Mightiest of the fallen

Rajat Gupta may be a victim of the anger directed at financial leadership since 2008, but he has been treated fairly by the US legal system

By resisting pressures from all quarters in the Rajat Gupta case, District Judge Jed Rakoff has delivered justice. There were the demands of the US Federal Sentencing Guidelines which judges are expected to follow, but Rakoff has set them aside in earlier insider trading cases. The defence had tried to persuade him of the merits of sending Gupta to Rwanda to benefit humankind, as against the waste of imprisoning a valuable mind. Gupta's associates and allies like Kofi Annan and Bill Gates were mail-bombing Rakoff with character certificates. This is a routine defence strategy prior to sentencing, but letters of support rarely bear such illustrious names. Finally, there was the public demand to vengefully punish white-collar crime, which has been visible in forums and media polls. They may not be statistically accurate but they compellingly convey the impression that in matters of financial impropriety, the US public is about as forgiving as a lynch mob.

Circumstantial evidence suggests that Gupta is a victim of public expectations, a case of collateral damage in recession-bound America. He was picked up by the dragnet of Operation Perfect Hedge, the biggest crackdown ever against insider trading. Its probable date of inception is significant: 2008. Wall Street was on its knees, having binged too hard on derivative instruments backed by assets as unreal as acid dreams. While the world was learning to do with less, US homes were being repossessed, jobs were being lost and investments wiped out, the buccaneers responsible for the crash went unpunished. Rather, profligate banks, financial institutions and corporations were being rewarded with bailouts.

But the government needed to show that it was doing something, and blood sacrifices in the top echelons of finance may have become politically necessary. It would have been risky to put the spotlight on the crash itself, since institutions which the government wanted to protect were complicit. Unluckily for Gupta, insider trading may have looked like an easier target. As the investigation has shown, it is routine, pervasive and easily detected. Rajat Gupta is only the mightiest of the fallen. His stature has obscured the fact that he is only one of about 60 executives who have been found guilty.

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