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Rajaratnam and Bharara: Intra-South Asian courtroom battle

By S. MITRA KALITA

It seems like a courtroom drama made for Bollywood: The Sri Lankan hedge-fund kingpin being prosecuted by a fellow immigrant, the Indian-born U.S. attorney for Manhattan.

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Raj Rajaratnam-pic: courtesy: bloomberg news

But the case against Raj Rajaratnam is very much an American story. Mr. Rajaratnam, the billionaire founder of the Galleon Group, and Preet Bharara -- the Indian-born, Ivy League prosecutor – are both South Asian, a term that actually gained popularity (and possibility) overseas to refer to the collective people from India, Pakistan, Sri Lanka, among others. The relatively small immigrant group has formed a power elite in the U.S., from positions in corporate boardrooms to the governor's mansion.

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Preet Bharara

An estimated 2.5 million Indians live in the U.S., less than 1% of the total population. Yet their median income is a whopping 80% higher than the average American's.

And in recent years, South Asians have found disproportionate success in technology and financial services, businesses at the core of the insider-trading allegations unveiled last week.

Authorities say Mr. Rajaratnam conspired with Intel Capital employee Rajiv Goel and Anil Kumar, a director of McKinsey & Co. global management-consulting firm, between 2006 and 2008. All three received M.B.A.'s from the Wharton School. All have denied wrongdoing.

Unlike earlier generations of immigrants, the 1965 law opening U.S. borders abandoned a quota system and attracted the brightest and best-educated foreigners. That allowed South Asians particularly to penetrate and dominate highly skilled professions, said Ravi Batra, a prominent Indian-American lawyer in New York City.

Mr. Rajaratnam was born and raised in Sri Lanka, an island nation off India's coast and the site of a long-running civil war. He studied engineering at the University of Sussex in England and graduated from Wharton in 1983.

The prosecutor in the case, Mr. Bharara, earned degrees from Harvard and Columbia Law School. He was born in Ferozepur, India, and arrived in the U.S. as an infant.

“South Asians found success in technology and financial services, businesses at the core of the allegations unveiled last week…”
Honored by the North American South Asian Bar Association in 2007, Mr. Bharara invoked his heritage—and those of his fellow desi lawyers.

"We should remember that in each of those acts of migration—repeated hundreds of thousands of time—lies a quantum of courage and will and daring that few of us will ever have to summon," he said, according to a news release from the bar association. "…South Asian lawyers have a special obligation and a unique perspective—because of who we are, where we came from, and how we got here. … We must try to use our profession to bring justice and equality and dignity to those who need help."

In the insider-trading scandal, Mr. Bharara "has to walk as fine a line as there is," said Sonjui L. Kumar, president of the bar association. "White prosecutors arrest people all the time, but here you have this financial mogul who happens to be South Asian and then you have a South Asian attorney. That's just where we are. … It's a testament of where we've come as a community."

Such prominent South Asians include PepsiCo Inc. Chief Executive Indra Nooyi, Louisiana Gov. Bobby Jindal and Silicon Valley financier Vinod Khosla.

A boom in high-technology and financial services helped lure South Asians from medicine and engineering into consulting and investment banking. Others turned entrepreneurial; one Duke University study found that more than a quarter of all tech start-ups in the U.S. between 1995 and 2005 were initiated by immigrants.

Through the dot-com heydays of the late 1990s into the present, organizations like the Indus Entrepreneurs, better known as TiE, have drawn venture capitalists, private equity and hedge funds looking for the next big idea. Indian immigrants became known for their innovations, said TiE Silicon Valley president Vish Mishra. The personal and professional blurred as the meetings offered talk and tastes of home—alongside access to mentors, funding, survival strategies for America.

"How do you develop friendships in a new country?" explained Mr. Mishra, also the venture director at Clearstone Venture Partners. "Rajiv Goel was Rajaratnam's college mate. That happens in every society in every community."

For some immigrants, the attraction to hedge funds was logical. Jobs were competitive and lucrative, yet favored the mathematically minded. Compared to the cozy world of investment banking, some South Asians might have found hedge funds to be more of a meritocracy, according to observers.

Some Indians fear resentment springing from the emerging scandal. "A level of success invites a level of scrutiny, that is always a natural consequence of success," said Rajiv Khanna, president of the India-America Chamber of Commerce. "It's not good publicity for the Indian businessman, but does [Bernard] Madoff define all the Jewish businessmen?"

"There've been so many scandals. This is one of several hundred," added Vivek Wadhwa, co-author of the Duke study and also a Harvard researcher who has examined immigrant education and networks.

"All it shows that Indians are coming of age," he said. "We have our bad apples too." [courtesy: The Wall Street Journal]

Related: "Powerful evidence for defendants" - In Fraud Case, a Deal That Lost Millions - New York Times, Oct 21, 2009

9 Comments

Its too premature to conclude if Rajaratnam is a wrong-doer. He has invested in his native Sri Lanka for over 2 decades and helped both those Lankan ventures he invested in and the country.

He helped many social causes both in the South and the North of the Island where his philanthrophy was transparent and known to GoSL. The oblique suggestion he financially backed the LTTE is patently false because he was investing heavily in the country and as a shrewd businessman would do nothing to endanger his vast fortune in the blue chip conglomerates here.

Wall Street financial sources already indicate this arrest has much to do with competition and the desire among powerful sources to ensure carpetbaggers” do not become too big in a sensitive high-stakes game where many are keen to maintain the Caucasian domination.

That the man out to legally lynch him Preet Barara is South Asian is not without significance in a court room battle that will engage keen global media attention where every effort will be made to prevent the suspicion the arrest has nothing to do with the foreign origin of the Lankan American investor. Bill Gates himself was hauled up before the Monopolies Commission and was rendered almost to tears until he broke free.

The Australian Press Mogul Rupert Murdoch was for long subject to torment by the American financial empire and has since shifted to that stupendously growing powerhouse – China.

George Soros was given a torrid time by Malayasia’s Mahathir and is no favourite of the US financial Mafia. Rajaratnam, younger than most recognized global financiers, clearly is no Bernard Madoff and according to reputed Colombo business sources - his associates - would not engage in ventures where his name may be at risk.

ISS

Posted by: Ilaya Seran Senguttuvan | October 20, 2009 11:31 PM

People complain about the Sri Lankan Justice System, yet if Raj were here in Sri Lanka he would not even have been arrested. In fact his Criminal activities would be part and parcel of being a Rich and Untouchable Sri Lankan.

Unfortunately for him, he's not immune from the eyes of the law in the USA.

And the US District Attorney's office is smart. They deliberately chose this Indian Prosecutor so that there will be no Media controversy to make it look like the Big Bad White People are Ganging up on the Poor Poor Immigrant Billionaire

Posted by: Devinda Fernando | October 21, 2009 02:38 AM

Intersting; Everywhere, Indians are the main enemies of SL Tamils

Posted by: Ravi | October 21, 2009 02:05 PM

ISS's analysis that as as a shrewd businessman Raj would do nothing to endanger his vast fortune [by helping LTTE] in the blue chip conglomerates in Sri Lanka is totally flawed. If he was really shrewd then why he is behind bars now. Insider trading is not something new in US. Knowing that why this so called shrewd businessman made the same mistakes which most of the traders do.

What is shrewedness. Someone said that real shrewed man will never manifest his shrewedness. Those who know Raj personally claims that he is big boaster.

Raj is the chip of the old block. Had the FBI caught him in the TRO net he would have been spared under insider trading, I believe.

Posted by: Sappani | October 21, 2009 10:34 PM

I agree with Devinda

Mahinda the man who looted Helping Hambantota funds is president.

Gota who made money through nephew ambassador in MIG deals and got Lasantha killed for exposing it is def secy

Basil the "Mister 10%" is power behind the throne

Sajin vaas & brother have turned Sri Lanka airlines & Mihin air into losses by siphoning off profits

PB is restored to grace

Lalith K is penalised for not giving a share to medamulana

Yep Devinda at last you've told the truth

But then again Raj is Tamil. So the Racist Rajapakse regime wont give him any help but only misappropriate his funds

Posted by: Satyajith | October 21, 2009 10:36 PM

Ravi,

Please allow me to offer a dissenting view from yours. Indians are NOT the enemies of Lankans. It is and will be the other way about. Every time a major political, man-made or natural disaster struck us, it is India that came to our aid immediately. It is India we looked to and appealed for solace.

On the Tamil issue Karunanidhi did a volte face at the last moment for reasons you know. Lankan Tamils must learn to formulate our own home-grown solutions. Tamilnadu and India looked supportively of the Tamils under trouble here while not jettisoning the wider cause of GoSL susceptibilities and the Sinhala people, which is how it should be.

Don’t forget beginning from the British times Lankan Tamils, have wronged the Indian Tamils till the late 1970s – under a false notion of superiority that was delusional. That may be because what we saw as Indian Tamil here were nothing but the wretched of the earth then. The worm has since changed and so the equation. The Kallathonis are travelling in the opposite direction. I don’t rejoice here but that is the reality.

Many Sinhalese who always looked at India negatively are changing. I am sure you will not disagree, it is in our interest to integrate culturally, economically and in every other useful way with this growing political and economic power. Who wants to make an enemy of a neighbouring country when the option of a friendly relationship is all plain to see?

It is time we work out a formulae among ourselves - particularly at a time when even those Sinhalese considered to be extremist, anti-Indian and difficult - are now beginning to look at matters afresh.

I am happy to note a group of young Tamils overseas – new faces – are working for a more inclusive leadership along these lines. Besides, don't forget in many ways all of us are Indian in many ways. As that learned humanist Dr Colvin R de Silva remarked "we all came from there - the difference is when and from which part of India?"

ISS

Posted by: Ilaya Seran Senguttuvan | October 22, 2009 06:23 AM

Sappani’s intervention is interesting. NYSE’s and its legislative hounds’ record on busting insider trading violations is certainly not lillywhite. Ivan Boesky (“Greed is good and healthy”)escaped with a light sentence and even had a Hollywood hit movie “Wall Street” doing his piece with Michael Douglas playing Gordon Gecko.

The venerable Dow Jones was stained too with their colleague Hongkong millionaire David Li getting out lightly. And so Michael Milliken – the billionaire, though he hit the can for a short while. The Worshipful IBM, the Wall Street-American icon, came under the spotlight when CEO Palissano was taken in and then released.

Young Jon Rowland of Teamtalk, the hugely popular Football Website, too did not get into too much trouble although the charge was one of serious insider trading. So this notion of a level playing field does not apply when it comes to mega-bucks in the Big Apple.

So let’s see what kind of justice-fairplay Rajaratnam, who has pleaded Not Guilty, gets...TRRO functioned in the open for many years in Colombo, the US and elsewhere with bank accounts in the more prominent ones...

The Cbo Press reported they were engaged in social and welfare work and were recipients of funds from all major NGOs and service organizations. Their fate was linked to that of world power play when the LTTE was banned by most countries. NHDA, UDA are two State bodies that worked in conjunction with the TRRO in the North…

While you and I can have different views of the definition of “shrewdness” I know at least two Chairmen of the very top blue-chips here who hosted, did business and socialized with Raj and from whom I gathered he was soft-spoken and reticent.

I did not know him or meet him but I hope the fate of the gamey ralahamy – as in that humorous Sinhala village folklore - does not visit him
when his chips appear to be down.

ISS

Posted by: Ilaya Seran Senguttuvan | October 22, 2009 07:57 PM

*** But then again Raj is Tamil. So the Racist Rajapakse regime wont give him any help but only misappropriate his funds ***

Satyajith,

LOL! You TAMIL TERRORISTS really crack me up! I suppose Douglas Devananda, Pillayan, Karuna, Thondaman, Jeyaraj Fernandopulle, et al are Not part of your equation? Oh Yes, I totally forgot! They Stopped beign "Tamil" because they stopped supporting your TERRORIST BACKED SEPARAIST AGENDA.... Only a TRUE TAMIL would do that!

Posted by: Devinda Fernando | October 22, 2009 10:48 PM


Wow!!! Devinda, you are the man.....I really like your replies. Only this way you can shut their mouths. Otherwise there's no way you can stop these whinges.

Posted by: Mano | October 25, 2009 09:55 PM

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