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Former McKinsey head Rajat Gupta hands himself in to the FBI

Today is a sad day for McKinsey alumni. We’ve been hearing about former global McKinsey head Rajat Gupta in relation to the Galleon case for a while now, but today it got serious. Rajat Gupta has turned himself in to the FBI and is facing charges that could lead to a maximum prison sentence of 105 years, although since Galleon founder Rajaratnam was sentenced to only 11 years I would not expect a higher sentence.

If he turns out to be guilty, it’s a really beating for everything young hard working McKinsey consultants are taught to believe in. Rajat Gupta was supposed to be a role model who grew the firm considerably and raised its global profile. He was chairman of The Global Fund to Fight AIDS, Tuberculosis and Malaria and of the India AIDS Initiative of the Gates Foundation. He was also appointed the special advisor on management reform to UN Secretary General Kofi Annan. He was everything Harvard Business School students and young McKinsey consultants were supposed to aspire to; a successful business man who was using his influence to make the world a better place.

And then we find out he was supposedly selling insider secrets he acquired from his board seats at Goldman Sachs, P&G and American Airlines? For money, of which he should have had more than enough? I’d really like to understand what could have motivated such actions. He has pleaded not guilty and we will need to see what his trial brings to light, but at least we can see a case of a severe error of judgement.

The whole case has also made me think of all the failed male role models in business we have seen in the last years – Madoff, Rajaratnam, Anil Kumar, Rajat Gupta, rogue traders Jerome Kerviel and Kweku Adoboli. You hear a lot about how women are only x% of CEOs and y% of billionaires, but the truth is, we are also 0% of rogue traders and close to 0% of fraudsters. I am not happy about it. Trust me, as a McKinsey alumn, it makes me really sad and also angry, because people like these are destroying the McKinsey name on any alumn’s CV. But I guess we see here the flipside of male ambition and greed, which leads to many success stories, but also to stories such as Rajat Gupta’s. I do hope he is innocent, but another senior McKinsey figure under arrest is bad news for all alumni.

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{ 2 comments… add one }

  • Basti November 10, 2011, 2:57 PM

    You write that Gupta and others at McKinsey are trying to “make the world a better place”. I’m wondering whether this is really the case. I was just reading a CNBC piece (http://www.cnbc.com/id/42014827/Is_There_a_Culture_of_Corruption_at_McKinsey) on whether corruption and conflicts of interests are not more widespread at the Firm than we think. The Guardian (
    http://www.guardian.co.uk/society/2011/nov/05/nhs-reforms-mckinsey-conflict-interest) has recently pointed out that there might be conflicts in the company’s advise to the British National Health Service. Greenpeace’s director has just published a piece (http://www.guardian.co.uk/commentisfree/2011/nov/10/mckinsey-rainforests-nhs-advice) highlighting how McKinsey’s advise to rainforest nations would lead to increased deforestation and how the company’s secrecy makes it impossible to evaluate whether they offer good quality work for public money. Looking at those examples I find it hard to argue that people at McKinsey are trying to make the world a better place when the practices of the company they are working for are leading to such destructive results.

    • High Flying Ladies
      Twitter: ueberfliegernet
      November 10, 2011, 3:08 PM

      Hi Basti – thanks for your comment. You raise a very valid point. There are many examples of projects that one could feel uneasy about. Maybe my phrasing wasn’t ideal… I agree with you that it is unrealistic to believe that all consultants are there to make the world a better place. I was referring specifically to Rajat Gupta only, who through his charitable and UN involvements had seemed like someone who was using his power for those purposes. Clearly, this turned out to be wrong.Thanks also for positng the cnbc link, it looks very interesting. It’s really disappointing. I agree that even though it is individuals, not the firm, once several very senior individuals at a firm, not to mention the global head, are involved in such unethical behaviour, you really need to question what kind of culture would reward and promote such people.

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