The two-year sentence handed down to ex-McKinsey chief Rajat Gupta by a Manhattan judge has surprised many. The verdict is a departure from the principle that punishment should tally with the crime it seeks to redress. Gupta has been held guilty in a case of insider trading. The clinching evidence that swung the jury was a call made by Gupta to Galleon Group’s co-founder Raj Rajaratnam after a meeting of the Goldman Sachs board, on which the former was a member. That call was followed by a last minute set of trades in Goldman Sachs shares that benefited Rajaratnam hugely. Those trades suggest that Rajaratnam was in the know that the board had sanctioned a huge investment in the company by Warren Buffet’s Berkshire Hathaway. This, and other evidence of a long-standing friendship and business relationship with Rajaratnam, convinced the jury to hold Gupta guilty on three counts of securities fraud and one count of conspiracy. The jury was not unsympathetic. It recognised that Gupta epitomised the ‘American Dream’ — that he had risen to the top of America’s corporate hierarchy with no advantage and, after amassing wealth and fame, had done much by way of supporting philanthropic causes. There was no bias here.
Based on the circumstances of the case, the prosecution had demanded Gupta serve at least eight years in prison. The sentence of two years and a fine of $5 million for a man as rich as Gupta is more than just lenient — it is close to an exoneration. This show of lenience was clearly the result of a high-profile campaign to pressurise the judge to treat Gupta differently. Those canvassing for Gupta included social and business icons like Bill Gates and Kofi Annan. But that should not have mattered. A criminal guilty of crime must be treated on par with others similarly convicted. In Gupta’s case, his supporters demanded soft treatment for two unusual reasons. The first was that he had an illustrious career and, therefore, did not need to commit the crime he is accused of. The second was that in the midst of his career he had done much to help the needy of the world. The implicit message that such a judgement sends out is hard to justify: if, say, a poor person commits a crime, his or her social and economic station cannot be a cause for leniency when sentencing; but if a successful rich person engaging in philanthropy does so, the case is different. The other argument could be that corporate fraud is not a crime like murder, and so can be treated differently. But in a world where financial crises precipitated by widespread financial fraud have caused so much economic and social devastation, even that is impossible to digest.
Keywords: Rajat Gupta case, securities fraud, insider-trading cases
I cannot believe that the Judge was swayed by Bill Gates and Kofi Annan
support to this criminal.
Editorial is not worth appreciation; must understand the clear findings behind the scene operations; while Rajat is involved by some oversight or extra concern for someone, it is NOT established he made MONEY - true an error or crime but NOT intentional selfish.
Congratulations. Really a courageous comment. It is unfair for judges to be influenced by by subjective perception of a person and not go by hard evidence. as for philanthropy, only people who have amassed money can do it. Amassing money itself should be seen as a criminal act. instead, we see such people as virtuous. Minus these extraneous considerations, Gupta should deserve more punishment in law. You are absolutely right.
Of late it has become a habit of media to criticise judges and their judgements. Alleging that public opinion and high profile lobbying swayed the judgement in Mr. Gupta's favour (only two years instead of eight years demanded by the prosecution) would tantamount to questioning the integrity of the judges. India is a perfect example where public opinion run high in many high profile cases but we hardly criticize judgements for being biased by the public opinion.
The editorial seems subjective based on opinions rather than hard facts or detailed study of the case.
I do not agree with author's point of view. Conventionally, as
considered, jurisdiction suppose to be blind one for all. It does not
rely on intangible ,but vital,aspect of process. But here time to move
ahead from that rigid adherence. In view of Mr.Rajat Gupta case, he
has been bedrock for many of economic and more than that for social
initiative. Here comes the concept of "Utilitarianism" which says "the
larger good should be served no matter if at the cost of little evil".
Hera the "Larger Good" what Mr.Gupta has done should be recognized
rather his little "evil". The word "little" is very relative here so
we must understand the future prospects of his deeds that may serve
people immensely.
When people like Kofi Annan and Bill gates stand strong side by
someone, there is definitely a certain "larger" cause behind it.As far
as judicial leniency is concerned,now it's time to move on from
inflexible written laws to reckoning of empathic aspect of issue.
Humanity will be served better.
At least the court has taken less than 2 years to give a verdict on the
financial fraud case and Mr RJ got the jail term along with a fine of
Rs.25 crores or more but in india we are still dilly-dallying with the
Satyam computer case.
For the well being of democratic people,it is necessary to sentenced
every one,either he is famous or influential for doing crime of any
type.unbiased decision from judiciary is really admirable.If we will
think about poor people then he was always sentenced for doing crime.
Have you heard that any rich man or politician was sentenced in past for
doing crime,specially in India.So the government should do work for well
being but not to save the criminals.
Looking at the kind of support Rajat Gupta seems to be getting, it is apparent that in today's world the crimes committed are not as relevant as to who is committing them!
The excuse that he did not materially benefit from the act is neither here nor there. If we use the same yardstick, some of the people who were accused in the Rajiv Gandhi case and in jail for the last 20 years should be have been let off long ago as they did not actually kill him but only "conspired" to kill him.
Why Rajat Gupta did what he did (even if he did not immediately benefit from it) is not important. That he did, is. And this was not an act done in the spur of the moment, rather one that was premeditated and done by someone who knew exactly what he was doing.
If nations and mature democracies want to ensure equal justice for all, the focus should be on the crime and punishment it deserves. Not on who commits it.
I can't agree with this ed opn. I think the Judge acted humanely and
judiciously. Even under our Criminal Procedure Code it is not
mandatory for a Judge to sentence a first offender for the full term
possible and he can even release him under probation if the prescribed
sentence is less than 7 years imprisonment, etc. It is nothing like
rich vs poor accused, even the poor are eligible for such lenient
treatment. I feel the Judge should have been more lenient and released
him on probation with a direction that he dedicate those two years
sentence period solely for community service and do no business in
that period.
A well written editorial and fully agree with your views, a double standard was not expected from the judge. Whether RG benefitted from the conversation with Rajaratnam or not is the question, it is a crime and whoever commits it has to be treated at par in law which did not happen here in this case. If a rich person does a crime and offers more to Charity and take care of the needy can the law exonerate him?
When corruption is talked about in India, by Indians, about
themselves, do we perhaps think, that if action is taken against
certain people, no one will lead, because a person like Dr. Manmohan
Singh, was said to be corrupt, because allegedly his ministers were
directly corrupt. The same about corporations. If the leaders do not,
then who leads? Also, importantly, corporations are the employers, it
would appear, of the ordinary man, who people might see as more
fortunate and prosperous than the others, if that person is not self
employed. The corporation is a community, where people interact with
each other, it seems. When a man replaces a man accused of corruption,
why should he, and how should he, be different? It is easy to say that
a person is corrupt. Mr. Gupta was not even assumed to be, in anyone's
imagination.
Orange thief was the name of the lesson we had in our school classes. Orange thief was a kid who stole oranges to soothe his growling stomach. He get caught and get locked in a room. Story goes like the kid swallows whole oranges and thus escapes. Even though the theft was hunger induced, they are called thieves. If we watch the television ads we can observe that the lower class happens to be portrayed as thieves, be it the maid to steals, be it the security who loots the bank. But never will a filthy rich indulging in misappropriations to quench his unsatiating quench for more feature in an ad. The editorial is excellent. When other newspapers indulged in nonsensical coverage, one national newspaper had one whole page discussing virtues of Rajat Gupta, The Hindu stood for what newspapers are meant to be.
This 2 year term is surely discriminatory if one had read their intimate business relation ships.both are equally guilty.if not the court thought but surely not to this highly reduced 2 year term.Now rajaratnam/his lawyer/family can take cue of this editorial & argue before the judge gupta's reduced jail terms can be used as a precedent for other serious trials.In fact judge should've castigated gupta regarding the recommendation letters of gates/kofi annan.Does it not amount to interfering &influencing the judges though not by means of money etc.
The author is absolutely right. Rajat Gupta got away with a two year prison sentence, thanks to a lenient judge who even showered praise on this corporate crook. Petty thief's get much more & languish in jail for years. Justice comes with a price tag, Big Business can afford big time attorneys, who can work around the technicalities.I presume that's the way the justice system works in most developed nations. If one reads the sympathies pouring around from some of the politicians, big business & management gurus that this guy nurtured, one gets the clear understanding of how biased the rich & famous are towards their own ilk. He should have remained in his native country, where as we all know, such crooks thrive & none would dare touch him.
One would have expected a Harvard cum IIT graduate to show greater integrity & values than what Mr. Rajat Gupta has shown.
"Integrity without knowledge is weak and useless, and knowledge without integrity is dangerous and dreadful."
I disagree with the author of this article. I think the article brings out unjustified comparison. Rajat Gupta did a mistake for sure and he has been disgraced for it and now sentenced for it. The disgrace as he put it in his own words "a lifetime reputation is tarnished" is probably enough for his mistake. His work for middle-class Americans and his contribution to Americal corporate sector is huge. Poor men do not and can not go to the heights where Gupta was. So, the comparison between Rajat Gupta and poor is not straightforward here. If people like Bill Gates and Kofi Annan were supporting Gupta it was not for nothing. Let's not be always sentimental in bringing a comparison between poor and rich in such novice way.
There was no Evidince to prove that Mr.Gupta has benefited from the
information. In fact he hasn't. So, finally it comes to the point of
leniency in keeping a secret but not conspiracy as alleged. I don't see
any bias in the judgement. Further, high profile support probably
doesn't come without a rational reason.
To those who seem to be in a frenzy
clamouring to this corporate criminal's side: You are not the one to
determine or weigh the evidence because you are not privy to every
detail of the case. The case against him was
built and it was presented with due process. So in your desperate
sycophancy don't be quick to exonerate this man. Further it doesn't
matter whether this guy is beneficiary directly. And can you for sure
vouch that this guy wasn't a beneficiary? How? There are a lot of tacit
quid proquos in such highlevel shady deals. Shame on both Bill Gates
and Kofi Annan, who by the way aren't exact replicas of ethics and
fairness. The editorial has accurately brought to light the hypocrisy
and holier than thou corporate rogues.
cannot agree more with you
It is well known that the so called mistake done by Mr. Rajat Gupta was
nothing but the outcome of the INDIAN habit of sharing things. As for
this case, it doesn't seem like being done for personal benefit or so.
There are even incidences of student being asked to leave elite
institutions like MIT (Boston) for sharing past exam papers. This has to
be taken care of with the general mentality of public and not with harsh
rules.
The Editorial has erred in questioning the judgement per se on the quantum of punishment. If outside interference in the deliverance of justice reach such a crescendo, then it will be a dangerous trend. We do not expect judeges to be swayed by public outcry or media trial.
the judgement clearly said that Rajat is a good man but did a bad thing and hence he must be punished to send a strong signal to wall street. That sums up the whole issue.
Extending the logic to a crime committed by a poor man is not valid at all,as we are dealing with a financial crime committed by a financial wizard and there is no comparison at all.
Even in case of poor, there are instances of their sentence getting reduced due to their good behavior, remorse etc.
Jury verdict holding Gupta guilty is part of trend wherein non-US people
and companies are picked up and punished for what is wrong in US e.g.
UBS, Credit Suisse, BP, SAMSUNG etc. People working in / for /
associated with Wall street make money mostly by using information
received ahead of public.
Even after a detailed reporting of Rajat Gupta's Insider trading that
took for more than one year to build a case against him.It's a really
shameful that he is getting only two years of prison terms.
I am not sure but many Indians as we can see from others in comment
sections will be supporting Rajat Gupta's Trial double standards, as we
have done the same from centuries in our own country.
I also like to mention one more point, that it was proved in the court that Mr. Gupta was not a beneficiary from this deal. He hadn't gained anything(materialistically) from this deal. He just did the mistake to trust his old friend.
I respectfully beg to disagree with the views expressed above. I am
sure the judge had the facts of the case pinned down and was clear
that the sentence handed out was the right one.
Since no one can actually prove what transpired during that critical
converstaion between raj Ratman and Gupta, this case is purely
circumstantial. Cases based on circumstantial evidence have a way of
being fair. That's what the judicial system is designed to do.
The entire financial system that defaruded the globe a few years ago
have been let off scot free. Rajat Gupta is but a small fish in that
ocean of crime. Let the judicial system go after the ones that REALLY
matter.
I really appreciate your impartial editorial on the Punishment awarded
to Mr. Rajat Gupta
My congratulation to the Editorial Board .
Hardly, a few papers in the world may have the courage to opine like
yours.
I initially thought this editorial was pro Rajat Gupta. I was happy to
complete it and learn otherwise.
Talking generally, people who do any bad act might also have done one
or more good acts. If they are caught, how can lenience be shown
because they have done good? Punishment must equal the badness.
Simple!
Gupta had several mitigating factors to invite a lesser sentence. One of which was that he co-operated fully to help the prosecutors to nail the main accused and offender - Raja Rajaratnam who got 11 years in jail. Under American plea bargaining this is allowed...smaller fish may be offered leniency if they help nail the big fat fish who corrupt the entire system.
Common Hindu, you are whining about a verdict that happened in USA. What about your own country? Anyone ever (politician / buinessman / rich people) punished for any crime? Only poor people are punished, all rich and influence people always getaway. Atleast , here there is a system and that works irrespective of whether he/she is rich or famous or influential.
The editorial "A case of double standards" has analysed well, in an unbiased manner, every relevant aspect pertaining to the case against the ex-McKensey Chief Rajat Gupta and emphatically driven home the point that the sentence handed down by the Manhattan Judge has been far below the punishment which anyone else indulging in such a crime would have been awarded in the normal course. This is in absolute conformity with the prevailing public opinion in this regard. The Hindu deserves special praise for its frank views.
Listen He did not commit murder or rape.I know economic offence is diplorable but we should look at the other side of the accused also.
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