Old friends testify for Gupta at NY insider trial

Mon Jun 11, 2012 1:23pm EDT

* Ex-Goldman director denies tipping Rajaratnam

* Closing arguments in trial expected on Tuesday

By Grant McCool

NEW YORK, June 11 (Reuters) - Having decided not to take the witness stand at his insider-trading trial, former Goldman Sachs Group Inc board member Rajat Gupta on Monday called longtime friends, including an international development official who grew up with him in India, to testify on his behalf.

Gupta's defense in the U.S. District Court trial in New York is expected to wrap up on Monday. The jury would then hear closing arguments from prosecutors and his lawyers on Tuesday.

"I have always observed since my childhood days that Rajat is straightforward, direct, truthful and inspires trust," testified Anil Sood, 62, who was an official with the World Bank in Asia and Africa for 30 years. "I have seen him consistently demonstrate these values."

Gupta, 63, is charged with securities fraud and conspiracy over allegations he illegally breached his fiduciary duties by passing corporate secrets to former Galleon Group hedge fund manager Raj Rajaratnam, his one-time friend. Gupta denies the charges and his lawyers say the government's case is circumstantial and speculative.

He is calling up to six character witnesses as part of defense efforts to bring to the jury's attention his longtime standing as a philanthropist as he also rose to the top tier of the corporate world. Gupta headed the McKinsey & Co business management consultancy for nine years and served on several corporate boards, including Goldman and Procter & Gamble Co .

Prosecutors say Gupta abused those board positions by supplying Rajaratnam with stock tips involving Goldman and Procter & Gamble information between March 2007 and January 2009.

If convicted, Gupta faces a possible maximum of 25 years in prison. Rajaratnam was convicted at trial 13 months ago and is serving an 11-year prison sentence.

REASONABLE DOUBT

In order to convict Gupta, prosecutors have the burden of proving to the jury beyond a reasonable doubt that he defied his duties to the companies and that he had something to gain from tipping Rajaratnam, a onetime friend and business associate.

Expectations of Gupta himself taking the witness stand rose on Friday when his main lawyer, Gary Naftalis, said in court it was "highly likely" his client would testify. But in a letter on Sunday, the defense told U.S. District Judge Jed Rakoff that Gupta would not be a witness.

Another of Gupta's friends, Ashok Alexander, traveled from New Delhi to take the witness stand. Alexander testified he met Gupta in 1986 at McKinsey and later worked with him in different contexts, including with the public health foundation of India.

Alexander, 58, the country manager for the Bill & Melinda Gates Foundation in New Delhi, said he considers Gupta "to be a friend, but also a mentor and occasional coach."

At the start of Monday's proceedings, Rakoff angrily demanded that a defense lawyer quickly tell him who the next witness was. Rakoff has frequently shown impatience with the pace of the trial, which began on May 21 and had been scheduled to run three weeks. It is now in its fourth week.

The judge also said that for Tuesday's closing arguments, he would limit each side to three hours "to address jurors and the remaining portions should be addressed to the sidewalk."

The case is USA v Gupta, U.S. District Court for the Southern District of New York, No. 11-907.

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