Rajat Gupta's smoking gun

Does ISB have a course on business ethics? This tape -- featuring the Chairman of ISB Board -- will be a great educational aid in that course.

Listening to that tape leads WSJ's Evan Newmark to wonder, "How come Gupta hasn’t yet been criminally charged for his shenanigans?" Newmark's commentary highlights the incriminating parts of the conversation. One of them is the part where Gupta reveals Goldman Sachs's plans. I want to excerpt the other part. Here's Newmark:

Oddly, I don’t think Gupta’s misuse of his Goldman board position was the ugliest feature of the call. That distinction goes to the way Gupta blithely accepted Rajarantam’s shady dealings with Anil Kumar, Gupta’s McKinsey protégé.

Here’s part of their exchange:

Raj Rajaratnam: Now, from, for the last three or four, I mean four or five years, I’ve given him a million bucks a year.

Rajat Gupta: Yeah, yeah.

Raj Rajaratnam: After taxes, off shore cash.

Rajat Gupta: Yeah, yeah.

Those Gupta “yeahs” are not “yeah, I’m sort of listening to you, Raj”, those are “yeah, you’re right, Raj. That Anil is an ungrateful leech.”

Please listen to the wiretap of the call yourself. The tone of Gupta’s voice will tell you much more than simply reading a transcript.

Here was the former Managing Partner of McKinsey acknowledging that Rajaratnam is paying offshore cash to a McKinsey partner, violating McKinsey’s internal disclosure and conflict of interest rules, as well as evading U.S. taxes.

A “crime” by Gupta? Probably not. More a sin of omission. But disgraceful? Absolutely.