Goldman Sachs’s former director Rajat Gupta”s  Lawers  have suggested that  he was not involved in the monetary leaks  to  hedge fund billionaire Raj Rajaratnam. It might have come from other sources.
As Joseph Yanagisawa, who works in Goldman Sachs’s technology unit, Wednesday testified about records of phone calls between Gupta’s office and Chief Executive Officer Lloyd Blankfein’s office, defence lawyer David Frankel confronted him with the logs of another executive.
The logs showed more than two dozen calls between phones associated with David Loeb, Goldman Sachs’s head of Asia Equity Sales in New York, and Galleon Group co-founder Rajaratnam and others at Galleon.
These included calls from Loeb’s phones to numbers associated with Rajaratnam and Galleon trader Adam Smith on dates when Gupta is alleged to have tipped Rajaratnam, bolstering a defence claim that it was Loeb or others who leaked data.
Prosecutors say that within seconds of hanging up from the board meeting on Sep 23, 2008, Gupta tipped Rajaratnam at around 3:55 p.m. about Berkshire Hathaway’s $5 billion investment in Goldman Sachs.
Earlier, an Indian-American witness testified that Gupta stood to profit from investments he made in funds managed by Rajaratnam, but conceded she had “no information,” whether Gupta actually profited or if he got back his $10 million investment.
Isvari Mahadeva, former Galleon portfolio manager said the fund firm’s records showed Rajaratnam, Gupta and a third money manager, Ravi Trehan, formed Voyager Capital Partners in 2005, with Gupta contributing $5 million.
She said that in 2007 Gupta had an option to invest an additional $5 million that could reap 10 percent in additional profit.
“I was told he chose to exercise the option,” said Mahadeva, who worked for Galleon for 12 years until Rajaratnam was arrested in October 2009.
Defence attorney Gary Naftalis  had made the suggestion in Manhattan federal court on Monday during cross-examination of Anil Kumar, a former McKinsey partner described as a protege of Gupta’s, on his testimony about the relationship between Gupta and Rajaratnam.
The defence also asked Kumar about Gupta’s threat to sue Rajaratnam over the losses in the Galleon Voyager Fund as a reason why he wouldn’t leak inside information to Galleon hedge fund co-founder in 2008. Kumar said Gupta had invested $10 million in the Voyager Fund in 2008, Rajaratnam invested $40 million, and the two borrowed $300 million from Lehman Brothers Holdings Inc for the fund.
Later, the fund was wiped out in the 2008 stock market collapse, angering Gupta and prompting him to consider filing a lawsuit because of what he said was Rajaratnam’s mismanagement of the fund, Kumar said.
Gupta later showed up at Kumar’s apartment in February or March 2009, Kumar said after learning Rajaratnam had withdrawn money from the fund without Gupta’s consent or knowledge.
“He said he’d discovered something that was quite distressing,” Kumar testified.
“Rajaratnam had removed some of the money for the fund for himself,” Kumar said, adding, “Gupta said ‘This is plain wrong, this is worse than not managing the money well, it’s taking money out.'”
Prosecutors said that the litigation threat didn’t come up until 2009, which was after Gupta allegedly provided illegal tips to Rajaratnam as late as Jan 29, 2009.
Kumar also testified that Gupta hadn’t been invited to Rajaratnam’s birthday party in Kenya in 2007.
Later Goldman’s chief executive Lloyd Blankfein testified that board discussions were supposed to be kept secret.