Wednesday, 20 June 2012


June 19, 2012 

(The target audience my Management Students) 


We discussed in the class room how Satyam Scam is a classic example of failure of Professional Ethics by Ramalingam Raju. Rajat Gupta is another sad example of mixing his Personal Ethics with Professional Ethics as done by Ramalingam Raju in Satyam Computers.

I have been emphasizing that Personal Ethics and Business Ethics (includes obviously professional ethics) are different and for different purposes. You must make sure that as Professional Manager, learn to distinguish and separate your Personal Ethics from Professional Ethics. (SEE MY ARTICLES POSTED on the subject of Personal Ethics, Business Ethics and Corporate Governance in February and March 2012).

Rajat Gupta was a Managing Partner of McKinsey & Co and Director of Goldman Sachs Group and Proctor & Gamble and so many other eminent positions. He is now convicted by a Federal Jury in Manhattan on June 15 for Insider Trading. He is found to have leaked sensitive information to his friend Raj Rajaratnam, Hedge Fund Manager. This can land Rajat Gupta into prison sentence of 20 to 25 years for securities fraud and conspiracy (remember in noble India, even the murderer gets much lesser imprisonment). It is a sad event for all great professionals and also lesson that nobody is beyond the law in America (of course not in our noble India). Raj Rajaratnam, his friend, who cofounded Galleon Group LLC was earlier convicted and sentenced to 11 years in prison for the crime of Insider Trading. Gupta is the latest example of mixing up personal agenda with the professional ethics.

We had seen in the class room of Business Ethics that personal ethics is what is good and bad for your personal life, whereas business/professional ethics is what is good and bad for your business/profession. Don’t mix the two.

The sheer greed of personal life led Ramalingam Raju to influence his Business Ethics and commit a fraud of Rs. 7,500 crores in Satyam Computers, (overall total loss as computed by RBI is Rs. 20,000 crores) In the case of Rajat Gupta, it is really strange, because he had everything what one possibly wants in the life, but it appears like Ramalingam Raju, he wanted MORE. Otherwise why did he pass on sensitive inside information not once but several times. As a Goldman Sachs Director, he passed on sensitive information to his friend Raj Rajaratnam, who made huge profits using this information. Yes, he may have been influenced by his friend Rajaratnam, but Rajat Gupta who is a role model for any professional in the world should have realized the tenets of his professional ethics, which gives an impression that what underlined the friendship between them is greed and barren selfish motive.

What is important for any professional or professional manager is the determination and ability to discriminate between Personal Ethics and Professional Ethics and adhere to the professional code regardless of lure and temptation of your personal ethics. This many times, unfortunately, with many people at different stages of life, borders on utter selfishness, greed and lust for money.

As said by me earlier in my articles, Personal Ethics with many are not necessarily based on selflessness or morals, it could be selfishness or dominated with self-interest. For such managers, it would be a big challenge to live upto the tenets of business ethics or professional ethics. 

 Prof. Ram Mallar.
© 2012
Mallarr Law Associates LLP
3, Silver Cascade, 110AA, Near Ruby Mills, Senapati Bapat
Marg, Dadar West. Mumbai 400 028.
Tel. No.: 2432 28413 (3 lines)


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