Photo: SAJA Forum
Yesterday the SEC charged former Goldman Sachs board member, Rajat Gupta, with insider trading.But Gupta wasn’t just a former Goldman VIP. He was also a board member of Procter & Gamble — up until yesterday, in fact.
He was a board member of a haul of top tier business schools, including Wharton, Harvard and MIT’s Sloan School of Management.
He served as the UN Secretary General’s special adviser on management reform; he is chairman of the International Chamber of Commerce.
We could go on and on… and we will.
He’s also chaired the Bill & Melinda Gates Foundation’s Global Development Program Advisory Panel, and was the only panel member, according to Bloomberg, “who has not led a country or at least worked directly for its president or administration.”
“More recently he’s become a global philanthropist who rubs shoulders with Bono, Bill Clinton, and Bill Gates, tackling problems like malaria in Africa and AIDS in India,” Fortune reported last year.
But perhaps most telling is that he ran the respected global consulting monolith, McKinsey and Co, for many years, where he was a senior partner until 2007. McKinsey, according to financial insiders who spoke to Bloomberg, is considered a bastion of corporate morality and trust.
“McKinsey is the closest thing the business world has to a confessional, and [Gupta] was the high priest,” said a former managing director at Salomon Brothers and business school dean.
And a former Goldman MD talked about McKinsey “as the psychiatrist-in-chief for corporate America.” The person explained to Bloomberg that if Gupta was found guilty of his alleged crimes,” it means you can trust no one.”
We also thought it was interesting that the Bill and Melinda Gates Foundation said the soft-spoken “Rajat is a valued member of the panel and will continue to serve on it.”
Gupta earned his MBA from Harvard, and then applied to McKinsey. He was rejected after his first application, Bloomberg reports. But after a personal recommendation from esteemed Harvard professor Walter J. Salmon, he was reconsidereded and accepted. Salman described his former pupil as “an outstanding student, and as far as I could tell in my exposure to him in those years an outstanding person.”
A friend and business colleague who’s known Gupta for 30 years told Bloomberg he is “a classy guy” who “delivered results” at McKinsey.
According to an article in the Chicago Tribune about Gupta’s promotion to head McKinsey, he is a big fan of Mother Theresa, is not a “disciple of the good old American ‘kick butt and take names’ school of management” and is extremely spiritual in his governing style:
Gupta is not going to bang table tops, jab his finger in your chest or send threatening memos to get his way or make his point.
“Rajat has a very Eastern orientation,” says Joel Bleeke, a director in McKinsey’s Chicago office. “He leads from behind, rather than from out in front. He doesn’t bark commands. He is a facilitator and collaborator. He puts a very strong emphasis on wisdom, rather than pure intellect. He understands that wisdom includes intellect as well as other aspects of life. With his Asian background he understands the softer, emotional sides of people better than Western leaders do.”
Gupta’s Relationship With Raj Rajaratnam
On the insider trading charges, Bloomberg reports that indicted Galleon chief Raj Rajaratnam has been a close business colleague of Gupta’s for 13 years. Gupta was even the honorary chair at a 2007 benefit honouring Rajaratnam.
In the SEC’s complaint against Gupta, it’s alleged that moments after telephone calls with Lloyd Blankfein about Goldman profits and Berkshire Hathaway’s $5 billion investment, Gupta called Rajaratnam straight away with insider tips.
Through a laywer, Gupta denies any wrongdoing.
Also, a former McKinsey director called Anil Kumar, who plead guilty to providing illegal tips to Rajaratnam, was on the board of an Indian business school that Gupta founded. In fact, Kumar was even described as Gupta’s self-styled protege.