The bare bones of the case are that Guptaji misused his position as a member of the Goldman Sachs and P&G Board of Directors. As a Director on the Boards of these two companies Guptaji was in the know of certain confidential information that was, obviously, not in the public domain at that moment. He was under obligation to maintain the confidentiality of the information provided to him and not give that information to others for securities trading.
The accusation is that Guptaji passed on the information that he received due to his position on these Boards to his dear friend and business partner Raj Rajaratnam who then proceeded to transact in these securities and profit from the same.
An incident quoted in the chargesheet filed by the District Court in New York is how Guptaji participated in a special meeting of the Goldman Sachs Board on 23rd September, 2008. This he attended via telephone. This meeting was called to approve the 5 billion dollar investment by Berkshire Hathway in Goldman Sachs. Given the financial state of affairs at that time, Lehmann Brothers had just filed for bankruptcy, this was indeed big news. The public announcement of this deal came after the 4 pm close of the NYSE on 23rd September.
Now for the juicy part of the charges, 16 seconds after Guptaji disconnected his call from the Board meeting (at about 3.54 pm) his assistant connected him to Raj bhaiyya. And Raj bhaiyya purchased about 3,50,000 shares at about 3.58 pm. Now if this is not a ‘DO IT NOW’ method of living ones life I do not know what is. I mean this explains why he achieved so much success. If I was in his position I would have thought seriously about calling my friend and would have continued thinking about it. No action. Which explains why he is where he is and I am where I am…. Er… um… actually as of now that is super news, but then I digress.
There are other accusations listed in the Indictment that has been filed. There is another one about Goldman Sachs and the loss that it reported for the first time in its history as a public company. Raj bhaiyya received this information from Guptaji within 23 seconds of the meeting having ended. Information that helped him stave off losses by selling the stock that it had.
There was another incident where Guptaji as a member of the Board of Directors got information about P&G’s less than impressive organic sales growth. He was in Switzerland at that time, probably participating in the Davos circus, but found time to call Raj Bhaiyya who immediately sold short approximately 1,80,000 shares.
Now these as I have said are accusations that have been leveled against Gupatji. They have yet to be proven. Guptaji has denied these charges and is out on bail.
Is he guilty? Or is he not? I do not know. And it is always prudent to presume a man innocent until proven guilty.
I really am not concerned about whether he is guilty or he is not. I am interested in seeing how the Indian media and the corporate sector react to this news. I missed out on what they had to say yesterday. What with Diwali and all the sweets that needed to be dealt with.
I am interested in understanding how we treat his fall from grace. We rejoiced in his elevation claiming that it showed that Indians are taking over the world or some such crap. How are we going to deal with these accusations?
Are we going to hyper-ventilate and go over the top and call this action a racist one by the American judiciary against one of our own? Or are we going to go hammer and tongs at him and hurl insults at him for letting us down so badly? After all, some sections did live vicariously off his success. Or better still are we just going to pretend that this did not happen and get on with life. I mean we do have so many other crooks to think about that we may not have time for this guy who, let’s face it, is accused of activities that resulted in gains of about 4 cr in one transaction and some unspecified millions in the other two. I mean, what is 4 cr in relation to 1.76 lakh cr. No competition.
So, this is what I am interested in – the reaction of all and sundry to this issue, rather than the issue itself. Watch this space.
Ps: I wonder if we are going to transfer all our adulation to Preet Bharara who is the United States attorney for the Southern District of New York and responsible for the mess Guptaji is in.
Addendum: This is what Guptaji had to say in his Graduation Day address to the students of the Indian School of Business (ISB) on April 8, 2006
".... The third lesson I learnt was an interesting one, which is not always obvious. You will work with lots of other people. Try to make them successful. Don’t try to make yourself successful necessarily. Obviously you should work hard, but in life you have to work through others. No matter how brilliant, no matter how good you are, you can through your own merits, only succeed so much. But if you make other people successful, help them do their best, they in turn, will help you succeed and with the power of everybody helping you succeed, you will succeed beyond your dreams....."..... Looks like he took his advice rather seriously. I mean he really did try to help Raj Bhaiyya. A lot. And I am sure these charges are beyond Guptaji's dreams too...