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57 of 60 people found the following review helpful
5.0 out of 5 stars A high octane thriller, June 6, 2013
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This review is from: The Billionaire's Apprentice: The Rise of The Indian-American Elite and The Fall of The Galleon Hedge Fund (Kindle Edition)
This is not a novel but it is every bit as gripping as any thriller you are likely to pick up.

It was just a question of time before someone wrote a book about these historical business events and Anita Raghavan just happened to be the first. I am sure that there will be other books, possibly many other books but they will have a high bar to cross because Raghavan's book is so darn good - meticulously researched and compellingly written.

There is no doubt that the business events discussed are highly significant. The former head of the world's premier consulting firm, who was on the board of many blue chip firms including the pre-eminent financial juggernaut, freely giving privileged information to a shady hedge fund operator - this is not an everyday scenario. Or maybe it is but it was certainly a deep secret and no other comparable case has surfaced as yet.

This is an important business story by any yardstick. But there is a sub-text - many of the principals came from India, Pakistan, Sri Lanka and Bangla Desh so it also a story of South Asians and how they have risen from obscurity and hard-scrabble roots to the very top of establishment America. I am South Asian myself so this resonated deeply in a bitter sweet way. Yes, those convicted were South Asian, but so were those who prosecuted them and held them legally accountable for their transgressions. A true tale of immigrant progress.

Raj Rajaratnam, a scrappy Sri Lankan born trader, started a hedge fund called Galleon Group and built it into one of the world's biggest and most influential. He managed billions of dollars and became a billionaire himself. He also lived the high life with private jets flying important customers to choice Super Bowl seats and exotic paid ladies at orchestrated events. For more on this see "The Buy Side" by Turney Duff. His enormous success owed much to a network of informers who fed him confidential information that he used brilliantly to juice his outsize returns. Rajaratnam had strong street smarts and a penetrating insight into human foibles that he used to ruthlessly manipulate persons.

For example, Anil Kumar was a McKinsey Director and former classmate at Wharton. McKinsey directors live well but don't own private islands and helicopters to take them there. Rajaratnam commiserated with Kumar about his inadequate compensation, extolled his acumen and analytical abilities and then paid him a million dollars to make use of his "skills". This money was funneled through a foreign bank account in the name of his housekeeper - an arrangement both flimsy and illegal and this came back to haunt Kumar. Gradually it became clear to Kumar that the "skills" Rajaratnam needed was the information he was privy to in his capacity as a McKinsey consultant. He balked, but by them he had accepted the money and the trap was sprung and he started coughing up the information sought.

The grand panjandrum was Rajat Gupta the thrice elected global head of consulting giant McKinsey who was perhaps one of the most respected executives in the world. He was on the board of Goldman Sachs, Procter & Gamble, American Airlines and firms of that caliber. The CEOs of both Gillette and P & G have said that the merger of the two firms would not have happened without mediation by Gupta who was both liked and trusted by both sides. He was very wealthy, but not wealthy beyond the dreams of avarice. Full disclosure: Rajat Gupta was a guest speaker at my course in Columbia Business School and what he said was so honest and inspirational that I also invited him to speak at my class at London Business School. He outlined a view of business behavior that resonated deeply with students and that I believe business badly needs. I am still struggling to reconcile what he said and his career at McKinsey with what he was accused - and convicted - of doing later.

Rajat Gupta started several ventures with Rajaratnam some of which were successful and some which were not. Wire taps on Rajaratnam's phone showed that Gupta called him seconds after important board meetings - such as at the time of financial turmoil when Warren Buffet agreed to invest five billion dollars in Goldman. Rajaratnam's firm then made significant and highly profitable trades. A lot of circumstantial evidence but enormously strong and convincing to the jury which convicted him.

Rajat did enormous good in many fields and was the force behind the Indian School of Business - one of the premier business schools in India. He was the iconic role-model of many Indians including those like Sanjay Wadhwa who, as deputy chief of the SEC's Market Abuse Section, investigated and built the case against him. Quite possibly Gupta also paved the way for South Asians like Preet Bharara, the US Attorney for the Southern District of New York, to reach the high positions they occupied. Bharara was the one who eventually convicted Gupta.

Raghavan takes a Ken Follett approach in her book. If you read "Eye of the Needle" you will recollect that it goes back and forth in time and gradually ties all the characters together. Similarly Raghavan begins with a White House dinner for the visiting Indian Prime Minister, goes back to colonial India and Gupta's father's role in the freedom struggle, back to the US and Gupta's legal travails, back to India during the turmoil and bloodshed of partition and how Wadhwa's parents were caught up in it and so on. I just happen to like this approach and found that Raghavan converted a tale of high level business chicanery into a gripping narrative.

The unanswered question is WHY? Why did Gupta, as accomplished and successful an executive as you can find, consort with persons of the ilk of Rajaratnam and readily give away confidential information?

Rajaratnam's brother Rengan was quoted in the press as saying "For years these guys were sitting around in sports clubs and exchanging information. That wasn't a crime. And now we immigrants do the same thing and it is?" Presumably Rajaratnam believes this. Does Rajat Gupta also believe it?

We do not know much about the rarefied circles in which Rajat mingled so comfortably. Was his behavior the outlier? Or the norm and his misfortune was that he got caught?

I am waiting for the book that will shed light on this.
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Showing 1-2 of 2 posts in this discussion
Initial post: Jun 28, 2013, 10:14:45 AM PDT
Superb review! Thank you for posting it.

In reply to an earlier post on Jun 28, 2013, 11:09:56 AM PDT
Thank you!
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