‘Started questioning my instinct... I should have at least testified’

NEW DELHI: Rajat Gupta’s biggest regret in life is not taking the witness stand to testify in his own defence in the riveting trial that ended with his conviction for securities fraud on June 15, 2012 and subsequent sentencing to two years’ imprisonment in the US. Charged with tipping Sri Lankan-american hedge fund manager Raj Rajaratnam about investor Warren Buffett’s decision to pump $5 billion into Goldman Sachs at the height of the financial crisis, and on other counts, Gupta was at the centre of one of the biggest insider trading scandals in the US. Now 70, Gupta finally has his say in his memoirs, Mind Without Fear, in which he chronicles his rise to becoming the first non-american chief executive officer (CEO) of Mckinsey & Co., where he spent 37 years, and his dramatic downfall. “Not that, had I testified, it would have necessarily changed the outcome,” Gupta, who completed his prison term on January 5, 2016 and maintains that he was innocent, said in an interview to Hindustan Times on February 7, when he was on a visit to India to promote the book. “I don’t know. But I should have at least testified.” Edited excerpts:

Why didn’t you testify at your trial?

My instinct failed me. In terms of testifying, you know, my lawyers asked me and I told them ‘I am the only one who can tell the story. I want to tell the story.’ They said ‘Yes, yes, fine.’ Then when the time came to prepare, they were half-hearted in their preparation. This was before the trial. I said ‘I want to testify. Let us prepare, what questions you are going to ask me, what questions do you think they are going to ask me.’ We started preparing, I forced them, but they constantly told me ‘no, no, you shouldn’t testify.’ It started from the time when the Securities and Exchange Commission (SEC) wanted to interview me. They said ‘no, no, you shouldn’t.’ My family was ambivalent about it, saying ‘they are going to put you through a tough cross-examination.’ I wasn’t afraid of it but... I didn’t know anything about the justice system, I didn’t know anything about how cases are done, so on and so forth. So you know you have to rely on people who, you think, know what they are saying. As the trial wore on, they kept saying ‘you shouldn’t testify.’ In the end I started questioning my instinct. That is what happened. They told me if I testify and if I am convicted, they would give me a much longer sentence because they would think I didn’t tell the truth under oath and all of that added up to my, kind of, giving in. I relied on professional advice. It takes a lot of courage and conviction to go against it. It’s one of the regrets I have. Not that, had I testified, it would have necessarily changed the outcome. I don’t know. But I should have at least testified.

In your book, you write that you were made a kind of scapegoat for the financial crisis. How so?

The point I was making is that they didn’t get any real culprits in the financial crisis. They couldn’t get any of the bad guys. They fined the banks. But how can you fine them billions of dollars and not hold any of the management accountable. How does that work? You did something bad, you are fined. But none of the senior management are held accountable. They didn’t go after any of them. It doesn’t make sense to me—there is wrongdoing, but you don’t go after any of the people who did the wrongdoing.

Why did they pick you to make an example of?

I was well-known. I was highly visible, being associated with Mckinsey, Procter and Gamble and Goldman. You know, unfortunately many of the prosecutors (Gupta’s prosecutor was Preet Bharara, of Indian origin) want publicity because of their political ambition. They want to be in the headlines. And I was a somewhat famous, but easy target. I didn’t have any power. The reason they couldn’t get the bankers was because they are very influential. I am not that influential, but I am very visible. There is a book that came out called The Chickenshit Club, you know. About prosecutors going against people they could win against...they spent an enormous amount of resources trying me, but the result of it? They didn’t ultimately get anybody who was responsible for the crisis.

What are the takeaways from your trial, the experience in prison?

One of the things my father always said is ‘many things will happen in your life but it is how you deal with them that’s the most important thing.’ You cannot always control what happens to you, but you can control how you react and that is one of the biggest lessons I learnt. That is, something is happening to me, which I can’t control, but you know if I can react with grace, with dignity, with self-respect, then I feel I have dealt with it well. And another lesson, I would say, is a sense of reflection and detachment. Once I got charged and indicted, I had all the time in the world. It was a very reflective time for me. Some of it was very difficult because I was very afraid of what was going to happen. I felt a great sense of the need for detachment. When I resigned from everything that mattered to me, including from the boards of institutions I had founded, like the Indian

School of Business or the Public Health Foundation of India, I felt ‘okay I did whatever I could do, now it is time for someone else to take it over.’ I also learned who my real friends were; the importance of the support of the family.

How did you react to Mckinsey striking your name off the Mckinsey alumni list, kind of excommunicating you?

I thought it was completely unreasonable. Obviously, it hurt a lot. I had spent 37 years there and you know, I don’t even understand it. Mckinsey made me. I am a product of Mckinsey. I joined them when I was 24. My entire professional career was built there. How is it that I am not an alumnus? Whether they take me out of the alumni directory or not means nothing. I am tied to Mckinsey and Mckinsey is tied to me. I don’t know why they took me out of the directory. All I can say is that, of course, they should be concerned about their reputation, etc. I don’t even mind them distancing themselves from me if that’s what they wanted, but this is something they did when I was not even (convicted). I mean you have the principle of ‘you are innocent till proven guilty.’ That is a universal principle, and a value that Mckinsey had, should have had, and Mckinsey is a partnership, they are a global partnership, and we support our partners. We don’t kick our partners when they are down, when they most need our support. That was very hurtful and very disappointing.

Can you tell me about your time in prison?

Prison is a time for reflection. You have a great deal of time for reflection. I had a relatively short sentence. It was two years so I could see the light at the end of the tunnel. Second was that I had a very close family and a lot of friends. I had over 100 visitors on my visiting list, so they would come over all the time. You could have visitors on Friday, Saturday and Sunday. My grandkids would come every Friday after school. That engagement with my friends and family gave me a lot of warmth and resilience, that it is all going to be fine, you know. The third thing was that I was friendly with other prisoners. I was different from the others. They were quite racially divided—there was a Spanish-speaking group, there was the black group, there was a white group. I was friendly to all of them. And tried to help anybody I could in many small ways. In a way it was a very interesting experience. I also determined that this was like going to a monastery for me. I am going to go and improve myself physically, mentally, emotionally spiritually. I walked 10 miles a day. I did exercises. I made friends. I started a book club, we engaged in a lot interesting discussions, I started a bridge club. We played a lot of games together. There was a microwave, we cooked. There was a

Do you think you can ever forgive Raj Rajaratnam?

He is the reason all this happened to me. So I don’t feel good about that. He also didn’t treat me well in his investments so I lost a lot of money. But I also admire him for not yielding to temptation... He was offered a five years’ reduced sentence if he testified against me and he refused to do so. He said I have nothing bad to say about Rajat, so I am not going to (testify). I respect him for that. That takes a lot of courage.

I was a somewhat famous, but easy target. I didn’t have any power. The reason they couldn’t get the bankers was because they are very influential.

You have been the first nonamerican CEO of Mckinsey, been associated with a lot of powerful companies, founded Indian School of Business and the Public Health Foundation of India. What is the one achievement you are most proud of?

One is to take Mckinsey in a different direction. I created a global footprint for Mckinsey, made it more externally oriented, working on societal issues, not-for- profit (activities) and I made some changes in governance which are still valid today. I feel I had an impact on the firm that was quite longlasting and positive. I feel very proud about that. I feel very proud also about creating two marquee institutions in this country—indian School of Business and PHFI, which are world-class institutions . I had many partners in that, so it was not like I created it, but I was the catalyst. I was the person who had the idea and developed it. I am very proud of the model, which is a collective model. There is no building named after me in ISB or PHFI, I don’t want that. That is not what it is about to me. It is about creating the right institutions that would outlast you.