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.
