Circle of Friends by Charles Gasparino

Author:Charles Gasparino
Language: eng
Format: epub
Publisher: HarperCollins

CHAPTER 10

SOMETHING GOOD IS GOING TO HAPPEN

Another reason Danielle Chiesi was such an effective player in the Rajaratnam circle of friends was that she put pressure on others to become better at breaking the law. Keep in mind, Chiesi wasn’t paid directly by Rajaratnam with cash, or at least investigators didn’t find evidence of money directly changing hands. She was paid with information.

Like Rajaratnam, Chiesi understood that the mosaic they were trying to assemble often required several pieces of inside information assembled from various sources; the compensation was in the sharing of that information until the mosaic was completed.

And she seemed to stop at nothing to meet that goal. Anil Kumar, the executive at McKinsey & Co., felt the most pressure in Rajaratnam’s circle to live up to her example.

Unlike with Chiesi, whom Rajaratnam liked, his relationship with Kumar was somewhat strained. First, Kumar worked for money. Even more, Rajaratnam considered him an Indian version of a WASP, with his Ivy League pedigree and family background. Later the relationship faltered because Kumar, for all his book smarts, couldn’t match Chiesi’s talent for gathering inside information.

That didn’t cause Rajaratnam to cut Kumar off—far from it. Despite his complaints about Kumar that were picked up on tape, Rajaratnam knew that it was always good to have friends in high places who were willing to break the law. And given Kumar’s position at McKinsey, there were few places higher.

McKinsey’s tentacles extended into every corner of corporate America, and if Kumar wanted to earn money from Galleon, he would be competing with the likes of the feisty Chiesi to provide Rajaratnam with the most valuable of that information.

Kumar and Rajaratnam, of course, shared many attributes aside from their education at one of the world’s best-known business schools. They were immigrants: Kumar from India, and Rajaratnam from Sri Lanka. They were both ambitious, Kumar in a quiet, analytical way, while Rajaratnam boasted a macho approach to trading, calling himself a “warrior.” He once told Kumar that trading during the 2008 financial crisis was like “fighting Muhammad Ali; I know he’s stronger and faster but you’re in the ring with him.”

And they shared a love for making money, as the wiretaps so vividly displayed. That said, Kumar was a reluctant addition to Rajaratnam’s circle of friends. “Raj seduced Kumar into doing insider trading,” was how Wadhwa believed the relationship took hold. The facts bear that out to a certain extent. Kumar was looking for a legitimate business relationship with Galleon, offering the consulting services that McKinsey is known for, and was seduced by the trappings of Rajaratnam’s success—the private planes, the houses, the expensive trips—and of course, his enormous wealth.

Once he decided to join the Rajaratnam circle, Kumar was paid $500,000 a year and offered a $1 million bonus in return for what Rajaratnam described as “valuable” information. Rajaratnam even had an idea on how to hide the obvious illegality of the arrangement. He suggested that Kumar set up a dummy company in Geneva, Switzerland.

Rajaratnam would

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