Rajat Gupta
Rajat Kumar Gupta is an Indian-American business executive who, as CEO, was the first foreign-born managing director of management consultancy firm McKinsey & Company from 1994 to 2003. In 2012, he was convicted of insider trading and spent two years in prison. Gupta was a board member of corporations including Goldman Sachs, Procter & Gamble and American Airlines, as well as an advisor to non-profit organizations such as the Bill & Melinda Gates Foundation and The Global Fund to Fight AIDS, Tuberculosis and Malaria. He is the co-founder of the Indian School of Business, American India Foundation, New Silk Route and Scandent Solutions.
Gupta was convicted in June 2012 of four criminal felony counts of conspiracy and securities fraud in the Galleon scandal. He was sentenced in October 2012 to two years in prison, an additional year on supervised release and ordered to pay $5 million in fines. His conviction was upheld by a Federal Appeals Court on 25 March 2014. He then lodged an appeal of his conviction with the U.S. Supreme Court which was subsequently upheld in April 2015. An application to remain free until the court determined whether it would hear the appeal was denied in June 2014, leaving Gupta having to commence his two-year prison term that month. He was released on monitored house arrest in January 2016 and from house arrest in March 2016.
Early life and education
Rajat Gupta was born in Calcutta, India, to a Bengali father Ashwini Gupta and a Punjabi mother Pran Kumari. His father was a journalist for Ananda Publishers and a professor in Calcutta's Ripon College prior to that. His mother taught at a Montessori school. Gupta has 3 siblings.When Gupta was five the family moved to New Delhi, where his father went to start the Delhi-edition of the newspaper Hindustan Standard. Gupta's father died when Gupta was sixteen and his mother died two years later. Now orphans, Gupta and his siblings "decided to live by ourselves. It was pretty unusual in those days."
He was a student at Modern School in New Delhi. After high school, Gupta ranked 15th in the nation in the entrance exam for the Indian Institutes of Technology, IIT JEE. He received a Bachelor of Technology degree in Mechanical Engineering from IIT Delhi in 1971. His economics professor at IIT Delhi was Subramanian Swamy, who wrote his recommendation letter when he applied for Harvard Business School. Declining a job from the prestigious domestic firm ITC Limited, he received an MBA from Harvard Business School in 1973. Gupta graduated with distinction as a Baker Scholar.Helyar, John, Carol Hymowitz and Mehul Srivastava. . Bloomberg Markets Magazine. May 16, 2011. Gupta remarked that the first time he saw an airplane was when he flew to ITC at their request to inform them he would be attending Harvard.
Career
McKinsey & Company
Gupta joined McKinsey & Company in 1973 as one of the earliest Indian Americans at the consultancy. He was initially rejected because of inadequate work experience, a decision that was overturned after his Harvard Business School professor Walter J. Salmon called Ron Daniel, then head of the New York office and later also the managing director of McKinsey, wrote on Gupta's behalf.Gupta's mentors at McKinsey included Ron Daniel, the former managing director who as senior partner first hired Gupta into the New York office, and Anupam Puri, the first Indian at the firm and eventual senior partner. He, in turn, mentored Anil Kumar as another early Indian-American at the consultancy. Gupta and Kumar "were the face of McKinsey in India." According to The Financial Times, "the two operated as a forceful double-act to secure business for McKinsey, win access in Washington and build a brotherhood of donors around the Hyderabad-based ISB and a handful of social initiatives."
Gupta began his career in New York before moving to Scandinavia to become the head of McKinsey offices in 1981. He did well in what was then considered a "backwater" area; this is where he first made his mark. Elected senior partner in 1984, he became head of the Chicago office in 1990.
In 1994 he was elected the firm's first managing director born outside of the US, and then re-elected twice in 1997 and 2000. Gupta is widely regarded as one of the first Indians to successfully break through the glass ceiling, as the first Indian-born CEO of a multinational corporation. During Gupta's time as head of McKinsey, the firm opened offices in 23 new countries and doubled its consultant base to 891 partners, increasing revenue 280 percent to $3.4 billion. His annual salary was estimated at $5–10 million USD.
However Gupta's tenure was marked by controversy. When Gupta joined McKinsey, it was a small partnership run according to the high standards of its early leader, Marvin Bower, but by the time Gupta became managing director, McKinsey was under pressure from an increasingly competitive market, and Gupta's expansion efforts were said to have watered down McKinsey's vaunted principles. Enron, closely identified with McKinsey, collapsed during his time as managing director. During the dot-com bubble he and Anil Kumar created a program for McKinsey to accept payment from its clients in stock. Gupta's accountability for the shifting of standards was weighed differently by different observers, and some defended him noting that the managing director's job was like trying to "herd cats"; Gupta himself described it as "a sort of servant-leader job," with "at least 150, if not 400, leaders". In what was seen as a reaction against Gupta's aggressive firm expansion, Gupta's successor Ian Davis was elected by "emphasizing the need for a return to the McKinsey heritage".
After completing three full terms and nearly a decade as head of the firm, Gupta became senior partner again in 2003 and senior partner emeritus in 2007. According to close friends when he stepped down as McKinsey management director, Gupta lost what NYU's Lechner called "the halo effect" including the tremendous status afforded by his previous role. Gupta reportedly began to express a certain resentment about money, as his peers in Silicon Valley and Wall Street at the time "raking in staggering amounts of money while Gupta soldiered on with a mere senior partner's millions".
Gupta maintained an office, executive assistant, email and phone at McKinsey and Company after 2007, and maintained the title "senior partner emeritus" of the firm. He also continued to receive a salary from McKinsey as senior partner emeritus, totaling $6 million in 2008 and $2.5 million for each of the following three years. However, in the wake of subsequent scandals a McKinsey spokesperson was quoted as saying, "Our firm no longer has a professional relationship with Rajat Gupta." According to NDTV, "sources tell us that the firm dropped Mr Gupta from its alumni database, and called clients worldwide to say that they would have nothing to do with him going forward." The manner in which the firm severed ties with its former head attracted some controversy. After his release from prison, Gupta continued to be rebuffed by McKinsey.
Outside McKinsey & Company
In 1997 Gupta co-founded the Indian School of Business with friend and fellow senior partner Anil Kumar. The school was ranked number 13 in the world by The Financial Times in its Global MBA Rankings 2011. Gupta and Kumar have both since resigned as chairman and executive board director respectively.Before stepping down as managing director he co-founded Scandent Solutions with Ramesh Vangal and the American India Foundation with Victor Menezes and Lata Krishnan. After McKinsey Gupta co-founded and chaired the private equity firm New Silk Route, formerly named Taj Capital Partners, with Parag Saxena and Victor Menezes.
In 2005, five years after Raj Rajaratnam "gave generously to two of Gupta's favorite Indian causes", Gupta, Rajaratnam and Ravi Trehan, an investor via BroadStreet Group and another friend of Gupta, co-founded Voyager Capital, 80% owned by Rajaratnam and capitalized at $50 million.
Gupta has served on several corporate boards as a director during his career. He became a member of the board of Procter & Gamble in 2007, and held that post until March 2011. He was also a member of the board of investment bank Goldman Sachs from 2006 until the expiration of his term in 2010. Gupta was also the non-executive chairman of Genpact from 2007 until March 2011. He also served on the board of AMR, the parent company of American Airlines, from 2008 until 2011, and on the board of Harman International from 2009 to 2011. Gupta has also served on the board of Russian bank Sberbank, and as a managing advisor to Symphony Technology Group.
Gupta has also served as a director of various financial groups. In addition to his work at Goldman Sachs, Gupta served as an advisory partner with Fjord Capital Partners and as chairman of the advisory board for Clutch Group. Gupta was also a member of the advisory board for OmniCapital Group.
Philanthropy
Gupta's philanthropic, charitable, and volunteer efforts mainly focus on the areas of education, global health, and global business.In the past, Gupta has been involved with a number of universities and other educational institutions, volunteering and serving as chairman and member of several boards and councils. As of 2011, he has either resigned or taken leaves of absence from the boards on which he served as director or chairman.
In June 1995, Gupta was elected to the University of Chicago's board of trustees. He also served as a member of the Yale President's Council.
Gupta co-founded the Indian Institute of Technology Alumni Association. He was chairman and served on the advisory board.
With Anil Kumar, Gupta co-founded the Indian School of Business, and was chairman of the governing and executive boards.
Gupta served as chairman of the board of associates of the Harvard Business School, and was a member of the board of governors for the Lauder Institute of Management & International Studies at The Wharton School, University of Pennsylvania. Additionally he served on the Dean's advisory council at the MIT Sloan School of Management and on the advisory board of Northwestern University's Kellogg School of Management.
Gupta was a member of the Dean's advisory board of Tsinghua University School of Economics and Management, and was on the board of Skolkovo.
Gupta was on the boards of Millennium Promise and the Pratham India Education Initiative.
In 2009, he was elected as a Member of the American Academy of Arts and Sciences. In 2011, he became a founding member of the Young India Fellowship. He is the former Co-Chairman of the United Nations Association of America.
Gupta's activities in global health include serving as a founding board member and then chairman for The Global Fund to Fight AIDS, Tuberculosis and Malaria. He served from April 2007 to March 2011. He was the co-founder and founding chairman of the Public Health Foundation of India. He was on the board of the Emergency Management and Research Institute, Health Management Research Institute, International Partnership for Microbicides, Board for the Global Health Council, the Global Health Council and the Harvard School of Public Health, and the Weill Cornell Medical College. He was chairman of the advisory board and the India AIDS initiative of The Gates Foundation and its Global Health Initiative until 2011. He is a former member of the United Nations Commission on the Private Sector and Development,. In March 2006, he was named the founding chairman for the Public Health Foundation of India. He remained in that position until resigning in March 2011.
In addition, he was the co-founder and co-chairman of the American India Foundation, the largest diaspora philanthropy organization focused on India and based out of the US. He began the organization in response to an earthquake that struck India in 2001, with its initial goal to help victims. From 2006 to 2011, he served as a trustee for the Rockefeller Foundation.
Throughout his career, Gupta has been a part of various global business initiatives. He was previously the chairman of the International Chamber of Commerce, and was appointed as special assistant to the Secretary General for Management Reform for UN Secretary General Kofi Annan in 2005. From 2008 to 2010, Gupta was a member of the foundation board for the World Economic Forum. Gupta was chairman of the U.S.-India Business Council from 2002 to 2005. He served on Indian Prime Minister Manmohan Singh's global advisory council from its inception until early 2012.