Recently convicted hedge fund founder Raj Rajaratnam might have been right about Rajat Gupta, the esteemed financier who allegedly fed Galleon inside information from the Goldman Sachs board. During the trial, the jury heard a wiretap of Rajaratnam saying that the reason Gupta left Goldman's board for a gig at a private equity company was because:
“I think he wants to be in that circle,” Mr. Rajaratnam says. “That’s a billionaire circle, right? Goldman is like the hundreds of millions circle, right?”
Today a Bloomberg Markets magazine investigation into Gupta's "double life" identified a similar motivational force driving the once-revered head of McKinsey to flout the rules of corporate finance.
During the past decade, Gupta, who was already a millionaire, began to veer off-track. He spent more time with Wall Street money managers. He told colleagues that he wanted to be a deal-maker, not just a consultant. Gupta declined to comment on what he told his colleagues or on anything else reported in this story.
While Gupta was devoted to his philanthropy in India, his quest to amass great wealth led him to lapses in judgment, says Bala Balachandran, dean of the Great Lakes Institute of Management in Chennai, India, and a friend for almost three decades.
“He wanted a billionaire’s life and the question for him was how could he become a billionaire in a short time,” Balachandran says.
Where did the unquenchable desire for instantaneous, extreme wealth go wrong? According to Balachandran, it was his friend's choice of partners that did him in. Sure, Gupta violated McKinsey's rules by starting his own consulting business on the side and independently advising companies despite a conflict of interest. But while fooling around with these extracurriculars, Gupta really did himself in by choosing the wrong people to trade with. Take, for instance, Gupta's decision to co-found a private equity firm with Rajaratnam in 2006, a year after Galleon had to pay a $2 million fine in an SEC complaint for improper trades.
“You’re an eagle, so why do you want to be with these chickens who can’t fly?,” Balachandran says he told Gupta. “You’ll get the chicken flu.”
So Gupta caught greed from the Wall Street money managers and then the chicken flu from Raj? No wonder the Feds haven't charged him with anything yet. They probably don't want to go near him.
Gupta Defied McKinsey Before Accusation [Bloomberg Markets Magazine]