Rajat Gupta, Rajaratnam had animosity: defence lawyer

New York, March 3, 2012

The defence team of Goldman Sachs Group's Indian American director Rajat Gupta, accused of insider trading, is seeking material to show "animosity" between Gupta and convicted hedge fund billionaire Raj Rajaratnam.

Gupta's poor relationship with Rajaratnam, the Galleon Group co-founder convicted of profiting from his tips, would be a "key defence theme", one of Gupta's lawyers said.

In a letter to US District Judge Jed Rakoff Thursday, lawyer David Frankel said an unnamed "key government witness" discussed the "animosity between the two men" in a July 2010 interview with investigators from the Securities and Exchange Commission and Federal Bureau of Investigation.

In a hearing in January before Rakoff, who will preside over Gupta's criminal trial in May, prosecutors said Claes Dahlback, a Goldman Sachs director who is a former chief executive officer of Sweden's Investor AB, spoke to Gupta after Rajaratnam's October 2009 arrest.

"Dahlback asked Gupta if Gupta knew Rajaratnam," Rakoff said, quoting a memo summarising Dahlback's June interview with the government.

"Gupta responded that 'Rajaratnam was a bad man'. Gupta further stated Gupta lost money with Rajaratnam," Rakoff said, summarising the witness report.

Prosecutors said in January that Gupta was motivated to pass tips to Rajaratnam by friendship and by investments he held with the hedge-fund manager.

Defence lawyers may try to counter the government's case by showing friction between the two men.

In November, Rakoff ruled that Lloyd Blankfein, Goldman Sachs's CEO, could be questioned before Gupta's criminal trial begins. Rakoff said depositions of other Goldman Sachs officers must be conducted after the trial.

In his deposition in the SEC case, Blankfein said that representatives of the US Attorney's Office, the SEC and FBI had prepared him, in two sessions, for his testimony.

Reed Brodsky, one of the federal prosecutors in Gupta's criminal case, asked three-fourths of the questions in the sessions, Frankel said.

Gupta's lawyers have asked Rakoff to allow them to conduct additional questioning of Blankfein and production of the documents shown to him by prosecutors.

In a separate court filing, the SEC said that Gupta's lawyers shouldn't be allowed to conduct additional questioning of Blankfein. ...IANS/NRIpress.com

Rajat Gupta was a senior partner of McKinsey & Company. He joined the firm's New York office in 1973, assumed leadership of its Scandinavian offices in 1981, and joined the Chicago office in 1987. He assumed the role of office manager there in 1989, was elected managing director of the firm in 1994 and served until 2003. He stepped down as a partner of the firm in 2007.

McKinsey was founded by James O. McKinsey in 1926. More than 75 years later, the firm has grown into a global partnership serving three of the world's five largest companies and two-thirds of the Fortune 1000.McKinsey already had an established practice in budgeting and finance when he decided to test his theory that so-called "management engineers" could go beyond rescuing sick companies to helping healthy companies thrive and grow