Mind Without Fear

by Rajat Gupta

  Most of that day’s evidence dragged on like the preceding days’. The former CFO of Smucker’s testified about the Folgers Coffee deal. The government was trying to highlight how secret the deal had been, but on cross-examination the witness had to admit that in fact there had been numerous leaks to the press and dozens of people had been involved in the deal-making process, including teams from both companies, several law firms, several banks, and other advisors. As the afternoon drew to a close, the government called their next witness, Goldman director Bill George. Originally, they had been planning to call my friend John Bryan, but a few weeks before the trial, they had announced a substitution, claiming that Bryan did not remember the board meeting in question. Clearly, the prosecutor wanted someone from Goldman to testify about the events of October 23, 2008, and specifically to say that he remembered the board being told that Goldman was going to lose $2 a share. This would validate Rajaratnam’s wiretapped conversation in which he claimed to have heard that figure from someone on the board. Since there were no minutes from the meeting, they were relying on witness testimony. I appreciated that John had not wanted to testify against me, but I wished he had been willing to tell the jury what actually happened at the meeting rather than simply claiming forgetfulness.

  I knew Bill, but not as well as John. He didn’t want to look at me as he took the stand. While unable to say that the board had been told any specific amount for Goldman’s share price, he did say that he remembered the bank was going to lose money, for the first time in its history. “Of course they were going to lose money!” I thought to myself, frustrated. “We were in the middle of the worst financial crisis in decades, and it had been all over the papers that they were laying off 10 percent of their staff that day!” Those layoffs had been the only thing discussed in the board meeting, but any investor off the street could have figured out from that article that Goldman’s share prices were about to take a dive.

  George also testified about the events of June and July 2008, in relation to the July 29 call when I had inappropriately confirmed to Rajaratnam that Goldman was considering buying a commercial bank. The government wanted him to testify that this information was considered confidential, which he did. On cross-examination, however, my lawyers were able to demonstrate that numerous analysts and news outlets had been speculating about the possibility for weeks before that call. The ideas I’d shared with Raj, while inappropriate, were certainly far from secret.

  The government followed George with Michael Cardillo, a former Galleon-trader-turned-government-cooperator whose six charges of securities fraud had been reduced to one when he agreed to plead guilty, and who was still awaiting sentencing. Clearly, he’d made a deal and would have said just about anything on the witness stand. He testified about the January 2009 incident involving P&G’s declining sales, as well as the Folgers–Smucker’s deal, but much of what he had to say was blatant hearsay—third-hand reports from unnamed sources with nothing to corroborate them, not even phone records. We tried to get Cardillo’s testimony barred, but Rakoff once again ruled against us, using the same frustratingly circular “conspiracy” argument he’d used to allow the wiretaps. At least Gary had a chance to discredit him during cross-examination, highlighting his obvious incentives for testifying in return for a reduced sentence. He did a good job of poking holes in his carefully rehearsed tale and shining a light on the general culture of exaggeration and one-upmanship that characterized trading at Galleon.

  We were one week into the trial, but already it felt like an eternity. Every evening, after a long day in the courthouse, I’d been rehearsing for my testimony. Although by this point I should have been ready, I felt unprepared. When I finally got back to the apartment each night, I’d be exhausted but often too anxious to sleep. The girls came most evenings, along with my brother, Anjan, and his wife, Mala, and my sister Kumkum and her husband, Mrinal. Didi was the only one of my siblings unable to be there—her husband, Prabir, was seriously sick and could not travel. We would sit together, trying not to talk or think about the trial. I refused to read the papers, but Megha told me that they seemed only to be confirming the prosecutor’s false story—leaving out anything that supported my case.

  In an attempt to take everyone’s mind off of our troubles, I found myself telling stories about my parents, and my father in particular. Although my daughters knew the basic facts about their grandparents, I’d never really told them the stories my father had told me. Now, I talked about his passion for independence, his time in jail, his suffering at the hands of the British. I reflected on his great love for my mother, and his refusal to marry her until India was free and he was no longer risking imprisonment or worse. I told them how he almost died from tuberculosis, and how his life was saved by his classmate-turned-warden. I even told the story of his death.

  It comforted me a little to speak of my father and helped put my predicament in perspective. He had endured much worse than I was facing, yet he retained his dignity, his faith in humanity, and his equanimity. I did not know why fate had dealt me such a harsh blow at this stage of my life, after being so generous for so long, but I’d do my best to meet it in a way that would have made my father proud. I wished he could have known his granddaughters, the four young women listening with rapt attention to the stories of his life in a New York City apartment, half a world away from Kolkata.

  The Memorial Day weekend should have been a respite, but even as I proudly watched my youngest daughter graduate from Brown University, I was silently undergoing cross-examination in my head. I did my best to be present for Kushy, but I could tell that she, like all of us, was too worried to enjoy the day. I was almost anxious to get back to the court—I just wanted to get this ordeal over as fast as possible.

  A Job that Was Never Mine

  During the second week, after Cardillo completed his testimony and several more witnesses were called to comment on reams of documents, the government called a man I had briefly been acquainted with, a Galleon marketing director by the name of Ayad Alhadi. Raj had hired him in early 2008 when the former NSR hedge fund arm was in the process of becoming Galleon International. In those days, we’d still been unclear about the relationship between the two funds, and discussion of a 15 percent cross-ownership was ongoing, as well as a potential role for me as chairman of both. So when Raj asked me to join Alhadi for some fundraising meetings in the Middle East, I was happy to help. My name and stature in the global business community would give investors confidence, he explained. I had a couple of planning meetings with Alhadi and then made a stop on my way to India to accompany him to investor meetings in Abu Dhabi and Dubai in March and April of 2008.

  Once it became clear, by late that summer, that the Galleon International cross-ownership and chairmanship were not going to come to anything, I stopped helping Alhadi fundraise. It had never been a formal role, and I never received any financial compensation, but the prosecutor was intent on blurring that picture. If he could convince the jury that I’d worked for Raj, he could make a stronger argument that Galleon’s success was my success, and hence I had benefited from Raj’s illegal trades.

  Alhadi played his part in court, testifying that when we met, I’d been introduced to him as “the new chairman of Galleon International.” It was infuriating. There were no contracts, no employment records, no payments, no evidence whatsoever to support the claim that I’d held this job, yet this guy was allowed to just tell the jury I had.

  A battle was brewing as the second week came to a close: on Friday, the prosecutor was planning to call Heather Webster, a JP Morgan private banker who had advised my family and me during 2008. She had met with me at my home in April of 2008 to discuss my financial status and my estate planning. During the meeting, she had taken handwritten notes, which the prosecutor planned to introduce as evidence. In an after-hours conference, my lawyers fought to have her notes barred, arguing that they were not verbatim statements and would be misleading. In particular, we were concern
ed about the fact that she had jotted down a summary of my personal financial assets, and one line of her notes read: “Chairman, Galleon International, $1.3bn, owns 15% of it. Invests in long/short equity in Asia, entitled to performance fees.”

  Given the timing of that meeting, I’m sure I told her the Galleon role was a possibility, since at the time I believed it was. This meeting had taken place just weeks after my trip to the Middle East with Alhadi. But she had noted it as if it were already a fact, and she had no independent memory of the content of the discussion. The fact was, I never worked for Raj, nor did I own 15 percent of Galleon International. But the prosecutor planned to use Heather’s notes to claim I did, and therefore further bolster the shaky benefit argument that they had begun to build with Alhadi’s testimony.

  While the government was arguing for the notes to be admitted, they wanted only the part that supported their story. On the next page were notes from our estate planning discussion, where Heather had written that I planned to give away 80 percent of my wealth to charity during my lifetime. These notes, Brodsky argued, were “potentially prejudicial and confusing,” and he could not risk bringing them before the jury.

  We didn’t see how they could have it both ways. If they wanted to include the notes, they should include all of it. At least then we’d have an opportunity to counter the narrative of my greed. As Gary argued to the judge, my intention to give away my money was “thoroughly inconsistent with the notion that [I] would be doing an insider trading scheme for money.” But in yet another baffling move against us, on the morning when Heather was due to take the stand, Rakoff decided to allow the Galleon notes, but barred the section on my plans for charitable giving.

  It was a moment that seemed to sum up the trial. I couldn’t believe it. What could possibly be the logic behind this double standard that on the one hand declared her inaccurate notes to be admissible evidence and on the other made an exception for one part that was both accurate and extremely relevant to my defense? If Heather was being deemed a credible witness, then didn’t the jury deserve to hear that I had told her I planned to give away so much of my money—a fact that flew in the face of the whole thrust of the prosecutor’s characterization of me? How was this not relevant, when the charges against me hinged on accusations of greed? Not wanting anyone to see the despair that I’m sure was written on my face, I clasped my head in my hands.

  Anita was more demonstrative in her disgust, getting up and marching out of the courtroom. She did not return till after Heather’s testimony was completed, but she didn’t miss anything; the prosecutor got exactly what he wanted, and the most we could do on cross-examination was to highlight the incomplete and potentially inaccurate nature of the notes, and the complete absence of supporting memories. The one small advantage to having Heather on the stand was that it gave my lawyers a chance to offer in evidence the numerous emails from the summer and fall of 2008 that showed my frustrating quest to get information out of Raj about Voyager. As my personal banker, Heather had been privy to much of this, and we were able to elicit testimony that supported the story I’d be telling when I took the stand.

  Well-Prepared Witnesses with Little to Say

  Anita returned to the courtroom just in time for a new source of disgust: my former colleague Anil Kumar was taking the stand. She knew, like few others, the extent to which I’d gone out of my way to help Anil advance his career at the firm and support his family. She had graciously welcomed him and his wife to our home on a number of occasions. Now, he was repaying that generosity by testifying against me, even though he had no direct knowledge of the case. Indeed, my lawyers had tried hard to argue that he should not be called as a witness at all. Nowhere was he named as a co-conspirator, yet the prosecutor intended to elicit a description of Anil’s crimes, including tips he’d given to Rajaratnam and his elaborate offshore payment arrangement.

  Gary accused Brodsky of trying to retry the Rajaratnam case in the midst of my trial, since Anil had nothing to contribute to the evidence other than an implication of guilt by association. We also objected to a line of questioning that intended to claim that Anil violated McKinsey policy by “moonlighting” for Raj and that I was aware he was doing it, showing my disregard for the rules. In fact, McKinsey had no formal policy on that front, and I was unaware of the true nature of his arrangement with Raj, despite whatever impression the July 29 tape might have given. At least the judge agreed with us on blocking that particular line of questioning, but the rest of Anil’s testimony was allowed to proceed. As he made his way to the witness stand, head bowed in an exaggerated show of deference to judge and jury, I turned and caught my wife’s eye. She just shook her head.

  Anil testified at length, although he had little of substance to say. Unlike the halting progress of the trial thus far, his testimony stood out for its full-sentence, even full-paragraph, answers, with relatively few interruptions from counsel. Listening to him spout off his rehearsed statements and play expert educator to the jury was its own kind of torture. His manner was obsequious and strangely childlike for a fifty-three-year-old self-confessed criminal—every answer was followed by “sir,” he apologized repeatedly, and several times he referred to his crimes in terms reminiscent of a contrite schoolboy. “I had an understanding with Mr. Rajaratnam that I was doing bad things,” he confessed, looking pained. As I was seated right in front of him, he had to try hard not to catch my eye, but he successfully managed to do so, even during sidebars.

  The main thrust of the prosecutor’s questions for Anil, as far as I could see, besides highlighting his guilt in order to tarnish me, was an attempt to pin the timing of my dispute with Rajaratnam at a much later date than when it actually occurred. Anil told the jury that he had heard about the Voyager losses in mid to late October 2008, which was indeed the time I’d learned the fund had gone to zero, but many months after my dispute with Raj over the redemptions had begun. Anil, however, claimed that I had discovered the redemptions only in early 2009 and had showed him the evidence at that time. This was simply untrue, and Anil had no basis for saying it, having never been involved with the issues surrounding the funds.

  As I listened to Anil, my frustration with Ravi Trehan bubbled up for the hundredth time. He was the one person who could have credibly corrected this false narrative, since he had been the one who discovered the redemptions in early 2008 and brought them to my attention, and I’d had numerous conversations with him about my troubles contacting Raj, including the one on September 23, the day of the Buffett investment. Early on, he’d talked to my lawyers and confirmed the timeline, but recently, he’d simply stopped returning my lawyers’ calls. I knew that somehow they’d gotten to him. The government even had his name on their list as a potential witness for the prosecution. If he’d been willing to take the stand in my defense, I’d have been less concerned by the stories Anil was telling. After all, the jury knew Anil was a collaborator, and my lawyers made sure to emphasize that during cross-examination, highlighting the fact that he’d had numerous meetings with the prosecutor to prepare, pointing out that his sentencing had been postponed until after my trial. (Later that summer, he would be given a noncustodial sentence of probation in recognition of what prosecutors described as his “extraordinary” cooperation.) There were numerous inconsistencies between Anil’s current testimony and his previous depositions, as our cross-examination revealed. Surely the jury could not see him as a credible witness. But without Ravi I worried Anil’s testimony would carry undue weight. And if Ravi testified for the prosecution, what might they have told him to say?

  We were about to enter the trial’s third week, and the government still had a long list of witnesses to call. The judge had promised the jury we’d be done in four weeks, but clearly most of that time would be used by the prosecution. After all, they still had their star witness to call, Lloyd Blankfein, and the judge had a prior engagement on Tuesday, so the court would not sit that day.

  Arriving to great media fanfa
re on Monday afternoon, Blankfein seemed to enjoy the attention of the hushed courtroom and the deference of judge and counsel. Like Anil, he carefully avoided meeting my eyes.

  As soon as Blankfein began to speak, it was clear that he’d been prepared. Very well prepared. (Some months later, when I saw the legal bills, for which I was deemed liable, my suspicions that he had been coached extensively in preparation for his testimony would be confirmed. While some such preparation is common and accepted practice, day after day spent with numerous very expensive lawyers seemed excessive.) Blankfein had nothing of substance to say, since he didn’t remember any of the events in question. So how was the government to get him to confirm their story about the board meeting? To get around his complete lack of memories, the prosecutor carefully elicited testimony as to what his general practices and routines were with regard to things like informing board members about the bank’s financial performance. For example, they wanted to show that I’d been given confidential information about the bank’s earnings on various occasions, most notably in the October 23 call. Blankfein did not remember if he had done this, so he simply answered each question with a variation on “it was my general practice.” After several objections, Gary, visibly frustrated, requested a sidebar.