Mind Without Fear

by Rajat Gupta

  “This man has no recollection of these things!” he exclaimed. “I can say that with greater certainty than I would in the normal course because we took his deposition.”

  I remembered that deposition all too well. It had taken place about three months earlier, in connection with the SEC case, and Gary had suggested that I sit in—he thought that my presence might soften the Goldman chief up a little and appeal to his humanity. That didn’t play out so well, and I simply spent an acutely uncomfortable nine-plus hours listening to my former colleague verbally stumble around, contradict himself again and again, and essentially demonstrate that he had no clear memory of any of the events in question. Clearly that hadn’t changed. He still had nothing to say, but now his expression of that nothing was polished and precise. Damn, I thought. We’d made an error of judgment in deposing him—we’d given the prosecution a preview of all the areas where they’d need to rehearse.

  Gary persisted with the judge. “His memory is so bad he can’t remember a specific thing about anything! This is taking habit evidence and really trying to substitute it for a witness who has absolutely no recollection of any of these matters, and yet it would be conveyed to the jury as if this guy actually remembers something.”

  Rakoff, however, after examining the witness himself for a few moments, ruled that “custom and practice” was admissible evidence. Blankfein was allowed to testify that it was his “practice” to always inform board members of the bank’s estimated P&L, as well as projections as to where it was trending. He was also allowed to testify that it was his “practice” to “estimate off the estimate” or round numbers. These were both critical points with respect to the October 23 call. First, I knew he had not talked about earnings; the call had been about the leaked Wall Street Journal article about the layoffs. But if he maintained that it was his practice to always talk about earnings, and there were no minutes of the meeting, how could we disprove that? Second, the rounding of numbers mattered because the actual P&L from the previous day, October 22, was $1.75 per share. However, in the wiretapped call on October 24, Rajaratnam boasted he had heard Goldman was going to lose $2 a share. In my experience, those kinds of numbers would never be rounded up or down in board meetings—if we’d been told about earnings at all, it would have been the precise figure. But the government’s story relied on that $2 per share detail. They had not been able to get this number out of Bill George, who had only testified that he remembered the bank was losing money. But they clearly hoped to get around that by having Blankfein testify that rounding up was his “practice.”

  Besides these legal contortions, which Rakoff kept allowing, there was another frustrating aspect of Blankfein’s testimony. The prosecutor asked him about my 2008 job offer from KKR and even went so far as to ask about my expected compensation—something we had never discussed and that was certainly not relevant to the case at hand. Before my lawyers could object, he casually answered, “Five,” meaning five million. My jaw dropped. Not only was it an incorrect figure, but it served to cement the image of me as financially motivated. The belated objection was sustained, but the damage was done. On cross-examination, Gary sought to reframe my withdrawn resignation as an expression of loyalty to the bank, but I worried that the exaggerated figure would stick in the jury’s minds.

  As the long day came to an end, the judge reminded the jury that tomorrow, Tuesday, would be a day off and that Blankfein’s testimony would continue on Thursday morning to accommodate his commitment to attend his daughter’s high school graduation on Wednesday. This rankled a little, as I remembered Aditi’s missed graduation during the first week of the trial. While he celebrated his daughter, we sat through a day of testimony that the judge described as “excruciating”—a Galleon analyst who identified emails and phone numbers; McKinsey’s associate general counsel, who had assisted in document production to the USAO; a Goldman technology forensics officer; and a guy from the FBI who had prepared the government’s summary charts. Along with each witness came yet another flood of documents. The only positive that stood out for me was that in cross-examining the Galleon analyst we were able to bring into evidence the statements from the Voyager fund. What we’d discovered was that Rajaratnam kept two sets of books—one showing his redemptions and the other set showing no record of them.

  In cross-examining Blankfein on Thursday morning, Gary made a point to emphasize the Goldman chief’s lack of specific memories of any of the events in question. He was also able to show documentary evidence that much of the information that was being touted as confidential—for example, Goldman’s consideration of buying a commercial bank in the summer of 2008—was in fact discussed by the bank with industry analysts and reported on in the media.

  Then he zeroed in on the October 23, 2008, incident. He showed the jury the front-page Wall Street Journal article from that day reporting that Goldman was about to lay off 10 percent of its workforce. He showed email evidence that the board meeting had been called that very morning, right after the publication of the article.

  Blankfein, incredibly, claimed not to remember the Wall Street Journal article. I found this hard to believe. Those layoffs had affected more than three thousand people, and those people had not been informed that they were about to lose their jobs until they read it in the papers. Such a corporate faux pas should have made a much greater impression in a CEO’s memory than a couple of dollars’ movement in the stock price. Yet when Gary inquired about it, Blankfein had no answer. We played a voicemail announcement that he had issued to the firm that day in response to the article, expressing his regret about the leak, and at least he had to admit that this was the kind of information he would have wanted to bring to the attention of his board, especially given that just a week earlier he had told the board the bank was looking to increase its staff (a fact he also claimed not to remember).

  Gary also sought to highlight for the jury that Goldman had received TARP funding from the government during the financial crisis, a fact that should have raised eyebrows regarding their impartiality. And he drew attention to the unusual degree of preparation Blankfein had received, which had included officials from the USAO not only sitting in but taking the lead when he testified at the SEC—a highly unusual practice. Even the judge acknowledged this, ruling in our favor for once that we could continue that line of questioning as relevant to bias.

  At one point, when Blankfein was talking about making calls to board members, Gary saw an opportunity he couldn’t resist.

  “Sometimes, in light of your job, you find yourself going from one meeting to another?” he asked.

  “Yes,” Blankfein replied.

  “And while you’re in meetings, you often get phone calls, right?”

  “Yes.”

  After carefully laying his foundation, Gary went for the punchline: “So like many busy executives, when you finish a meeting, you often try to use that time to return your phone calls the minute you walk out of a meeting, right?” When Blankfein replied affirmatively, Gary added one last question: “Those phone calls don’t necessarily have anything to do with anything that was discussed in the meeting you were just in, correct?”

  “Yes,” Blankfein replied. Gary turned back to look at me, an expression of triumph on his face. I nodded and attempted a small smile, but I was under no illusions that scoring this small point would count for much in the midst of a testimony that for the most part had played according to the prosecutor’s plan.

  Privately, I wondered what had incentivized Blankfein to dedicate so much time to the case. I knew him well enough to believe that there must have been something in it for him or for the bank. In the years to come, as Goldman remained seemingly untouchable amid the ongoing recriminations following the financial crisis, my questions only persisted.

  By the time the government finally rested its case, on Friday, June 8, 2012, my morale had weakened considerably. What I had sat through was not just three weeks of testimony—it was the grand finale of a s
everal-year campaign to blacken my character and rewrite history. Its momentum felt inexorable. While my defense team had occasionally scored a point or raised questions about the credibility of a witness, overall we seemed powerless to slow the tide. It was going to be up to me to tell the real story and convince the jury I was telling the truth. No one else could tell it for me.

  _______________

  *Dirks was a whistle-blower who disclosed inside information in order to expose a fraud, but was charged with insider trading because some of the investors he warned subsequently sold their stock, avoiding significant losses. The Supreme Court decision to acquit Dirks established that to prove a tipper guilty of insider trading there must be a demonstrable benefit.

  15

  Unsung

  The song that I came to sing remains unsung to this day.

  I have spent my days in stringing and in unstringing my instrument.

  The time has not come true, the words have not been rightly set;

  only there is the agony of wishing in my heart.

  —Rabindranath Tagore, Gitanjali, 13

  New York City, June 8, 2012

  “Why would I give up the chance to defend myself? I’m the only one who can tell my story.”

  It was Friday night, after the prosecution had rested its case, and my lawyers had spent the past few hours trying to convince me that I should not take the witness stand on Monday as I had planned. I knew they had reservations, but I’d thought it was decided.

  Gary patiently explained his concerns again. Most people in my position didn’t testify because it’s too risky. The prosecutor would like nothing more than to get a chance to cross-examine me. I could open myself up to lines of questioning that I didn’t know how to handle. I might incriminate myself without even knowing it. If I testified and the jury found me guilty anyway, I might get a much longer sentence.

  I understood the danger but felt confident that I could handle whatever questions the prosecutor would have. And in my mind, the risks were outweighed by the potential benefit. I knew I was a persuasive speaker, and I was confident in my story. No one else could explain to the jury why the prosecutor’s carefully constructed narrative made no sense. Yes, I knew that my taking the stand would shift the focus of the trial. The case would come down to whether or not the jury believed me, rather than whether or not the prosecution had provided adequate proof of guilt. But having just sat through three weeks of prosecutorial storytelling, I was more convinced than ever that the true burden rested on me. I needed to tell a better story.

  The judge and the prosecutor were asking for a firm decision by the following day. Gary had told them it was “highly likely” I would take the stand, but, in fact, he still hoped to change my mind. When I remained adamant, he had suggested we call my wife and daughters and get them to weigh in. I’d already had this conversation with all of them, numerous times, so I didn’t see how that would change anything. They had all told me their feelings on the matter, but they knew it was ultimately a decision I had to make. But finally, I suggested to Gary, “You call and speak to them. Don’t tell them I’m here. Maybe they will say more, or I will hear them differently if they are talking to someone else.”

  “It’s too risky.” Anita’s voice cracked with emotion. “I just don’t want to see him put himself through that. Who knows what they’ll throw at him during cross-examination, or how they’ll try to drag his name through the mud. They’ve done enough harm already. Besides, it’s too late for it to make a difference now. And if he testifies and loses, the sentence will be harsher.” She paused, silent for a moment. “He always thinks it will be different for him. He really thinks that just because he’s telling the truth, the jury will believe him. You’d think he would have learned by now that people believe what they want to believe!”

  As I listened, silently, I looked around Gary’s office. It was a modest office for someone of his stature, but the view was iconic: the Chrysler Building on one side, the Empire State on the other. One wall was covered with framed courtroom sketches from the firm’s biggest cases. Would a scene from my trial be up there one day? I wondered. I tried to focus on the dilemma at hand as if for the first time. Anita’s instincts had been accurate so many times. She’d been right about Goldman, right about Rajaratnam, right about Anil. I hadn’t listened to her then, and look where I had ended up. Was I making a similar mistake? I could hear the fear in her voice, and I hated to be the cause of it.

  Sonu, who had been the most involved in the legal process, understood my desire to tell my story, but, as a law school graduate herself, she also respected the good sense of the lawyers’ advice. My eldest daughter has one of the clearest minds I’ve ever encountered, with a keen sense of how to balance risk and caution. Her wise counsel had helped me make many important decisions over the years. If she was leaning against it, perhaps I should listen. Megha, too, was hesitant, the lawyers’ caution clearly swaying her. My younger daughters were not on the call, and I was glad they weren’t put in this difficult position. Ultimately, it was my choice to make. But the decision I made would affect all of them.

  I’d never been one to shy away from risk or succumb to fear. I’d trusted my own instincts, and, for the most part, they’d served me well. But not always, I reminded myself. I’d made serious mistakes in trusting people like Rajaratnam and Anil. I’d believed that things would work out for the best, that people would do the right thing. And they didn’t. Was I making the same error in taking the stand? Was I being naive in thinking that truth would be heard? If there was any lesson to be learned from the events of the past two years, it was that justice did not always prevail. Maybe the defensive stance that my lawyers and family were advocating was a sensible one.

  I felt more conflicted than I had over any decision in my life to that point. Throughout this process, I’d been sure of my intention to testify, despite my lawyers’ and my family’s reservations. But now I was questioning my own certainty, and my usually optimistic outlook was beaten down by three long weeks in court. I’d always been the strategist, the chess player with his eye on the long game, the one to whom business titans and world leaders turned when they needed a clear-eyed view. Now, my vision had narrowed to the step in front of me. I could no longer see the way forward. A passage from the Bhagavad Gita came to mind, where Arjuna, the warrior, is desperately torn over the decision to engage in a great battle. “My will is paralyzed, and I am utterly confused,” he says, imploring his charioteer and teacher, Lord Krishna, “Tell me which is the better path for me?”1 I wished there were a wise teacher to whom I could turn for advice in this moment.

  After my lawyers hung up the phone and said goodnight, I lingered in the office, hoping some clarity would come. Finally, still tormented by indecision, I got in my car to drive home. As the brightly lit city streets gave way to the darkened hills of Connecticut, a strange sense of resignation came over me. I was tired and defeated. I did not have the energy or confidence in myself to go against the advice of my lawyers, my wife, and my daughters. By the time I pulled into the driveway, my decision was made, although it did not feel like I was the one who had made it. I would not take the stand.

  Regret

  To this day, that decision is my greatest regret. Without my testimony, our defense was considerably diminished. After all, how can you demonstrate that you did not do something? How can you prove a negative? We were overly reliant on character witnesses, and the judge had severely curtailed the number we could call and curbed what they could say. He even ruled that my lawyers could not use the term “integrity” in examining character witnesses, because it was “too vague.” Perhaps, in this case, he was right, I mused. Integrity was a virtue that I’d striven for my whole life, but what did it really mean? Did it demonstrate integrity to miss the fact that one’s business associates were involved in illegal activity? Could one be said to have integrity if one was too busy to pay close enough attention to critical financial details and ended up being c
heated? I had lived a full life and tried to do good in the world, but I had not always achieved balance or integration between my many commitments.

  I felt honored by the presence of the witnesses we did call and appreciative of their unshaken faith in my honesty and their willingness to state it in public. At least one of them, I knew, had been pressured not to take the stand. Pramath Sinha, ISB’s first dean, had received an unexpected and intimidating call from an FBI detective one day during the trial. He was asked a series of interrogative questions, including queries about whether he had been involved with Rajaratnam or used his office. Shaken, he hung up the phone only to find a series of missed calls from his niece, who told him the FBI had called her home and spoken to his elderly mother, who had been extremely confused. When my lawyers heard this story, they confirmed that such incidents were all too common.

  Ajit Jain testified via video, telling the jury about the lunch we’d had together in January 2009 when I’d told him about the Voyager situation and how Raj had “swindled or cheated” me. It had stood out in his memory because I was clearly so agitated and it was unusual for me to talk to him about my investments. His testimony powerfully supported the argument that I was furious at Rajaratnam for his duplicity regarding the Voyager investment. Moreover, the idea that I would discuss my relationship with Rajaratnam with a senior Berkshire Hathaway executive if I had, as alleged, been involved in an insider trading transaction relating to Berkshire’s investment in Goldman Sachs was entirely nonsensical. I knew that the lawyers at Berkshire Hathaway had strongly discouraged Ajit from testifying, so it meant a lot to me that he went ahead. Barry Bloom, former dean of the Harvard School of Public Health; Richard Feacham, founding director of the Global Fund; Ashok Alexander, another McKinsey partner who had served with me on the Avahan board and worked for the Gates Foundation; and Anil Sood, my old friend from elementary school who worked at the World Bank—each of these men had taken time out of their busy schedules to testify in my defense and I was deeply grateful.