Insider trading trial strikes 'combative' tone

The legal defense team of Raj Rajaratnam went on the offensive this week, attacking star witness and ex-McKinsey partner Anil Kumar's credibility in what the Wall Street Journal called "combative cross-examination". Likewise, the New York Times described the cross-examination as "repeated sparring" between Kumar and John Dowd, the lead defense attorney. Dowd had previously told jurors that he planned to reveal Kumar as a "monstrous liar" who was cooperating with federal prosecutors in order to "save his skin" from a lengthy prison sentence.

Dowd and Raj Raj leave the scene of a cross-examination shouting match.

'Monstrous' government stooge

Dowd, a senior partner at Akin Gump in New York, reasserted his "monstrous" accusations after finally getting access to Kumar, Rajaratnam's former friend and alleged co-conspirator. Kumar, Dowd argued, had betrayed Rajaratnam's trust by doctoring Galleon documents to hide his own identity; Kumar had said that he was instructed by Raj Raj to do just that in order to cover the tracks of their inside job. "I'm not sure what you mean by monstrous," Kumar said of Dowd's charge. "I obeyed the managing partner of Galleon, Mr. Rajaratnam's instructions.

The defense also sought to portray Kumar as a government stooge trying to limit his own prison sentence by testifying against Rajaratnam. "It's important that you testify in this court to make Mr. Streeter happy, correct?" asked Mr. Dowd, referencing the lead government prosecutor on the trial. "Wrong," said Kumar, clearly perturbed, countering that his testimony was meant only to "uphold the law".

'Combative' cross-examination

According to news outlets with access to the proceedings, the nature of the cross-examination was extremely confrontational. From the New York Times:

Mr. Kumar, who spoke in a soft, scholarly tone during the direct examination, became combative. He raised his voice several octaves and repeatedly sparred with Mr. Dowd, shooting back clipped, rapid-fire retorts and mocking his questions with derisive laughter.

That was day one (Tuesday). The Times again, on Wednesday's proceedings:

The exchange between the two men remained as heated as it had been in the first day of cross-examination on Tuesday, with Mr. Dowd growing impatient at Mr. Kumar’s often lengthy answers. Mr. Kumar, for his part, proved at times to be a combative witness, telling Mr. Dowd that his assertions were "wrong" and "absolutely incorrect."

Gupta makes an appearance

Jurors finally heard the voice of Rajat Gupta, longtime McKinsey managing director and Goldman Sachs board member, in a secretly-recorded conversation (see below) between him and Rajaratnam. In the recording, played yesterday by prosecutors, Gupta and Raj Raj discuss potential Goldman moves (including possible acquisitions of either AIG or Wachovia), and also manage to mock Kumar, who Rajaratnam says is "trying to be a mini Rajat".

Rajaratnam and Gupta's roots go deep in the business of big money. The pair both had a hand in starting New Silk Route, a private equity firm originally known as Taj Capital; Gupta recently resigned from the board of that company because of his implication in the trial.

Kumar also had connections to New Silk Route. "You were paid $1 million because of work you did for Galleon and Taj Capital," said Dowd, asserting that the payments he received from Raj Raj were for legitimate consulting work.

In the recorded conversation, both Gupta and Rajaratnam ask each other's advice and appear to be comfortable discussing privileged information—as if it were a regular feature of their interactions. Whether it happens in this trial or his own, it's only a matter of time before Gupta, not Kumar, takes the stand in his own defense.

July 29, 2008 transcript (U.S. vs. Rajaratnam)

More amusing developments

•The Times reports that juror No. 18, dubbed the "Hipster Juror", fell asleep at least once during yesterday's fiery exchanges.
•Anil Kumar, in response to Dowd's assertion that a $1 million payment from Galleon was labeled 'consulting': "I don’t think they could have written 'paid for insider trading' in their records, sir."
•From the Financial Times: "The court reporter often had to ask them to repeat themselves when they spoke over each other. Another time, Mr Dowd stood close to Mr Kumar and was shouting at him."

For more information:
WSJ
NYT
NYT
Financial Times