Anil Kumar was a top senior partner and director at management consultancy
McKinsey & Company, where he co-founded McKinsey's offices in Silicon Valley and
India and created its Internet practice among others. Kumar is additionally the
co-founder of the Indian School of Business with Rajat Gupta and the
creator of two different kinds of outsourcing. He graduated from IIT
Bombay in India, Imperial College in the UK, and The Wharton School in the US.
In 2010 he pleaded guilty to insider trading in a dramatic “descent from the
pinnacle of the business world.” He was the government's first cooperator and
most important witness “in two of the most important securities fraud trials
in history” against close friends and business partners Raj Rajaratnam, the
billionaire founder of the Galleon Group family of hedge funds, and Rajat Gupta,
the former head of McKinsey and Company and a board member of Goldman Sachs and
Procter and Gamble. Rajaratnam and Gupta were both convicted in separate
high-profile criminal trials. He was sentenced in 2012 by Judge Denny Chin to
two years of probation in exchange for testimony against former friends
Rajanatram and Gupta. Chin stated that “greed wasn't the motive in [Kumar's]
case” and that “this was aberrational conduct ... Mr. Kumar has led a
law-abiding and productive life.” Federal prosecutors called Kumar “one of
the best and most important cooperating witnesses” they had ever worked with.
In 2015, an investigation noted that Mr. Kumar had illegally collected funds from
insider trading in offshore accounts in the name of his domestic worker, Manju
Das. The investigation alleged that Ms. Das had no knowledge of these accounts,
which were created with identity documents falsified by Mr. Kumar; and
that Mr. Kumar had paid Ms. Das far below minimum wage for several years in
violation of US law. Ms. Das now lives in extreme poverty in India.
Early life and education Kumar graduated first in his class from
The Doon School, an elite high school in India, and ranked among the top 100
students across India for admission to the competitive Indian Institute of
Technology colleges. He graduated third in his class from IIT Bombay with a
degree in mechanical engineering, writing a thesis on renewable energy.
Kumar attended Imperial College at the University of London on “the equivalent
of the Rhodes scholarship” sponsored by Cecil Rhodes's De Beers Company. He
became the first student to complete Imperial's two-year course in applied
mechanics in 10 months, and also graduated first in his class. Kumar
attended business school at the Wharton School at the University of Pennsylvania
with a self-designed major on the management of technology and
international business. Career
Kumar was a “star senior partner,” and “one of McKinsey’s most senior employees
[and] brightest stars.” He co-founded McKinsey's offices in Silicon Valley and
India and created and led the Firm's business in three different areas of
Internet companies, outsourcing, and intrapreneurship. He was the protégé of
former chief executive Rajat Gupta, though was blamed for the collapse of
McKinsey's e-commerce initiatives after the dot-com collapse and never ran in
the elections for managing partner. Gupta and Kumar also co-founded the
Indian School of Business in Hyderabad, India.
= McKinsey and Company= Kumar began his career at Hewlett
Packard as a product manager before joining McKinsey and Company in 1986 as
one of the earliest Indian-Americans at the consultancy. In 1988 he co-founded
McKinsey's offices in Silicon Valley with a partner, growing the office “from
two people to approximately 35” by 1992. In 1993 as a partner he founded
McKinsey's office in New Delhi, which along with the Mumbai office co-founded
the consultancy in India. In India he pioneered the concepts of Knowledge
Process Outsourcing and Business Process Outsourcing and became the protégé of
then-managing director Rajat Gupta. Kumar returned to the United States to
found and lead McKinsey's Internet practice during the dot-com bubble.
“Under [Kumar's] leadership, McKinsey's e-commerce practice grew to represent a
full 25-30% of the Firm's revenues,” court documents revealed, though Kumar
was blamed for the evaporation of this business in the subsequent dot-com
collapse. He and Gupta briefly created a program to allow the firm to accept
stock in lieu of consulting fees. Kumar was also Chairman of the Knowledge
Center and Chairman of the Asia Center. He was a director and corporate officer
of the firm. He lived and worked from multiple offices in New Delhi, New York,
and Silicon Valley, traveling over thirty thousand miles a month.
He was a member of the Council on Foreign Relations and the Young
Presidents' Organization, a founding charter member of TiE, and was the
United States chairman of India's largest business lobby, the
Confederation of Indian Industry. Criticism of Kumar centered around his
close relationship with Gupta and a perception of arrogance. According to
The Financial Times, “the two operated as a forceful double-act to secure
business for McKinsey, win access in Washington and build a brotherhood of
donors around the Hyderabad-based ISB and a handful of social initiatives.”
Also according to the Times, “as much as Mr Kumar was admired for his business
ability and sharpness, he also drew fire for what was seen as his arrogance.”
Galleon investigation Kumar maintained an intentionally low
profile outside McKinsey until an October 2009 arrest in conjunction with
an ongoing and wide-ranging US governmental investigation into insider
trading. Former mentor Rajat Gupta was later arrested by the FBI in a related
case, prompting inquiries into McKinsey’s senior leadership and
business model. As of December 2009, Kumar was no longer
at the consultancy. In January 2010 he pleaded guilty to insider trading
charges and was “the government’s star witness” in March 2011 against
billionaire friend and Galleon Group founder Raj Rajaratnam. In the sprawling
case his involvement was unusual; according to a Reuters blog, “He’s the
only informant who could be considered even more successful than Raj was, at
least professionally if not in terms of raw cash. Raj had money, more money than
he really knew what to do with, but Kumar had much more societal acceptance
and prestige.” He settled with the SEC in May 2010 for $2.8 million, the amount
after gains he received from Rajaratnam through a Swiss bank account in a
domestic worker's name. Gupta, Rajaratnam, and Kumar were all close
friends and had founded the $1.3-billion private equity firm New Silk Route
together, though Rajaratnam and Kumar withdrew before the firm began
operation. Kumar was represented by the late Robert
Morvillo, who had previously led billionaire Martha Stewart’s defense in
her own insider trading case. He testified again as “the Government's
key witness” in the May 2012 criminal trial of former mentor Rajat Gupta,
where he described the relationships between Gupta, Rajaratnam and himself.
To do so was difficult, according to federal prosecutors, “because [Kumar]
knew that he could be partially responsible for helping to convict
someone with whom he and his family had deep and long-lasting ties.” Bloomberg
commented, “When business guru Rajat Gupta and his protégé, Anil Kumar,
worked together to expand management consultancy McKinsey & Co in the 1990s,
a date in court years later surely was not part of the plan.”
Both Rajaratnam and Gupta were ultimately convicted in separate
high-profile criminal trials. International media, business, and
finance industry observers have analyzed extensively Kumar's actions in aiding
Rajaratnam. Consensus remains divided on the precise motivators of money,
respect, and relationship, with The New York Times asking, “Why would people who
seem to have it all — wealth, prestige, powerful jobs and infinite access to
others with the same — risk that, and more, to provide inside information to
the Sri Lankan-born billionaire?” Rajaratnam's annual payments were
estimated at less than 5% of Kumar's annual income, further raising the
question of motivation. Prosecutors wondered “why an incredibly bright,
highly accomplished, professional consultant, and senior partner at
arguably the world’s leading consulting firm, who contributed considerable time
to start the Indian School of Business and to other charities, would betray his
profession’s core values.” One media source questioned Kumar's sentencing
report. Judge Chin would ultimately rule that “greed wasn't the motive in
[Kumar's] case.” Federal prosecutors said “Kumar's
testimony was nothing short of devastating. Kumar was credible,
precise, and fully corroborated.” In July 2012 he was sentenced by Judge
Denny Chin to two years of probation, ending in July 2014.
Education and non-profits Kumar co-founded the Indian School of
Business with Gupta in 1997, today ranked among the top 15 business schools
in the world by The Financial Times. Court documents revealed he personally
raised approximately 35% of all money donated to the school and kept a low
profile as co-founder: “a large part of the intellectual vision of ISB is in
fact Anil's, a point not many outside ISB's leadership will ever be aware of.”
In New Delhi, Kumar helped IIT Delhi double its student body with no increase
in costs and was a founding board member of the Bharti Foundation. In San Jose,
he served on the boards of the Children's Discovery Museum and San Jose
Civic Light Opera. As of 2012, he was working with the
Baylor College of Medicine and Max Healthcare to start a medical
university, teaching hospital, and nursing school in India, and also with
the Hero Group to start an 8000-person engineering college in India.
Personal life Kumar maintained an intentionally low
public profile, and according to prosecutors was "earning significant
amounts of money at McKinsey [though] lived relatively modestly, his assets
far exceeded his liabilities." He lived and worked for decades in New Delhi, New
York, and Silicon Valley, traveling over thirty thousand miles a month for
McKinsey. He had a Manhattan apartment in the Time Warner Center and a house in
Saratoga, California. He is married, with one son.
See also McKinsey & Company, Inc. — in particular
Notable employees and Galleon case Galleon insider trading case — in
particular relationship with Rajaratnam and Gupta
Indian School of Business — in particular history and formation
New Silk Route — in particular history and formation
Rajat Gupta — in particular relationship with Kumar
Raj Rajaratnam — in particular conviction
SEC v. Rajaratnam — also U.S. v. Rajaratnam
References Further reading
Vachani, Nilita. “The Strange True Story Of How A Chairman At McKinsey Made
Millions Of Dollars Off His Maid”. The Nation November 9, 2015
Raghavan, Anita. The Billionaire's Apprentice: The Rise of The
Indian-American Elite and The Fall of The Galleon Hedge Fund. Hachette, June
20133. Sharma, Amol and Joann Lublin. “A Star
Partner's Galleon Arrest Shakes Up Ranks at McKinsey”. The Wall Street Journal.
October 21, 2009. McDonald, Duff. “Galleon Scandal's
Executive Conundrum”. CNN. October 23, 2009.
McDonald, Duff. “Rajat Gupta: Touched By Scandal”. CNN. October 1, 2010.
Duray, Dan. “Dealbook London Correspondent Scores Deal for Crisis
Book”. The New York Observer. December 3, 2010.
Lamont, James and Tom Burgis. “Elite Take Sides As Gupta Fights SEC Charges”.
The Financial Times. March 8, 2011. Lattman, Peter. “On Tape, Galleon
Founder Told of Possible Goldman Deals”. The New York Times. March 15, 2011.
Lattman, Peter. “Rajat Gupta Charged with Insider Trading”. The New York
Times. March 1, 2011. McCool, Grant and Dena Aubin. “McKinsey
In Uncomfortable Rajaratnam Trial Glare”. Reuters. March 30, 2011.
Rothfeld, Michael and Susan Pulliam. “Defense in Galleon Trial Bids to
Discredit U.S.'s Star Witness”. The Wall Street Journal. March 16, 2011
“Rajaratnam Lawyer, Key Witness Do Battle At Insider-Trading Trial”.
Financial Alternatives. March 16, 2011. Raghavan, Anita. “Expert View On Galleon
Insider Trading Trial”. NDTV. March 18, 2011.
Van Voris, Bob, David Glovin and Patricia Hurtado. “Rajaratnam Lawyer
Challenges Kumar’s Testimony on Insider Tips, Payments”. Bloomberg. Mar 16,
2011. External links
McKinsey & Company, Inc. The Indian School of Business