Rajat Gupta’s Lust for Zeros

As Rajat Gupta’s appeal is scheduled to be heard next week, Anita Raghavan, a DealBook contributor, has examined the circumstances that led to his partnership with Raj Rajaratnam, the billionaire head of the Galleon Group hedge fund.

“The fundamental question behind his case remains a mystery. Why would one of the most revered C.E.O.’s of his generation, who retired with a fortune worth some $100 million, show such bad judgment?” Ms. Raghavan writes in an article to be published Sunday in The New York Times magazine. “The confusion, a management consultant might suggest, may arise from looking at the problem from the wrong angle. What if Gupta, the adviser to presidents and executives, simply got played?”

Mr. Gupta, a former chief of the consulting firm McKinsey & Company and a former Goldman Sachs board member, may have ultimately been influenced by greed. “While Gupta departed McKinsey with a fortune, he was now mingling with a crowd that included Bill Gates, Henry Kravis and Henry M. Paulson Jr., then Goldman’s cief executive, with whom he traveled to Indonesia to see the Komodo dragons. For many of these men, $100 million was not rich; it was simply the price to play,” she writes, in an article adapted from the forthcoming book “The Billionaire’s Apprentice: The Rise of the Indian-American Elite and the Fall of the Galleon Hedge Fund.”

Mr. Rajaratnam, for his part, knew how to exploit his connections and had “assembled a stable of carefully curated industry moles. His favorite targets were South Asians like himself. Despite the stereotype of South Asians as hardworking grinds who eschew the sharp-elbowed politicking of their American peers, Rajaratnam knew they could be every bit as competitive as anyone else on Wall Street.”

A jury ultimately found Mr. Gupta guilty in June 2012 of leaking confidential information about Goldman to Mr. Rajaratnam on three different occasions in 2008. He was also convicted on a conspiracy charge. He remains free on bail pending appeal.

“Whether Gupta’s charge is overturned or not, he will still be remembered as the dignified McKinsey managing director who fell down the money trap and under the spell of a boorish hedge-fund trader, a reality which, in his world, is almost as damning as the crime he stands accused of committing,” Ms. Raghavan writes.