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Rediff News  All News  » Business » I was not 'joking' with Rajaratnam: Former Intel executive

I was not 'joking' with Rajaratnam: Former Intel executive

March 29, 2011 11:09 IST

Former Intel executive and key government witness Rajiv Goel has said that he was not joking with Galleon Group founder Raj Rajaratnam when telling him about the dealings of his company.

The defence previously asked Goel whether he thought Rajaratnam was kidding about giving BMW cars to two women in Intel's sales department who leaked information to him.

The prosecution went over several parts of secretly recorded phone.

"Were you joking... was this idle chit chat?" asked Reed Brodsky, citing the line, "But yesterday, our board approved this deal."

"No", said Goel, who has already pleaded guilty to telling Rajaratnam that Intel was planning to make a $1 billion investment in a new joint venture with Clearwire and Sprint to develop an ultra-fast wireless Internet service.

Sri Lankan-born Rajaratnam is the main accused in the largest insider trading case to hit US courts in decades, which entered its fourth week of proceedings on Monday.

Rajaratnam purchased 125,800 shares of Clearwire on March 24, 2008, allegedly based on inside information provided by Goel. In return, Goel said he received a loan of USD 100,000 to buy a house in 2005 and then a year later a gift 500,000 when his father fell sick.

Goel, 52, and Rajaratnam, 53, met at the Wharton School of the University of Pennsylvania in the early 1980s.

Citing news articles and analyst reports, the defence again tried to show that information about a potential deal between Clearwater and Sprint was already in the public domain.

Rajaratnam's lawyers also said that the information given by Goel was incorrect and not useful to their client.

The Intel exec admitted that some of the information did turn out to be wrong, and that he had no knowledge of how Rajaratnam traded on the alleged insider tips.

On the last day of his testimony, Goel donned a bolder stance with the defence lawyer Terence Lynam. "I'm just trying to be a little careful," he said, asking for a page on the witness box monitor to be adjusted so that "context" could be clearer.

"I'm just correcting your comment," he told Lynam as they both argued on several points. Prosecutors have to prove that Rajaratnam made $45 million by using leaked confidential information.

His lawyers say that Rajaratnam conducted his business based on information that was already in the public domain and through research.

Out of the 26 people arrested in this case, 19 have pleaded guilty. Rajaratnam, however, denies any wrongdoing.

If found guilty, he faces up to 20 years in prison.

After Goel finished his testimony, the prosecution called its third witness Rick Muscha, a senior executive at Xilinx Inc., which is based in California and makes computer chips.

Muscha was called by the government to try and prove that his former colleague at the company, Kris Chellam, was passing information to Rajaratnam about its earnings.

Chellam eventually left Xilinx to work in Galleon. Muscha replied "no" when asked by defence attorney Michael Starr if he had ever heard conversation that took place between Chellam and Rajaratnam.

The defence showed analyst reports to prove that any trade Rajaratnam may have done on Xilinx stock was based on public information.

The prosecution, however, showed other analyst reports that reached opposite conclusions to prove that Rajaratnam learnt that company would lose revenue from an insider.

The prosecution has already presented three of its key witnessAnil Kumar, former McKinsey director, Lloyd Blankfein, chief of Goldman Sachs and Goel.

The government is expected to call Adam Smith, a former Galleon portfolio manager, who has also pleaded guilty, as a witness.


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