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&lt;p&gt;Well, well, well.  Just as McKinsey published a report this week on the testy nature of the relationship between corporations and government (see my last post), the SEC announced today that one of its former leading lights will receive a far more personal education on the subject.  According to the &lt;em&gt;New York Times&lt;/em&gt;, Rajat Gupta, who led McKinsey from 1994-2003, has been accused of providing insider information to one Raj Rajaratnam, Galleon Group founder and the chief defendant in an impending trial for securities fraud and conspiracy.&lt;/p&gt;&lt;p&gt;&quot;Mr. Gupta has done nothing wrong,&quot; his attorney says.  Unfortunately for his client, the federal government begs to differ.  It goes something like this: Gupta, 62, served on the board of Goldman Sachs after retiring from his post at McKinsey in 2003; as a board member, he had access to an absurd amount of privileged information, including the information that Warren Buffett was to invest $5 billion in the bank midway through 2008; once the investment was confirmed, Gupta rang his old friend Rajaratnam at Galleon Group (from the same phone he used to participate in the meeting that confirmed Buffett&#39;s investment) to tell him the good news; aware of Goldman&#39;s financial health and the impending $5 billion cash injection, Galleon promptly purchased approximately 255,000 shares of Goldman stock.  Fast forward to this week, and Rajaratnam awaits trial for charges that will almost certainly land him in federal prison.  Anil Kumar, another former McKinsey exec, has already pleaded guilty to fraud &quot;related to the Galleon case&quot; (Kumar also provided Rajaratnam with insider information).  And now, SEC investigators have gone straight to the top of the McKinsey hierarchy with Gupta, who currently serves on the board of Procter &amp;amp; Gamble.&lt;/p&gt;&lt;p style=&quot;text-align: center;&quot;&gt;&lt;img style=&quot;display: block; margin-left: auto; margin-right: auto; border: 1px solid black;&quot; src=&quot;http://www.vault.com/VCM/articles/gupta2.png&quot; alt=&quot;&quot; width=&quot;143&quot; height=&quot;198&quot;&gt;&lt;br&gt;&lt;em&gt;Rajat Gupta: So good looking it&#39;s criminal.&lt;br&gt;&lt;/em&gt;&lt;/p&gt;&lt;p&gt;Kumar has already gone down, Rajaratnam is on his way, and Gupta is next.  But what&#39;s next for McKinsey and Goldman?  Both represent the gold-standard of their respective industries, and both have detailed histories of participating in, even orchestrating some of the world&#39;s most destructive instances of fraud (Enron and, well, the destruction of the global economy come to mind here).  Do prestige and corruption go hand-in-hand?&lt;/p&gt;&lt;p&gt;I&#39;ll ask the obvious question: how deep does this corruption go?  Of course, we don&#39;t have any idea.  That&#39;s up to the folks at the SEC to figure out, though if recent Oscar winners and Rolling Stone journalists are to be believed they aren&#39;t doing a very good job of it.&lt;/p&gt;&lt;p&gt;Will this scandal weigh heavily on the minds of McKinsey clients?  For the smaller fish, probably not; the consultants on these projects probably don&amp;rsquo;t have the clout to pull off major heists of tens of millions or more.  But for the big clients?  The Enrons of the world?  I don&#39;t know, but it should.  If the head partner at McKinsey is not only complicit in but actively a part of one of Wall Street&#39;s most publicized cases of fraud in recent history, why not assume that the guilt (or, at least, awareness) extends to most of the other top McKinsey partners?&lt;/p&gt;&lt;p&gt;Anyone with even a cursory knowledge of the banking and consulting industries could go on for pages about the potential for (er&amp;hellip;history of) illegal cooperation between the two; for one, top consultants commonly end up on the board at top banks&amp;mdash;some even wind up serving in prestigious government circles.    There is no way to know the extent to which corruption pervades the industry, but episodes like this do represent ominous warning signs.&lt;/p&gt;&lt;p&gt;&lt;strong&gt;For more information:&lt;/strong&gt;&lt;br&gt; &lt;em&gt;NYT&lt;/em&gt;&lt;br&gt; In the Black: Former Goldman Sachs Board Member (and Raj Raj Pal) Charged with Insider Trading&lt;/p&gt;

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