This won’t help Rajat Gupta’s defence: Gupta and Anil Kumar ran a side business while they worked at McKinsey.
The existence of the consulting firm was a blatant violation of Mckinsey rules, according to Bloomberg Markets Magazine.
Gupta doesn’t work at the consultancy anymore, so all Mckinsey can do at this point is conduct an internal investigation (which they did) but the discovery will likely hurt his battle against the SEC.
Gupta, a former Goldman Sachs board member and McKinsey chief, is disputing SEC allegations that he tipped Raj Rajaratnam about non-public details about Goldman earnings and the $5 billion Warren Buffett investment.
Now it turns out that Gupta was guilty of major violations at McKinsey, his alma mata, which has left some of his former colleagues shocked, Bloomberg Markets Magazine reports.
Firstly, while he was running McKinsey, he ran his own consulting operation on the side — with Anil Kumar. That’s a blatant violation of McKinsey policy.
Secondly, Gupta also advised an India-based firm called Genpact, independently, which is also a violation of company rules.
Michael Stewart, a McKinsey partner and director of communications told Bloomberg:
It has always been a clear violation of our values and professional standards for any firm member to provide consulting or advisory services outside of McKinsey for personal monetary gain.
There is a strict ethical and business code at McKinsey: its employees are expected to “never talk about their clients in public,” and the company “won’t even disclose customers’ identities.”
It’s never clear why individuals at the top of their industry, who already possess great wealth and power, break the rules for such tiny gains. One reason given for Gupta’s risk-taking is that he wanted to run with the Wall Street crowd — he told business colleagues “he wanted to be a dealmaker, not just a consultant,” and spent more time with hedge funders and bankers.
Hence why he launched his own private equity venture, New Silk Route Partners.
Gupta’s longtime friend and then dean of the Great Lakes Institute of Management in India, Bala Balachandran, said: “He wanted a billionaire’s life and the question for him was how could he become a billionaire in a short time.”
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