Ex-McKinsey head Rajat Gupta had told his "close friend" Ajit Jain, chief of Berkshire Hathaway's reinsurance business, that he had been "swindled and cheated" by hedge fund founder Raj Rajaratnam when he lost his USD 10 million in an investment fund.
New York: Ex-McKinsey head Rajat Gupta had told his "close friend" Ajit Jain, chief of Berkshire Hathaway's reinsurance business, that he had been "swindled and cheated" by hedge fund founder Raj Rajaratnam when he lost his USD 10 million in an investment fund.
India-born Jain, seen as a successor to Berkshire Hathaway's billionaire investor chief Warren Buffett, testified through video deposition as a defense witness in the insider trading trial of Gupta yesterday.
Gupta's lawyer Gary Naftalis showed the jury in Manhattan federal court Jain's video depostion, which was recorded on May 27. In the video, Jain is seen sitting in a chair answering questions posed to him by Naftalis.
In the testimony, which came after the prosecution rested its case, Jain talks about a conversation Gupta had with him during a lunch in January 2009 at a restaurant in Stamford, Connecticut.
"He (Gupta) told me, as best I can remember, that he had a 10 million investment with Rajaratnam in some venture and he had been gypped, swindled or cheated by Raj," Jain said.
"He lost his entire investment with Rajaratnam."
"So it wasn't just an issue of a bad investment," Naftalis asked. "Right," Jain said.
In response to a question by Naftalis, Jain said it was "unusual" for Gupta to share information about his investment with him.
Gupta's lawyers have argued in the case that he could not have shared secret boardroom information about Goldman Sachs and Proctor and Gamble with Rajaratnam since there was a falling out between the two when Gupta lost his investment.
A former McKinsey partner Anil Kumar had testified in the trial that Gupta felt Rajaratnam had taken his money behind his back and was being "evasive" about what had happened to his investment.
Jain began his testimony by saying he was born and educated in India and received his MBA from Harvard Business School. He had gone on to work at McKinsey and said Gupta had been "on the fast track" at the consulting giant, which at that time had only a handful of Indian employees.
Gupta then "ended up running McKinsey," Jain said.
He said he used to meet Gupta on various social occasions and described his relationship with him as a "completely social" one.
Jain is among the most important defence witnesses in the insider trading trial of Gupta, who has been accused of leaking to Rajaratnam information about a five billion dollar investment Jain's boss Buffett had lined up in Goldman Sachs at the height of the financial crisis in 2008.
The government has also accused Gupta of passing to Rajaratnam tips involving Goldman Sachs earnings in the first quarter of 2007 and fourth quarter of 2008.
Prosecutors say Gupta told Rajaratnam that Cincinnati- based Proctor and Gamble planned to sell its Folgers Coffee unit to J M Smucker.
Jain's deposition is expected to continue on Monday.
Before showing Jain's testimony, Naftalis brought on the witness stand Richard Feachem, a former under secretary general of the United Nations and former executive director of the Global Fund to Fight AIDS, Tuberculosis and Malaria.
Feachem said he has known Gupta since 2002 as the two worked together in the healthcare field. He described Gupta as a "man of exceptional honesty and truthfulness."
Prosecutors also played several FBI wiretaps of voicemail messages between Gupta and Rajaratnam in 2008.
In some voicemails, Gupta said he would be "calling to catch up whenever you get a chance, bye."
Earlier on Friday, federal prosecutors wrapped up their case with the testimony of their star witness Goldman Sachs Chief Executive Lloyd Blankfein.
Blankfein's testimony lasted three days during which the defense and prosecution posed often monotonous and mundane questions. Blankfein, however, gave the answers, sometimes even smiling widely.
Blankfein had also testified in Rajaratnam's trial last year in March.