Goldman’s scandal-prone board

By Felix Salmon
April 15, 2010
stepped down from Goldman's board of directors last month -- the only question is why it took him so long. Galleon's Raj Rajaratnam was charged back in October, along with McKinsey director Anil Kumar; Gupta was not only the former head of McKinsey but was and is a close friend and business associate of Rajaratnam:


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It’s pretty clear now why Rajat Gupta stepped down from Goldman’s board of directors last month — the only question is why it took him so long. Galleon’s Raj Rajaratnam was charged back in October, along with McKinsey director Anil Kumar; Gupta was not only the former head of McKinsey but was and is a close friend and business associate of Rajaratnam:

Messrs. Rajaratnam and Gupta spoke frequently, and Mr. Gupta was invited to attend parties hosted by Galleon, an individual close to the situation says.

In 2006, Mr. Rajaratnam, Mr. Gupta and Mark Schwartz, a former Goldman executive, formed Taj Capital, a hedge-fund and private-equity firm focused on South Asia. The firm, since renamed New Silk Route, manages $1.4 billion in private-equity investments.

All of that alone places Gupta far too close to Rajaratnam for Goldman to be happy with Gupta on its board. But today it gets much worse: the WSJ’s Susan Pulliam reports that Gupta is being investigated for examined with respect to insider trading in Goldman shares, via his friend Raj.

What is it with Goldman and these unfortunate events surrounding its board? First there was the scandalous secret meeting with Hank Paulson in Moscow. Then there were the dubious stock transactions by Stephen Friedman. Then there was the embarrassing interview with Ruth Simmons, which was swiftly followed by her departure from the board. And now this. What can it all mean?

Update: souhaite, in the comments, reminds me of the Meg Whitman affair in 2002. And a friendly PR person emails to tell me that there’s “an important distinction” between being investigated and being examined. Gupta’s being examined, according to the WSJ, he’s not being investigated.

4 comments

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Don’t forget Meg Whitman’s misadventures in GS stock and subsequent resignation:
http://money.cnn.com/2002/12/20/news/whi tman/index.htm

(Not so recent, but I’m sincerely hoping this isn’t forgotten during the CA governor campaign.)

Posted by souhaite | Report as abusive

time to give the Goldman board a spring clean. need to get some fresh ideas to sort the company. elizabeth warren anyone? who else would you put there.

Posted by savo | Report as abusive

I bet if the Goldman board, and the top execs at GS were evaluated by Hare’s Psychopathy Checklist-Revised (PCL-R), the majority would be classified as clinical psychopaths.

Posted by inboulder | Report as abusive

Whenever I read comments such as above and stronger versions of the same, I have only one serious observation to note :- Where are all the “sharp” AG’s and serious investigative reporters to stop the arrogance of dead beat CEO’s and director’s that cannot think of wise honest policy’s to beat the opposition?
Are their actions “Reckless disregard and purposed intent to mislead” the trust investor’s place with them?
Then of course is the Greed of the Investing Public. They do not know of to play the game. Tobytwo

Posted by Tobytwo | Report as abusive