commerce, Directorship of some of the largest corporations of our world but also the chairs of the charitable health and education initiatives that Rajat founded. The punishment far exceeds any perceived indiscretion on the part of Rajat Gupta. It is the personal opinion of this author that it is time for the prosecutors to shelve the matter and get back to the steak and wine. The public at large expects our public figures to retain their humanity. If so, the public at large must respond by understanding and consideration.

Copyright: Any interested person may reprint this article online or in other media. Kindly provide reference to this source - Ashok Malhotra, January 2012

 UPDATE OCTOBER 9, 2015

 Since this post was written Rajat has been convicted for two years and most of his sentence is now over. However the stand taken by this article has been vindicated by the most recent ruling of the US Supreme Court that  insider trading must involve benefit for the accused. See:
http://www.nytimes.com/2015/10/06/business/dealbook/supreme-court-denies-request-to-hear-insider-trading-case.html?_r=0


Comments

ProfAshok said…
your views and opinions on the contents of this blog post are welcome and will be appreciated.
January 16, 2012
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