Saturday, March 19, 2011
The second week of the Raj Rajaratnam trial was mostly devoted to the testimony (both direct and cross) of Anil Kumar, the former McKinsey executive, who previously pleaded guilty to securities fraud charges. In addition, the prosecutors played more of those many taped phone conversations between RR and other individuals discussing various acquisitions. The most interesting tape may have been the conversation between RR and Rajat Gupta, the former Goldman director, involving Goldman board discussions about possible deals. (The SEC has sued Gupta in an administrative proceeding; Gupta, in turn, has sued the SEC in federal court.)
Kumar testified that he gave "super confidential information" about McKinsey client AMD and other companies to RR in exchange for $2 million, some of which was paid through an offshore account set up in the name of his housekeeper. RR's defense attorney aggressively cross-examined Kumar, accusing him of a "monstrous lie" in setting up the phony account and fraud on the IRS. RR's attorney also argued that the money paid by RR was for legitimate advice and that the information was not material nonpublic information.
After Kumar's testimony concluded, the prosecutor played still more taped conversations, this time RR's calls with former Intel employee Rajiv Goel (who also has pleaded guilty and is expected to testify). In one of them RR said he had received information about PeopleSupport "because one of our guys is on the board."