India Reacts to Gupta\'s Sentence

Craig Ruttle/Associated PressRajat Gupta, right, leaving the federal court in New York on Wednesday after he was sentenced to two years imprisonment for insider trading.

The sentencing of Rajat Gupta, the Kolkata-born former Goldman Sachs director, to two years in prison for leaking confidential information has prompted shock and sadness among many of his longtime admirers and friends in India, some of whom even started a Web site to voice their support for him. But some younger Indians, business students who represent the future of corporate India, say they are torn between revering Mr. Gupta as a role model and viewing him as a criminal.

Mr. Gupta was sentenced Wednesday in United States District Court in Manhattan for leaking corporate secrets to Raj Rajaratnam, a former hedge fund manager who himself is serving an 11-year sentence. Mr. Gupta was also fined $5 million.

Abhinav Rishi, a 27-year-old student at the Indian Institute of Management, Ahmedabad, said Wednesday he had hoped that Judge Jed S. Rakoff would sentence Mr. Gupta to community service instead of prison time.

“I'm emotional about this,” Mr. Rishi said. Referring to Mr. Gupta, he said, “He 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.”

Mr. Gupta, 63, who was educated at the Indian Institute of Technology, Delhi, and at Harvard Business School, was the first Indian-born executive to lead the consulting firm McKinsey & Company . In addition to Goldman Sachs, he served on the boards of Procter & Gamble and American Airlines.

Udit Sood, a 23-year-old student at the Indian Institute of Management, Calcutta, admitted that his sympathies for Mr. Gupta were stirred in part because of his Indian origins. “He is one of us and I don't want to see him rotting in a United States jail,” he said. “After reading so much about him, I don't want to see him in chains.”

In India, Mr. Gupta was deeply admired for preserving his strong ties with the country, and for co-founding the prestigious Indian School of Business in Hyderabad. Orphaned at 18, he now lives in Connecticut with his wife and four daughters. In addition to his Wall Street successes, he won international respect for his philanthropic work on health and education. He sat on the boards of the Global Fund for AIDS, Tuberculosis and Malaria and the Bill and Melinda Gates Foundation.

In 2011, Mr. Gupta's image was shattered wh en he was arrested in a sweeping investigation of insider trading on Wall Street, led by another Indian-American, Preet Bharara, the United States attorney in Manhattan. A jury convicted Mr. Gupta in June. “His conduct has forever tarnished a once-sterling reputation that took years to cultivate,” Mr. Bharara's office said in reaction to Wednesday's sentence.

Prosecutors had sought a 10-year prison term for Mr. Gupta. Bill Gates and Kofi Annan, the former United Nations secretary general, were among many who wrote to Judge Rakoff urging leniency. Judge Rakoff, while imposing a considerably shorter sentence than the government had asked for, also rejected Mr. Gupta's lawyers' request that he be sent to Rwanda to help fight H.I.V. and malaria, rather than to prison.

Some Indian corporate leaders said even a two-year sentence was too much. “To put him in jail even for a day is gross injustice,” said Rajesh Kumar, head of marketing at Tata Motors, who knew Mr. Gupta in college. “It will hurt millions of people who would have benefited from his humanitarian work.”

But some business students, while calling Mr. Gupta an “inspiration,” said that justice needed to run its course, in the interest of deterring future corporate malfeasance.

“A number of good deeds don't wipe out a bad one,” said Prashant Sarkar, a 27-year-old student at the Indian Institute of Management, Ahmedabad. “Nobody is above the law and there should be equal standards for punishing people.”

Even as the curtain falls on Mr. Gupta's trial, people are still expressing incredulity at the charges. “Whatever happens, I am most saddened and still can't believe it,” Rural Development Minister Jairam Ramesh told India Ink before the sentencing.

Speculation about Mr. Gupta's motives continues. Some speculate that the former Goldman Sachs director wanted to make the jump from millionaire to billionaire, as Mr. Rajaratnam had. But his supporters insist that he was never greedy and didn't make money from the illegal trading carried out by Mr. Rajaratnam.

Judge Rakoff, who presided over the month long trial, wrote in his sentencing order that “there is no doubt that Gupta, though not immediately profiting from tipping Rajaratnam, viewed it as an avenue to future benefits, opportunities, and even excitement.”

“Thus, by any measure, Gupta's criminal acts represented the very antithesis of the values he had previously embodied,” he wrote.

Despite intense public interest in Mr. Gupta's fate, experts say that his case is unlikely to have any practical impact in reducing insider trading in India. “Public memory is short,” said Rajiv Luthra, head of Luthra and Luthra Law Offices in Delhi. “And investigative agencies are not enforcing the laws properly.”

The lawyer and anticorruption activist Prashant Bhushan scoffed, saying that India is a playground for bigger scam s than leaking boardroom secrets. “Insider trading is passé here, here we have loot of public resources by corporations with the connivance of public servants,” he said. “But people know they can get away with anything.”

But Mohan Gopal, who heads the Rajiv Gandhi Institute for Contemporary Studies, stressed that this case should be studied in India, especially now, when calls for holding the powerful to account are growing stronger.

“Two Americans of Indian origin are at the forefront of a battle over accountability of the rich and the powerful to common people in the United States, not on the streets, but in the courts,” said Mr. Gopal, referring to Mr. Gupta and Mr. Bharara.

“This would not have been possible if the same two gentlemen were operating in their country of origin. This must change,” he added.

The swiftness of the trials of Mr. Rajaratnam and Mr. Gupta, at least when compared to the Indian courts, was seen as one aspect of the American justice system's ability to confront business tycoons. Some observers said it would have been highly unlikely for Mr. Gupta to face prosecution for such dealings in India, or that it would have taken years.

The case against Ramalinga Raju, who confessed to falsifying records of his company Satyam Computers in 2009, is still ongoing. At the time, it was billed as corporate India's biggest-ever scandal, though it has since been overtaken in scale by allegations of improprieties in telecommunications and the coal industry.

Mr. Gopal, a former board member of the Securities and Exchange Board of India - the counterpart of the Securities and Exchange Commission in the United States - said that in India, the “chances of punishing a corporate leader for violation of securities laws are very slender.”

He blamed this lapse on the securities board itself, which he said is weak on enforcement; the Indian police, which he said do not have adequ ate power to enforce securities laws; and the lack of strong and independent prosecutors.

Whether or not Mr. Gupta's case has alarmed corporate criminals in India, it appears to have spooked young business students, some of whom say they now see a spectrum of corruption extending from the bureaucracy all the way to elite boardrooms.

At the Indian Institute of Management campuses, students say issues of ethics and corporate social responsibility are given special attention in their coursework. But in the business world, they say, these issues seem only to be given prominence at a few companies, like the Tata Group. And not all of them will get jobs there.

“My friends and I are very apprehensive that we may be asked to resort to unethical means,” said Aswin Murali, 26, who is studying at the Indian Institute of Management, Calcutta. “I hope the corporate world cleans up before we get pulled down.”