Gupta trial: Closet call and promotional fund meetings

Thu May 31, 2012 5:00pm EDT
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By Grant McCool

NEW YORK (Reuters) - To convict former Goldman Sachs Group Inc board member Rajat Gupta of insider trading, prosecutors must convince the jury he benefited from his relationship with Raj Rajaratnam, the now-imprisoned hedge fund manager he is accused of tipping.

On Thursday, the prosecution put on the witness stand a former marketing manager at Rajaratnam's Galleon Group who testified that he participated in meetings in the United Arab Emirates with Gupta to promote Galleon funds to potential investors.

The jurors in the U.S. District Court trial in New York were also given another glimpse into the secrecy of one of the corporate deals at the center of case. A Goldman Sachs executive said he made a critical telephone call from a janitor's closet during a New York Yankees baseball game.

"I introduced him the way he was introduced to me, the new chairman of Galleon International," Ayad Alhadi, the former Galleon managing director of marketing, testified.

He said he and Gupta attended meetings with banks and pension funds on March 31 and April 1, 2008, in Abu Dhabi.

Asked by prosecutor Reed Brodsky whether Gupta said anything about Rajaratnam in the meetings, Alhadi said: "Yes ... it was a positive opinion of his investment capabilities."

According to prosecutors, Rajaratnam appointed Gupta chairman of Galleon International in 2008 and awarded him an ownership stake. But under questioning later by a defense lawyer, Robin Wilcox, Alhadi said he "never received notice that it was consummated."

Gupta, 63, has pleaded not guilty to charges of providing Rajaratnam with boardroom secrets between March 2007 and January 2009 while he was a director at Goldman Sachs and Procter & Gamble Co. His lawyers say the government's case is circumstantial and speculative and that Gupta had nothing to gain financially by giving inside stock tips to Rajaratnam, his onetime friend and business associate.   Continued...

Rajat Gupta, a former Goldman Sachs Group Inc and Procter & Gamble board member, arrives at Manhattan Federal Court in New York, May 29, 2012. REUTERS/Andrew Burton