Overhearing the debate were Gupta’s dinner companions Treasury secretary Timothy Geithner and North Dakota senator Kent Conrad. It was heady company. If anyone had told Gupta back when he was a little boy in Calcutta that he would someday work at—let alone run—McKinsey & Co. and be invited to the White House for dinner, they might have had an easier time convincing him that he would walk on the moon. The heights he had attained would only serve to make the events that followed all the more unfathomable.
* * *
Seventeen days later, as Gupta rushed through airport security with his carry-on in tow, his cell phone rang. The caller on the morning of Friday, December 11, 2009, was Gregory K. Palm, the general counsel to Goldman Sachs & Co. Gupta had been a board member since 2006, and at least once a quarter, he would hear from Lloyd Blankfein, Goldman’s chief executive. Blankfein considered it a key part of his job to post his board of directors on the quarterly goings-on at the bank. But it was rare for Gupta to hear from Palm alone.
At Wall Street investment banks, general counsels are often among the most powerful (yet invisible) members of the leadership team. They are the keepers of secrets. They know where the corporate bodies are buried. Palm was extraordinarily discreet. Even though he was one of the firm’s most influential and highest paid executives—since 2002, Goldman had awarded him stock and options worth $67.3 million—Palm kept a very low profile. Many of the bank’s thirty-three thousand employees didn’t even know who he was.
Like Blankfein and Gupta, Palm came from modest means, a case study in American meritocracy. He was an electrician’s son who won the National Science Foundation fellowship award at the Massachusetts Institute of Technology. After MIT, Palm headed to Harvard, where he enrolled in its joint JD/MBA program. He was actually in Gupta’s class at Harvard Business School. (The two were in different sections and didn’t know each other.) In 1992, after a decade working for Goldman’s outside legal counsel, the whitest of white-shoe firms, Sullivan & Cromwell, Palm joined Goldman.
When Palm reached Gupta, his tone was unusually serious; he said there was something important he wanted to discuss with the respected Goldman director.
The night before, Palm had been sitting in his corner office overlooking the Statue of Liberty, on the thirty-seventh floor of One New York Plaza, wrapping up for the day. It was dark and most of his colleagues had left when Goldman’s outside lawyer from Palm’s old firm, Steven R. Peikin, called. Like many before him, Peikin worked for nearly a decade in the US attorney’s office for the Southern District of New York. He rose to head the Securities and Commodities Fraud Task Force before moving to Sullivan & Cromwell, where he now guarded the interests of one of the banks he used to scrutinize. Peikin told Palm that he had learned through the legal grapevine that there was evidence floating around that could draw Goldman director Rajat Gupta into an insider trading case.
The next morning, as Gupta prepared to catch a plane, Palm went to brief his boss at the bank’s headquarters, then at 85 Broad Street. Blankfein was surprised to hear what Palm had to say. Gupta had impeccable credentials and a sterling reputation. “We need to figure this out,” Blankfein told Palm. Goldman was under considerable scrutiny after the 2008 financial crisis. More bad press was the last thing the firm needed. “This is something that is obviously serious, but we don’t know a lot here.
“[Whatever you do], let’s make sure we don’t ruin Gupta’s reputation.”
Part One
Discovery
Chapter One
“Who Will Show Me
the Way in the World?”
Ever since he was born, Rajat Kumar Gupta was likened to his father. He was as handsome as his father, with the same strikingly chiseled jawline that gave both men a distinguished air, a sense they belonged to a secret world of privilege that went beyond wealth, intellect, or bloodline. In a society where skin color was a defining force, both Rajat and his father, Ashwini, were fair-skinned, a clear advantage that afforded them a natural superiority. Both were known for their generosity of spirit—an obliging way that over the course of their lives would win them steadfast friends and loyal followers. But beneath the surface the similarities ended.
Unlike his son, Ashwini Kumar Gupta came of age in an occupied country, seemingly fated by his birth in 1908 to live in deference to an imperial power. As a descendant of one of India’s oldest bloodlines, Ashwini was also, ironically, one of the chosen ones. He would be tapped and trained to deny his Indianness and perform like a faux Englishman, all in the service of India’s emperor, His Majesty the king. While he would receive a proper British education like the other esteemed members of his family, Ashwini Kumar Gupta rejected intellectual servitude.
When the British East India Company first settled in India in 1612—in hot pursuit of black pepper and cinnamon—few expected that England would one day turn its adventure in commerce into a chapter in conquest. Other European nations—France, Portugal, the Netherlands, and Denmark—were already well ensconced in the critical trading territory of India’s northeastern Bengal. It was not until the tail end of the seventeenth century, when Job Charnock, an enterprising agent of the East India Company, pitched stakes on the banks of the Hooghly River, a fast-flowing tributary of the mighty Ganges, that England began its rise to power.
Under the East India Company’s aegis, Calcutta grew into a thriving commercial hub, a hive of trading in spices and the other riches of the East: opium, jute, and muslin. Along with commerce, the English imported their way of life. Besides gin and tonics and golf (a sport that arrived in Calcutta in 1829, some sixty years before it reached New York), they introduced English education. Offering formal higher education to natives did not come from a sense of altruism; rather, as Thomas Babington Macaulay, a member of the Supreme Council for India, put it: “We must at present do our best to form a class who may be interpreters between us and the millions whom we govern; a class of persons, Indian in blood and color, but English in taste, in opinions, in morals, and in intellect.”
With Macaulay’s urging, Governor-General William Bentinck introduced English as the official language for Indian higher education, a move that would have momentous consequences a hundred years later.
As of 1858, though, the educated Indian class had not fully embraced their inner Englishman. While receiving the finest Western tutoring elevated their social position, education did not bestow an economic advantage. Poverty and scarcity were the norm for Indian natives, regardless of academic proficiency. After a bloody native Indian uprising—called the Sepoy Mutiny by the British and the First War of Indian Independence by the native nationalists—the Crown relieved the East India Company of rule and took complete control of India. Queen Victoria ultimately became the empress of the South Asian jewel.
Fifty years later, when Ashwini Gupta was born, the British Raj was firmly in control, and Ashwini’s birthplace—Bengal—was its seat of power. At the vanguard of almost every major social, intellectual, political, and economic movement in India, Bengal was New York, Paris, London, and Hong Kong all rolled into one. So powerful was its sway that one Indian National Congress leader quipped, “What Bengal thinks today, India thinks tomorrow.”
The Guptas were an old and distinguished Bengali family who counted themselves among India’s English-educated elite, a rarefied group at the turn of the century, representing less than 0.1 percent of the country’s total population. Their roots lay in Goila, a village then part of East Bengal, now Bangladesh. Despite their education, the Guptas struggled financially. They settled in North Calcutta, colloquially known as “Blacktown” because it was the domain of the city’s dark-skinned natives. South Calcutta, which the English appropriated, was labeled “Whitetown.” For native Indians, shut off as they were from economic opportunity, learning, not lucre, conferred status. And the Guptas were very learned. Education for them was a vocation, not just a profession.
Given the family’s intellectual pedigree, Ashwini Gupta was expected to have
a celebrated academic career too. He did not disappoint. He had a fine mind and was a “brilliant student” at Calcutta University, where he received a master of arts in economics. But even though he was raised and educated as a fluent English speaker, Ashwini Gupta did not aspire to become a British dandy. He was a fiery Bengali at heart. He thought like one, lived like one, and even dressed like one.
“Like all Bengalis at the time, he was a leftist,” says the journalist Inder Malhotra, who got to know Gupta when he was in New Delhi in the 1950s. In the bitterly cold winters commonplace in Delhi, Gupta donned a khadi dhoti—a garment popular among Bengali men. It was a rectangular piece of white cloth that wrapped around his waist and stretched to his feet and was made of khadi—a coarse fabric woven from hand-spun yarn. Gupta was rarely seen without it.
Khadi was one of the most powerful visual symbols of the burgeoning freedom movement. It was the cloth of choice for hard-core Indian nationalists. First championed by an English-educated Indian barrister named Mohandas Karamchand Gandhi, who urged Indians to boycott foreign cloth in favor of khadi, it soon became the leitmotif of the pro-independence Congress Party. It happened to be a cloth that meshed perfectly with Gupta’s political sensibilities.
Ashwini was one of India’s fervent freedom fighters who stridently rejected the native “interpreter” role he had been born into. He longed to stand out among the hundreds of thousands of khadi-wearing nationalists. In 1929, while studying in Calcutta, he joined the All-Bengal Students’ Association, an innocuous-sounding group that on its face had seemingly little to do with India’s struggle for independence. In reality, it was an organization brimming with revolutionary resolve.
Ashwini Gupta immersed himself in the association, often skipping classes to attend its meetings. His close friend Apurba Maitra, whose roll call number was next to his at the university, would cover for him, pretending to be Gupta at the customary call-outs at the start of each class. Maitra viewed his friend Ashwini, then all of twenty-two, as something of a senior statesman among student activists.
On January 26, 1932, Maitra was studying law at Calcutta University when an edict was imposed forbidding students from flying the Indian national flag in any university building. If they did, they would face “unpleasant consequences.” At that time, Calcutta’s police commissioner, Sir Charles Augustus Tegart, was notorious for torturing political prisoners (even young students) and for his uncanny ability to avoid assassination. But patriotic Indians viewed January 26 as the country’s show-your-colors day: were you an independent Indian or a pawn of the British Empire? Two years earlier the Indian National Congress had passed a resolution fixing the day for countrywide protests in support of complete independence. For khadi wearers, kowtowing in fear of British retaliation was ignoble and cowardly. For them, flying the flag separated the truly possessed from the poseurs.
Overcome with nationalist fervor, Maitra and nineteen of his friends flew the flag and then signed a declaration of opposition as required by the university. Not long after, while Maitra was at the university cricket field, an envelope addressed to him arrived at his dormitory. It was marked “On His Majesty’s Service.”
The terrified men, disregarding their collective code of conduct respecting individual privacy, tore open Maitra’s letter. Inside they found a summons demanding that Maitra appear before the powerful chief secretary to the government of Bengal at the Writers’ Building in Dalhousie Square, the seat of British power in Calcutta.
They hatched a plan: they would accompany Maitra to Dalhousie Square, but he would go in to see the British official alone while they waited for him outside. Knowing that the meeting could lead to swift imprisonment, the activists set aside their indispensables—sleepwear and books—so that they could grab them if the police van arrived to round them up and make arrests.
When Gupta overheard their plan, he chided them: “You idiots, if you go to Dalhousie Square en masse, the plain-clothes ‘spies’ around the Writers’ building will suspect you are supporters of Benoy Basu and his gang.” (Gupta was alluding to an incident from two years earlier when Basu and two accomplices shot and killed the British inspector general of prisons, a brute of a man who condoned torture.) Since the attack, a spree of assassinations had shattered the peace in Bengal. The province became such a hotspot for terrorists that word of its growing violence reached Buckingham Palace in London. In 1932, King George V, apparently befuddled by the reports he was receiving from Bengal, beseeched the provincial governor, “What is wrong with Bengal?”
One of Ashwini Gupta’s strengths was his skill as a versatile strategist and tactician. “Don’t go,” he advised. “Let Apurba [Maitra] go alone with the letter.”
Maitra obeyed. When he arrived at the Writers’ Building, he was escorted into the imposing office of Sir Robert Niel Reid.
“So, young man, you know the very bad position [you] are in?”
Maitra quickly confessed his crime. He and his friends were ready to accept any punishment for their flag-hoisting caper, but they would not apologize on any account.
“You are mad,” Reid said before explaining that the summons had nothing to do with flying the flag. “This anonymous letter has shaken your bones, you are talking incoherently. Have courage. This may not happen.”
Maitra was flummoxed. “Why courage?”
Reid informed Maitra that his father, a native serving the British as a magistrate, was a target of terrorists. “Imagine yourself with your widowed mother and her five children, you are the eldest,” Reid intoned. “You may be doomed and ruined.”
To ease his father’s anxieties, Reid suggested that Maitra quit his legal studies and accept a post as a warden in the Bengal prison system, a steady job with steady pay.
“Sir, if I do not accept it?” he queried.
In case Maitra forgot, Reid reminded him that round-the-clock armed police, provided at the discretion of His Majesty’s government, protected his father.
Reid didn’t need to say any more. Maitra agreed to the prison posting.
On the day Maitra’s train was set to depart to a prison high up in the rolling green hills of Darjeeling, Ashwini Gupta entered his compartment and took his hand, gently pulling him away from his well-wishers. Somehow Maitra had been found out. Through his vast network, Gupta knew Maitra wasn’t going to Darjeeling as a political prisoner, but as a guard.
“So, Apurba,” he said. “This little ovation of friends on the platform, a few bunches of flowers on your berth speak of our old love for you, but do you feel what you are carrying in your luggage?”
Maitra lowered his head.
“Our eternal hatred for you. Eternal hatred.”
Then, overwhelmed by emotion, Gupta drew his sash over his eyes and exited the train.
For the rest of the 1930s, Gupta and Maitra lived very different lives. Maitra, a warden at a small jail in Darjeeling, surrounded by acres of sprawling tea estates, spent his days guarding petty criminals and prominent freedom fighters. He looked upon his time as a young activist with some nostalgia, but he knew it was far behind him now. Ashwini Gupta, meanwhile, stayed in Calcutta. For a brief time, he lectured in economics at what was then known as Ripon College. But teaching was only a day job. In his off-hours he forged ties with prominent leftist leaders.
Gupta and Maitra would have never crossed paths again had it not been for Gupta’s participation in the militant Quit India movement in 1942. Gupta was among the tens of thousands rounded up and arrested in Bengal and sent to Presidency Jail in Calcutta. Maitra, by now an officer at Presidency Jail, was stunned when he saw his old friend Gupta.
“So, Ashwini,” said Maitra, placing his hands on Gupta’s emaciated shoulders. “You are all skin and bones…how?”
“Tuberculosis; one lung bleeding, fever every night, twenty pounds weight lost…Apurba, don’t come so near to me, you may catch it.”
Weakened by a multitude of beatings fighting for India’s independence and stricken with tuberc
ulosis years before antibiotics, the thirty-four-year-old Gupta was as good as dead. But that evening, Maitra signed out from the prison under the pretext of going to see a movie. Then he visited a prominent local doctor and pleaded with him to treat his old friend.
After two weeks, an ambulance arrived and Maitra watched as the withered Gupta was led inside. He was in the hospital for six months, and after multiple surgeries, Gupta lost several ribs, but he regained a modicum of health and his familiar smile was back.
Maitra cared for Gupta upon his return to jail, and while censoring his inbound and outbound mail, he discovered that Ashwini had a “wife in the making…a nice non-Bengali girl.”
Gupta had vowed not to marry until India won its independence. But before his final internment, he fell in love with Pran Kumari, a Bethune College student whom he tutored. Their courtship transcended traditional barriers.
The two came from different parts of India—one the cultural capital of the country, the other its breadbasket. Ashwini was a quintessential Bengali. Though his wife, Pran Kumari, grew up in Bengal, her family originally came from Punjab, which, because of its position on the flank of India, bore the brunt of constant assault from a series of invaders. The violence marred the natural beauty of Punjab’s rolling fields of wheat, barley, corn, and sugarcane. If the Bengalis were considered the soul of India, the seed of its cultural and intellectual heritage, the Punjabis were its body, literally tilling the land to feed India’s people.
Their love flourished in censored letters during Gupta’s years in prison. In early 1947, at the urging of friends and before India’s independence, Ashwini Gupta married Pran Kumari. The two belonged to different Hindu reform groups, but they were too progressive to care. The wedding took place on the campus of Bethune College. It was a modest affair. The Guptas were not showy people. Besides, though few knew it at the time, Ashwini Gupta’s incarceration had left the family in dire financial straits.
The Billionaire's Apprentice: The Rise of the Indian-American Elite and the Fall of the Galleon Hedge Fund Page 2
