The conviction of Rajat Gupta and lessons for India

Rajat Gupta, the poster boy of Indian Professionals, was finally found to be Guilty of Insider Trading.

Most of us in India are crying foul saying that this was another example of Indians being prosecuted. One could hear people saying that the US law enforcement agencies went after Rajat Gupta to discredit Indian professionals at large, by trying to send a message that we are dishonest.

Do I believe in the "Victimization of an Indian" theory?

The answer is not whether I believe the victimisation theory or not. The answer is a question – Did Rajat Gupta flout the law of the Land or not?

Many of us in India believe that the grounds on which the prosecution based its case and the verdict was given, was at the most circumstantial. We also believe that the conversations that took place are normal between two people who know each other well and are from similar background. The reason for this belief in India is that the strict parameters which define Insider Trading are not only not present but whatever are present are only mostly on paper.

Almost everybody in India who deals in stocks relies heavily on “TIPS”. Tips are nothing but another name for inside information. So most of us in India do not understand what the fuss is all about.

In India, there are cartels of Brokers called “Operators” who work in cahoots with Managements or those privy to confidential information to manipulate stock prices. Most of the retail investors would claim to know someone who has access to the Operators and will buy or sell stocks based on the belief that their information is based on what the the Operators are privy to.

For us here in India, the taped conversations between Rajaratnam and Rajat Gupta sound like normal banter that each one of us has daily with our friends and acquaintances. So the reaction is natural. It is also natural here that most of us believe that the success of India and Indians in America is not palatable to the larger affluent Global audiences. It is like – "OMG how can they be successful - these good for nothing brown rascals - if they are, then they must be doing something illegal!"

We are veering away from the fundamental question – did Rajat Gupta break the Law? The plea of people supporting him, that he did not benefit greatly from this and what he was disclosing was normal chit chat between two people in powerful positions, does not hold too much water.

Rajat Gupta was at the pinnacle of Corporate America, he should know the Law. Ignorance of Law does not excuse one and especially a person of his stature.

All the evidence point out that he divulged sensitive information to a third party which benefitted from the revelations. This is a clear breach of Law and there is no ambiguity here.

If there is a breach of Law then the party to the Breach is Guilty – Indian or no Indian. And the Guilty party has to be punished as per the Law. The question of discrimination against Indians is purely secondary. The primary aspect of the case is that Rajat Gupta flouted the Law and hence is guilty and should be punished.

This has a very important lessons for us – no matter how high and mighty one might be, one cannot escape if he/she has broken the Law.

Sadly this is something that is absent in India. Flouting the Law is a norm rather than an exception in India and everybody believes that they can walk away scot free by the dint of their connections or by the dint of money power.

This is what the Civil Society Movement in India headed by Anna Hazare is fighting to reverse. All of us who  believe in the interests of India should take the example of Rajat Gupta and laud the efforts of Civil Society to try and bring the highest office in India – PMO - also within the purview of Anti-Corruption bill.