Anil Kumar (born 1958) is an Indian-American former senior partner and director at management consulting firm McKinsey & Company, where he co-founded McKinsey's offices in Silicon Valley and India and created its Internet practice (representing a quarter of McKinsey's business at the time) 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 Rajaratnam 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 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.
Early life and education
Kumar graduated first in his class from The Doon School, high school in India, and ranked among the top 100 students across India for admission to the competitive Indian Institute of Technology colleges.Kumar, Anil (453-KB) 1970-74, The Doon School Old Boys' Society Register (2011) p.87 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.Morvillo, Gregory and Paul Grand. "Sentencing Memorandum". Morvillo, Abramowitz, Grand, Iason, Anello, and Bohrer, P.C. Access via United States District Court for the Southern District of New York (access required). 20 July 2012. 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,"Sharma, Amol and Joann Lublin. "A Star Partner's Galleon Arrest Shakes Up Ranks at McKinsey". The Wall Street Journal. 21 October 2009. and "one of McKinsey’s most senior employees [and] brightest stars."Rushe, Dominic. "McKinsey Jettisons Troubled Star Kumar". The Sunday Times. 6 December 2009. 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 (representing 25-30% of McKinsey's worldwide revenues at its peak), outsourcing, and intrapreneurship. He was the protégé of former chief executive Rajat Gupta, though he 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 (chief executive).Byrne, John. "At McKinsey, the Winner Is…". BusinessWeek. 7 March 2003.Stern, Stefan. "McKinsey Turns To Asia Chief Barton for Top Job". The Financial Times. 23 February 2009. 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 OutsourcingMcDonald, Duff. "Galleon Scandal Creates Investing Conundrum for Executives" . CNN. 23 October 2009. and became the protégé of then-managing director (chief executive) Rajat Gupta.Rushe, Dominic. "McKinsey Implicated in Galleon Trial". The Guardian. 14 March 2011. 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.Leonhardt, David. "Big Consultants Woo Employees by Offering a Piece of the Action". The New York Times. 22 October 1999. Kumar was also Chairman of the Knowledge Center and Chairman of the Asia Center.Bhambal, Juhi. "Knowledge@McKinsey: A Case Study" . Global Services Media. 30 November 2005. 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.de la Merced, Michael. "Hedge Fund Chief Is Charged With Fraud". The New York Times. 16 October 2009. Former mentor Rajat Gupta was later arrested by the FBI in a related case,Rothfield, Michael, Susan Pulliam and Chad Bray. "Ex-Goldman Director Gupta Charged in Insider Case". The Wall Street Journal. 26 October 2011. prompting inquiries into McKinsey's senior leadership and business model.Gapper, John. "McKinsey Model Springs a Leak". The Financial Times. 9 March 2011.Salmon, Felix. "McKinsey's Corrupted Culture". Reuters. 9 March 2011.
As of December 2009, Kumar was no longer at the consultancy.Bray, Chad, "Galleon Figure Kumar No Longer with McKinsey". The Wall Street Journal. 4 December 2009. In January 2010 he pleaded guilty to insider trading chargesKouwe, Zachery. "Guilty Plea in Galleon Insider Trading Case". The New York Times. 7 January 2010. and was "the government’s star witness" in March 2011 against billionaire friend and Galleon Group founder Raj Rajaratnam (United States v. Rajaratnam).Rothfeld, Michael and Susan Pulliam. "Calling Miss Manners: Tapes in Galleon Case Show Some Snark". The Wall Street Journal. 17 March 2011.Rothfeld, Michael, Susan Pulliam and Chad Bray. "Fund Titan Found Guilty". The Wall Street Journal. 12 May 2011. 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."Salmon, Felix. "How to Set Up An Insider-Trading Network". Reuters. 12 May 2011. 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.Bray, Chad. "Kumar Settles SEC Charges in Galleon Case". The Wall Street Journal. 17 May 2010. 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.Scannell, Kara. "Insider Trading Star Witness Challenged". The Financial Times. 17 March 2011.
Kumar was represented by the late Robert Morvillo,SEC v. Galleon. "Notice of Appearance". Doc 50. 24 November 2009 who had previously led billionaire Martha Stewart’s defense in her own insider trading case.Smith, Chris. "Can This Man Save Martha?" The New Yorker.Lattman, Peter and Benjamin Weiser. "Robert Morvillo, Legal Pioneer, Dies at 73". The New York Times. 25 December 2011.
He testified again as "the Government's key witness" in the May 2012 criminal trial of former mentor Rajat Gupta (United States v. Gupta), where he described the relationships between Gupta, Rajaratnam and himself."Gupta Trial: A Who’s Who of Those Who Will Come Up". The Wall Street Journal (blogs). 22 May 2012.Chakraborty, Barnini. "Blankfein Takes Stand, Says Gupta Was at Key Meetings". Fox Business. 4 June 2012. 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."Hurtado, Patricia. "Kumar Seeks Probation, Citing Help To Gupta Prosecutors". Bloomberg. 19 July 2012. 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."McCool, Grant. "Protégé testifies against McKinsey mentor Gupta". Bloomberg. 1 June 2012.
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.Jenkins, Holman W. "A Hedge Fund's Neurotic Tipsters". The Wall Street Journal (editorial). 23 April 2011.Gapper, John. "Anil Kumar’s Cheap Betrayal of McKinsey’s Soul". The Financial Times (blog). 8 January 2010.Kim, Jim.