BREAKINGVIEWS - Corporate India needs a nobler cause than Gupta

Former Goldman Sachs Group Inc board member Rajat Gupta (R) leaves Manhattan Federal Court with his lawyer, Gary Naftalis, following a guilty verdict in New York June 15, 2012.

MUMBAI, June 18 (Reuters Breakingviews) - "Rajat Gupta is no criminal, he's just an Indian," said India's Firstpost. That sentiment should rile business leaders from Mumbai to Bangalore. It was a mistake for leading industrialists - including Mukesh Ambani, the head of Reliance and Adi Godrej, the current president of the Confederation of Indian Industry - to back a campaign supporting Gupta. An open letter expressing admiration for his charity and his role in setting up the Indian School of Business looks like an apology for Gupta's crime.

The lack of reflection on the Gupta case fits in with a common line of thinking in India: you have to play the game. In Gupta's case, the game was helping a friend with some juicy privileged information. He appears to have seen no contradiction between that and his role as a standard bearer for middle-class Indians - a philanthropist and thought leader who founded a world class business school in Hyderabad.

There is a better way. The Tata group practically invented corporate social responsibility, way before it became a buzz word in the West. India should take some inspiration for the ethics of its best role-models and leaders.

Today's India has much in common with America's Gilded Age. The Ambanis and Godrejs have amassed wealth to rival the Vanderbilts and Rockefellers. Billionaires have created fortunes securing access to valuable natural resources and developing businesses through their ability to influence government to reduce competition and create a regulatory environment which favours incumbents.

But the Gilded Age was followed by the Progressive Era with cleaner politics, and a collective fight against corruption. And if the U.S. model is not inspiration enough, the fact that decision-making has ground to halt in Delhi, in part as a result of scandals, should encourage everyone to draw a line under the old system.

Gupta was once the face of modern India. His fall from grace could be a turning point, an opportunity for today's tycoons to set out a new vision. How about a second draft of the Gupta letter setting the agenda for India's own progressive era?

CONTEXT NEWS

- Rajat Gupta, the former head of consulting firm McKinsey and board member of Goldman Sachs (GS.N) and Procter & Gamble (PG.N), was convicted on June 15 on three counts of passing inside information to Galleon Group founder Raj Rajaratnam. He was also convicted of one conspiracy charge but found not guilty on two other counts of securities fraud.

- Gupta, 63, was accused of leaking details of P&G and Goldman board meetings to Rajaratnam, including confidential word of Berkshire Hathaway's (BRKa.N) $5 billion investment in the bank in 2008. The U.S. Securities and Exchange Commission also filed civil insider-trading charges against Gupta.

- Gupta's lawyer, Gary Naftalis, said in a written statement: "This is only round one. We will be moving to set aside the verdict and will if necessary appeal the conviction."

- Many of India's leading industrialists - including Mukesh Ambani, the head of Reliance Industries (RELI.NS) and Adi Godrej, chairman of the Godrej Group and the current president of the Confederation of Indian Industry - backed a public campaign supporting Gupta. The campaign included the setting up of a website - friendsofrajat.com - and an open letter expressing admiration for Gupta's charitable work and his role in setting up the Indian School of Business in Hyderabad in 1999.

- Firstpost story: link.reuters.com/pac88s

(The author is a Reuters Breakingviews columnist. The opinions expressed are his own.)

(Editing by Edward Hadas and Martin Langfield)