* Trial of ex-McKinsey head, Goldman director Rajat Gupta
* Protege Anil Kumar called by prosecution in NY court
* Gupta denies insider-trading charges over board secrets
By Grant McCool
NEW YORK, June 1 When business guru Rajat Gupta
and his protege, Anil Kumar, worked together to expand
management consultancy McKinsey & Co in the 1990s, a date in
court years later surely was not part of the plan.
At Gupta's criminal trial on insider-trading charges on
Friday, Kumar testified for the prosecution, describing the
connections both of them had to now-imprisoned Galleon Group
hedge fund founder Raj Rajaratnam.
Kumar, who has pleaded guilty to tipping Rajaratnam with
inside information he gleaned from his work at McKinsey,
described discussions the three men had in 2006 about forming an
investment fund focused on South Asia.
"Mr Gupta wanted to create one of the best asset management
funds in India," said Kumar, 53, speaking almost in a monotone
before a jury in U.S. District Court in New York.
The former senior partner at McKinsey said Gupta "wanted
something much broader than a hedge fund" and later in the year
after other partners were on board, "they had a joint aspiration
to raise about $2 billion."
Gupta, 63, once sat at the pinnacle of the business world,
spending 34 years at McKinsey and rising to the role of global
head. He has pleaded not guilty to charges that he provided
Rajaratnam with confidential information between March 2007 and
January 2009 while serving on the boards of Goldman Sachs Group
Inc and Procter & Gamble Co.
His lawyers say the government's case is circumstantial and
speculative and that Gupta had nothing to gain financially by
giving inside stock tips to Rajaratnam, his onetime friend and
Kumar is a key witness for the prosecution because he knew
both Rajaratnam and Gupta for decades. Gupta and Kumar were born
in India and Rajaratnam in Sri Lanka. They are all U.S.
He also testified at Rajaratnam's insider-trading trial in
the same courthouse a year ago. The hedge fund manager was
convicted by a jury and is serving an 11-year prison term.
When Kumar walked to the witness stand, hands held in front
of him and eyes cast slightly downward, Gupta's gaze followed
him. Gupta then raised his eyebrows as he turned to his wife and
daughters in the gallery, who have attended the trial since it
began on May 21.
Kumar's testimony is expected to continue on Monday. Kumar
is cooperating in the case in hopes of being granted leniency
when he is sentenced later this year. He pleaded guilty to one
charge of securities fraud and one charge of conspiracy in
A spokeswoman for McKinsey & Co declined to comment on the
Also next week, in what is expected to be the final week of
the trial, Goldman Chief Executive Officer Lloyd Blankfein is
set to testify for the prosecution.
In last year's Rajaratnam trial, the jury heard dozens of
conversations recorded by FBI computers on court-approved
wiretaps of Rajaratnam's mobile phone.
In one call on July 29, 2008, between Rajaratnam and Gupta,
the pair are heard discussing Kumar. The jurors in the Gupta
trial heard the same wiretap played in court last week.
"He is constantly ... scheming is not the right word, but
constantly trying to figure what other people's angles are,"
Rajaratnam said to Gupta.
At another point Rajaratnam says of Kumar, "I'm getting a
feeling that he's trying to ... you know, be a mini Rajat,
Rajaratnam goes on to say: "And I, you know, honestly,
Rajat, I'm giving him a million dollars a year for doing
Gupta then says, "I think you're being very generous."
The case is USA v Gupta, U.S. District Court for the
Southern District of New York, No. 11-907.