Rajaratnam Friend Says He Passed Intel Tips

Mar 23 2011 | 3:27am ET

After hearing his voice on a number of intercepted phone calls, jurors in the Raj Rajartnam insider trading case finally heard from Rajiv Goel, live and in person.

Goel, a former Intel Corp. executive, took the stand yesterday, testifying against his one-time friend and business school classmate, who faces decades in prison if convicted. Goel told jurors that he passed confidential information about Intel to Rajaratnam for years.

"I violated my obligations" to Intel, Goel said. He is expected to testify for two or three days.

Goel is the second former Rajaratnam friend to take the stand to say that he passed secret information on to the Galleon Group founder. Former McKinsey & Co. director Anil Kumar was the government's second witness, testifying that he told Rajaratnam confidential information about several McKinsey clients.

"Mr. Rajaratnam is—was—a very good friend of mine," Goel said. "He was a good man to me. I was a good pal, a good person to him." Goel said the two vacationed together with their families on two occassions.

Goel, who has pleaded guilty to insider-trading charges, said yesterday that Rajaratnam began pressing him for information about Intel, where he worked from 2000 until his arrest in October 2009, in 2002 or 2003.

"He's a trader," Goel said. "He trades on information."

Goel testified that he passed information about Intel's 2007 earnings and a wireless Internet deal with Clearwire Corp. to Rajaratnam. Former Intel investor relations executive Alexander Lenke testified last week that he told Goel about the performance numbers, and Intel executive Sriram Viswanathan told jurors that Goel, who worked in Intel's treasury group, would have had access to information about the Clearwire venture.

Earlier yesterday, Viswanathan testified that Goel would have been "spontaneously" fired for passing tips about the Clearwire deal. Galleon bought nearly 126,000 shares of Clearwire just two days before reports about its deal with Intel made the news.

Prosecutor Reed Brodsky sought to show that Rajaratnam's generosity to Goel was, in effect, payment for illegal services rendered.

"Mr. Rajaratnam helped me financially a few times," Goel said. He was "a generous person."

How generous? Goel testified that Rajaratnam gave him a $100,000 loan—which was never repaid—to help with the down payment on his first home in 2005. A year later, Rajaratnam gave him $500,000 to help pay for the care of Goel's elderly father in India; Goel used a big chunk of that money to repair his California house. And he invested with Rajaratnam, whose trades earned Goel between $700,000 and $800,000.

"Why did it stop?" Brodsky asked of the trading.

"Because he and I were arrested," Goel said.

Goel also testified that he was not the only alleged tipster to receive gilded favors from Rajaratnam. He told the jury that Rajaratnam said two women at Intel had long passed information about its orders to him.

"He gave them two cars, one to each individual," Goel said. "He gave them the keys to the car. If I recall correctly, they were BMWs."


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