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US prosecutors pressed to ‘wear a wire’ to trap Rajat Gupta: Raj Rajaratnam – The Economic Times

[MISC, Tuesday, 25 October 2011 11:45 No Comment]

WASHINGTON: Convicted hedge fund tycoon Raj Rajaratnam claims US prosecutors pressed him to "wear a wire" and record conversations with his Indian-American friend Rajat Gupta, Goldman Sachs Group Inc director.

In his first interview about his case, Sri Lanka born Rajaratnam told Newsweek Daily Beast that he was initially asked on the day of his Oct 16, 2009 arrest to tape his conversations with Gupta, the former CEO of elite consultancy McKinsey & Co McKinsey.

As late as two weeks before Rajaratnam was sentenced to 11 years in prison for insider trading, he was still being asked by the government to turn on Gupta. But he wouldn’t wear a wire, he says, so he could sleep at night.

"They wanted me to plea-bargain. They want to get Rajat. I am not going to do what people did to me. Rajat has four daughters," he said referring to Gupta as a "first-class guy."

A spokesman for Gupta’s lawyer, Gary Naftalis, referred to previous statements that his client had done nothing wrong and that a civil case brought by the US Securities and Exchange Commission was baseless.

But Rajaratnam felt betrayed by his two Indian American Wharton classmates, Anil Kumar and Rajiv Goel, on whose testimony the prosecution case mainly rests.

Kumar, the McKinsey executive, was hired by Galleon as a consultant. Goel, worked at Intel for eight years. Both of them pleaded not guilty first, Rajaratnam notes, before they switched to guilty under prosecutorial pressure.

Asked if he regretted anything, he said clearly referring to the duo: "I’d probably not be so trusting of people."

In his conversations with Kumar, Rajaratnam had trusted him to decide what was and was not insider information. "I did not think a senior partner of McKinsey would violate the confidentiality of McKinsey.

"I assumed he was kosher, that he would not cross the line." Rajaratnam does not speak well of Kumar. He calls him a "ch-t"-Hindi for "c-t." "I’m not Indian, but that word fits him," he says.

Kumar had introduced him to Rajat Gupta. The two of them wanted to start an Indian School of Business in Hyderabad.

"I gave them [the school] a million dollars. I later found out they never contributed any of their money, and are listed as the school’s founders. And I’m not even a fucking Indian," Rajaratnam is quoted as saying.

Rajaratnam’s South Asian connection makes less sinister some of the allegations in the trial, the interviewer says. For example, the prosecution noted that Rajaratnam would visit Goel’s house in Silicon Valley, presumably to talk about Intel.

But the real explanation is more human. "His wife makes really good chaat [a savory snack]!" Rajaratnam and Goel were very good friends, so his betrayal hurts him personally.

"There are two types of plea bargains. One is, you cooperate with the government. You finger 10 other people. The other is a plea bargain without cooperation." The white defendants all pleaded without cooperating; they did not wear a wire.

"The South Asians all did the plea bargain with fingering," he notes sourly. "The Americans stood their ground. Every bloody Indian cooperated-Goel, Khan, Kumar." He puts it down to "the insecurity of being an immigrant, lawyers bullying them into that position."

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