The Flight of Icarus: Millionaire to would-be Billionaire

BOOK REVIEW

 

FALLEN ANGEL   The Making and Unmaking of Rajat Gupta

Author: Sandipan Deb

Publisher: Rupa Publications India Pvt. Ltd. 2013

Price: Rs. 295/-

The Flight of Icarus: Millionaire to would-be Billionaire

Author of this book, FALLEN ANGEL etc. Mr. Sandipan Deb, is also a graduate of both the IIT and IIM, definitely the toughest colleges in India to get into; and graduate out of. Deb has also written another book entitled The IITians: The Story of an Extraodinary Indian Institution and How Its Alumni Are Reshaping the World. Yes, he likes very long titles and is very proud of the IITs.

Mr. Deb, as former Managing Editor of Outlook, Editor of the Financial Express, and founder-editor of Open, is expected to write well, and this book is very good indeed. Not only is it a page-turner but  is crisply written and well-researched.

Having said that, Mr. Deb, perhaps from a sense of correctness or IITian solidarity, refuses to take sides. This is a tale of an apparent enigma, but perhaps it is not such a mystery after all. Mr. Rajat Gupta is revealed as  an orphaned, self-made paragon of virtue, with a distinguished career, who nevertheless messes it all up in semi- retirement in his mid-sixties.

The question is asked again and again: did Rajat Gupta blot his copybook from a lust to join the league of billionaires? Answer: probably yes. He had long decades advising billionaires, but ended up with oodles of prestige but a modest asset profile of under $150 million. Not only that, the attempt to elevate himself to the billionaire club had a pathetic neediness about it, and lacked Mr. Gupta’s  customary unperturbed finesse. And so, it got him into the trouble he’s in.   

Were there any classic missteps on Mr Gupta’s part?  Oh yes, when he could have got away clean with a slap on the wrist, Mr. Gupta took the Government to Court over a small fine.  And the US Government taught him a lesson; proving the case against him, ruining his reputation, and convicting him, with a jail sentence to boot.

Gupta has had a long career in McKinsey & Co. after passing out of Harvard Business School. He rose to be voted in as Managing Director for three consecutive terms, till 2003. The Teflon, that apparently coated him, protected him, even as several firms McKinsey advised during his years at the helm, went down in flames. These included Enron, Kmart, Swissair, and a host of dotcom start-ups that went bust later, with whom McKinsey had shareholding in lieu of part-of-fee deals. But all the while, because McKinsey knew when to get out with its money, its revenues went up from $1.2 billion to $3.4 billion, in the nine years Gupta was Managing Director.

Gupta stayed an eminent person post 2003, young, sought after. He continued to advise various weighty entities, some in philanthropic areas of health and education, and sat on several boards, including that of Goldman Sachs.

And it was specifically the insider information on Goldman Sachs that Mr. Rajat Gupta allegedly supplied to Mr. Raj Rajaratnam of Galleon Hedge Fund, that led to his conviction and jail sentence and his Icarus-like plunge from grace.

This book also asks the question: did he do it on purpose? But once again Mr. Deb cops out and lets the jury, made up of working class New Yorkers, and Judge Jed S Rakoff do the dirty. And they decidedly pronounced him guilty, based on circumstantial evidence, yes, and on some damaging Government wiretaps.

Fact is, Gupta was clearly angling for a top job with Rajaratnam’s Galleon, at first with its to- be- launched International avatar, and hopefully later, in the flagship company itself. Mr. Gupta’s patrician dealings with the swashbuckling Rajaratnam, a multi-billionaire to Mr. Gupta’s $138 million in assets, over a decade his junior, put him at a considerable psychological disadvantage. It even lost him $ 10 million in bad investments.

But Mr. Rajat Gupta was no stranger to risky bets. But this time was different. He was playing with his own money, on his own time, staking his personal reputation. And he had hitched his wagon to a decidedly reckless player.

And so, when Rajaratnam went down, with a sentence of 11 years in jail for insider trading, it is not surprising that Mr. Gupta, despite his halo, caught at least two. Besides, both were betrayed to the authorities by quite a cast of henchmen.

In the unlikely event Rajat Gupta is let off on appeal in future, his career, what’s left of it, will never recover from this mauling.  The whole debacle could also be seen as bad luck, because it is certainly true  that many people have managed to get away with much worse.

But despite his decades in the US, Mr. Rajat Gupta is not really an insider. Neither is Tamil Sri Lankan Raj Rajaratnam. And Rajaratnam’s Galleon was probably seen to be flying the Jolly Roger much too blatantly, this while interloping, a long way away from home.

(809 words)

March 5^th, 2013

Gautam Mukherjee