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Did millionaire Rajat Gupta suffer from billionaire envy?

Perhaps the most puzzling aspect of the taped conversation between Rajat Gupta and hedge fund billionaire Raj Rajaratnam released by the Securities and Exchange Commission (SEC) is Gupta’s apparent lack of confidence and his almost deferential manner, often letting Rajaratnam finish the sentences for him.

The two who have known each other for over a decade and have been implicated by the SEC in an insider trading case. At one point in a conversation between the two, Gupta asks, almost timidly, for Rajaratnam’s opinion on an offer made by the private equity firm Kohlberg Kravis Roberts (KKR) to Gupta, to join them. And then at the end of the almost 18-minute tape, Gupta veers back to the topic and asks yet again for a second time about KKR. Rajaratnam advises him to go ahead, saying he would do so “in a heartbeat”.

Why does Gupta, estimated to be worth over $100 million, and a former head of McKinsey, the world’s most blue-blooded management consultancy need Rajaratnam’s affirmation for a career move?

Rajaratnam picked on this insecurity of Gupta. In a taped conversation between Rajaratnam and Anil Kumar, Gupta’s protege and senior partner at McKinsey, who is the US government’s star witness in the case against Rajaratnam, they discuss Gupta:

“But is it really that he was so greedy for the $12 million that KKR has offered him?” Kumar asks on the recording. Rajaratnam says Gupta “ran the numbers” with him, and “it was about $5 million a year with upside”. Later, Rajaratnam speculates on Gupta’s motive in joining KKR: “My analysis of the situation is he’s enamoured with Kravis, and I think he wants to be in that circle. That’s a billionaire circle, right? Goldman is like the hundreds of millions circle, right? And I think here he sees the opportunity to make $100 million over the next five years or 10 years without doing a lot of work.”

“At some point, what I worry about is that there can be this massive implosion in him,” Kumar adds, to which Rajaratnam responds: “He didn’t seem comfortable. He seemed like he was tormented, right?” So what was this insecurity that Gupta went through, this inner turmoil that Rajaratnam terms as “torment”?

Was it Gupta’s fear of an impending financial turbulence in his life? His lawyer now points to the fact that Gupta lost his entire $10 million investment in the GB Voyager Fund managed by Rajaratnam, at around the same time as the taped conversation between the two. The suave Gupta was sure to have seen the hard times ahead. Was it that his conscience and a life-long commitment to integrity and business ethics were in conflict with his desire to please Rajaratnam and ensure a lifeline to wealth?
Or was it the fear of being seen as not as capable of giving away money as making it? Only Gupta knows. In 2001, Gupta helped raise $1 billion in relief funds for the victims of the Gujarat earthquake. He was also active in the America India Foundation (AIF), the best-known Indian American charity in the US. Speaking on the condition of anonymity, a source who is closely involved with the AIF, had high praise and admiration for the way Gupta has helped the organisation grow since its inception in 2001.


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