Ex McKinsey chief Rajat Gupta goes on leave from his PE fund

Former McKinsey boss Rajat Gupta, accused by the US Securities Exchange Commission of conspiring with hedge fund executive Raj Rajaratnam in an insider trading scam, has opted for 'leave of absence' from New Silk Route, a PE fund founded by him.

Gupta, who continues to be the chairman of the prestigious Indian School of Business (ISB), Hyerabad, earlier this week quit from the boards of Genpact, American Airlines and Harman International. He had earlier quit from the boards of Procter & Gamble and Goldman Sachs.

The SEC filed civil charges against Gupta, accusing him of passing on sensitive information from P&G and Goldman Sachs to Sri Lankan-origin hedge fund executive Rajaratnam. Gupta's lawyers have denied the charges and say he did not gain from the alleged tip-offs.

Gupta, one of the most articulate spokesman for India at international business fora, decided to take 'leave of absence' from New Silk Route, the $1.4 billion PE fund that he co-founded five years ago, to avoid any embarrassments. The fund, which tracks investment opportunities in India, claimed that the issues relating to Gupta had nothing to do with the fund or any of its portfolio firms.

Gupta was the chief executive of McKinsey till 2007 and has been associated with several educational institutions including the Harvard Business School and the Kellogg School of management. Kolkata-born Gupta, who graduated from IIT Delhi and did his MBA from Harvard, was one of the first Indian consultants at McKinsey, when he joined in 1973.

Last year, federal prosecutors began probing Gupta's involvement in allegedly providing insider information to Galleon hedge fund, which was founded by Rajaratnam. Later, the investigations focused on Anil Kumar, another ex-IITian and senior partner at McKinsey – and also co-founder of the ISB – who co-operated with the prosecutors.