Rajat Gupta Apologizes To Family, Colleagues;Sentence is Too Harsh, Reacts India

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By Sreeja V N | October 25, 2012 10:50 PM EST

Rajat Gupta, the former Goldman Sachs Group (NYSE:GS) board member who was sentenced Wednesday to two years in jail for insider trading, has apologized to his family and colleagues.

In a statement before the verdict, Gupta said that he had lost his reputation, PTI reported.

The 63-year-old Indian-American said: "The last 18 months have been the most challenging period of my life since I lost my parents as a teenager. I have lost my reputation that I have built over a lifetime," Reuters reported.

“I feel terrible that they have been burdened with totally undeserved negative attention. I apologize to them and ask for their forgiveness," he said.

However, Gupta did not take responsibility for the charges against him and did not admit any wrong-doing.

Gupta, once considered the icon of the U.S. corporate world, was convicted by a jury which found him guilty of three counts of securities fraud, including insider trading. The now disgraced Indian-American corporate honcho had leaked board room secrets to his close friend and Galleon Group hedge fund founder, Raj Rajaratnam, between September and October of 2008.

U.S. District Judge Jed Rakoff sentenced Gupta to two years in jail and a year of supervised release after his jail term besides a fine of $5 million.

Gupta faced a maximum sentence of 20 years for insider trading, and prosecutors had demanded a ten-year jail term while his lawyers had asked for a probation period with mandatory community service in Rwanda.

He has been asked to report for serving the prison sentence Jan. 8, 2013, while his lawyers said they were appealing against the verdict. A U.S. appeals court in New York would hear his plea Thursday.

The legal world believes that Gupta has got a much lighter sentence considering the gravity of his crime which included “betrayal “of faith. Most of the defendants who were convicted of security frauds and insider trading have got much higher sentence than Gupta. Rajaratnam is serving an 11-year jail term for security frauds.

The judge said he was considering Gupta’s extraordinary charity work for handing him a lighter sentence.

Referring to Gupta's charity records influencing the verdict, Andrew Stoltmann, an attorney and investor rights advocate based in Chicago, told Reuters: "His Mother Teresa-like halo had warranted a sentence that was little more than a slap on the wrist. He had such an important role at some of these companies that it is kind of the ultimate betrayal of trust."

Reaction in India

Rajat Gupta, who was born in India and later climbed the corporate ladder in the U.S., has many friends and supporters in India and most of them felt devastated by the verdict.    

“I’m really, really distraught by this… He was committed public health causes, he didn’t have the mindset of a criminal wanting to make money,” K. Sujatha Rao, a former official with India’s Health Ministry and a friend of Gupta, told the Wall Street Journal.

“I personally believe that the sentence is very extreme. It should have been duly weighted against his sterling track record on the social front, public policy and extraordinary work,” Rana Kapoor, managing director and chief executive officer of Yes Bank Ltd, was quoted as saying by the WSJ.

Gupta had maintained his ties with India and was involved in several philanthropic activities in the country. He was often discussed among the corporate and management circles as an ultimate icon of the Indo-U.S. corporate dream.

“I’m emotional about this. Gupta made us believe that we don’t just have to be the India managers of big companies but lead from the very top and make India matter, ” Abhinav Rishi, a 27-year-old student at the Indian Institute of Management, Ahmedabad, told the New York Times.

“Whatever happens, I am most saddened and still can’t believe it,” Rural Development Minister Jairam Ramesh said on the sidelines of a corporate event on Gupta’s conviction.

“To put him in jail even for a day is gross injustice. It will hurt millions of people who would have benefited from his humanitarian work,” said Rajesh Kumar, head of marketing at Tata Motors.  

Gupta, who is considered the most influential person arrested in the U.S. for insider trading, was also the first Indian-American to head the McKinsey & Co. consulting firm.

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