Rajat Gupta's Tragic Ambition

Jurors weighing the insider-trading case against Raj Rajaratnam in a Manhattan federal courtroom are hearing plenty about Rajat Gupta, the former head of McKinsey. They've listened to a wiretap on which he confided to Rajaratnam that the Goldman Sachs (GS) board, on which he sat, discussed acquiring Wachovia or American International Group (AIG). They've watched Goldman Sachs Chief Executive Officer Lloyd Blankfein testify that Gupta violated the company's ethics code for directors. Prosecutors have called Gupta, who has not appeared as a witness, an unindicted co-conspirator, and the Securities and Exchange Commission has filed an administrative action against him for his alleged role in the scandal. Still, nothing explains why Gupta, once one of the world's most trusted advisers to companies, would risk his reputation by sharing confidential information with a hedge fund manager.

Gupta, 62, led McKinsey, the global consulting firm, from 1994 to 2003. He sat on the boards of some of the largest multinationals, including Goldman Sachs and Procter & Gamble. He raised millions for charity, hung out with the Prime Minister of India, and attended President Barack Obama's first state dinner at the White House. He divided his time between a waterfront home in Westport, Conn., that once belonged to J.C. Penney, a Manhattan apartment, and a Florida getaway.