Ashok Malik

Rs 295

Sandipan Deb’s Fallen Angel: The Making and Unmaking of Rajat Gupta is a racy account of the rise and fall of a man who typified both Indian middle-class aspiration and the American dream. Till his October 2012 conviction and sentencing on charges of insider trading, Rajat Gupta was an iconic figure.

The first Indian and the youngest man to head the global consulting firm McKinsey & Company, a corporate leader and philanthropist held in high regard by political leaders and CEOs alike, a stalwart contributor to the battle against disease in the underdeveloped world with his work on several foundations, one of the promoters of the Indian School of Business in Hyderabad: Gupta had “given back” to society, to his adopted country, to the country of his birth several times over. Today, he is just another name — the biggest name, fine — in one of the largest white-collar scandals in American business history.
What went wrong? Was there a flaw in Gupta’s character, always hidden and perhaps largely dormant through his 40-odd years in America, and his seamless transition from Harvard Business School to McKinsey? Was it a sudden surge of greed? Was it a moment of weakness? Was it an incremental problem, sourced in the corporate culture of the instant millions and technology boom of the mid-1990s, an era that changed McKinsey’s ethic and Gupta’s career forever?
In a remarkably non-judgemental book — frankly, at the end of it one can’t help but feel a tinge of sympathy for Gupta — Deb refuses to play judge. He makes alluring references to that period in the 1990s when Gupta became McKinsey’s managing director and presided over a company buffeted by change and challenges. The dotcom boom shook up the offices of McKinsey. Young associates and employees of the company found their college peers making a fortune in Silicon Valley. “Though the overall attrition rate did not rise significantly”, Deb writes, “the Firm lost some of its best people to the technology boom. In 1999 alone, the San Francisco office lost 50 people — fully one-third of its original strength.”
All this led to “serious internal debate” in McKinsey: “The traditionalists… wanted McKinsey to stay the way it had always been, above the hurly-burly, its consultants more monks than mercenaries.” Other voices had alternative opinions: “The stock markets were on fire. At the very least, should not the Firm go public? That would unlock enormous value and certainly make the partners extremely wealthy. There were even suggestions that McKinsey should start its own venture capital fund, or its own dotcoms.”
Gupta was the man at the helm and had to reconcile these positions. He couldn’t allow the “McKinsey mystique” to be destroyed by letting its shares be traded on the stock market and having investors interrogate the “intensely private and excellence-over-profits culture of the Firm”. This was, after all, a conservative, old-school workplace that required its employees to mandatorily wear Fedora hats till the 1960s. However, some things did change. Since many of the start-ups “clamouring for advice at McKinsey’s gates” could not afford its fees, “McKinsey began taking fees in client stock rather than cash.”
Far from being the neutral third umpire and disinterested elder statesman, McKinsey began to develop a direct, financial stake in its clients. Profits from sale of client stock would be shared by partners. “For the Firm’s senior partners,” writes Deb, “1998 and 1999 were quite a bonanza. The minimum Gupta would have been making annually in those years would have been $5-6 million.” Ulysses had been seduced by the Sirens.

It had started out so differently. As Deb recounts, Gupta’s humble-to-hacienda story begins in Delhi. The son of a Gandhian freedom fighter and journalist, he loses his father at 15. Two years later his mother dies, leaving him the head of a household of four siblings — two younger sisters and a kid brother. Determined to stay together and not be adopted by different relatives, the siblings invite a spinster aunt to stay with them and begin a great journey. Gupta comes 15th in the IIT entrance examination, one of the toughest in the world, and becomes a star at IIT Delhi: good student, excellent debater, soccer player, general secretary of the students’ association, leader, friend and comrade. He even finds time to woo his future wife and fellow IITian.
At the end of his four years at IIT, Gupta has worked hard enough to give himself choices that any young person would kill for: a job at ITC, a seat at IIM Ahmedabad, admission and financial aid for a Harvard MBA. He opts for the third, and America rewards him for his faith. The outsider who made it big, the immigrant who climbed to the upper echelons of the establishment, the middle-class boy who became exceedingly rich, the first-rate global citizen: Gupta goes on to tick every box.
It ends with a betrayal, an internal betrayal that Gupta has to negotiate with his conscience and an external betrayal embodied by Anil Kumar, another IIT alumnus who was Gupta’s colleague and protégé at McKinsey. It was Kumar’s evidence that eventually indicted Gupta but allowed Kumar to get away for his cooperation with the prosecution. Deb describes Kumar’s role in a riveting chapter (“The One that Got Away”) and leaves the reader in no doubt that he (Kumar) is a thuggish rogue who deserves opprobrium far more than Gupta does.
Kumar is Judas — and yet Gupta is no blameless Nazarene. “Gupta and Kumar had been close enough,” Deb writes, “to start a consulting firm on the side, officially owned by their wives, Anita Gupta and Malvika Kumar. This firm, Mindspirit LLC, set up in 2001 while Gupta was still head of McKinsey, had at least one client, the database company infoGroup… founded by (fellow) IIT alumnus Vinod Gupta… Rajat Gupta and Kumar advised Vinod Gupta on strategic matters. Mindspirit was compensated through 200,000 stock options, which the firm exercised for an undisclosed sum.”
After such knowledge, should one temper forgiveness? Read the book, reach your own conclusions.