McKinsey & Co, which thrives on a reputation for excellence and discretion, the strength of its alumni network, and the absolute trust of its clients, has been disgraced - perhaps forever.  Rajat Gupta, one of its leading alumni, today stands accused of tipping corporate secrets to hedge fund manager Raj Rajaratnam, who will stand trial on charges of being at the center of a large and complex insider trading scheme.

    Gupta's Long, Important Connection to McKinsey.  Rajat Gupta spent 34 years at McKinsey, the world’s most prestigious consulting firm, until 2007.  He essentially was a "lifer," who also served as Managing Director from 1994 to 2000 - having been elected by fellow partners for 3 consecutive terms - the maximum allowed by firm rules. 

    Betrayal and Bafflement.   In 2011, Gupta is charged with insider trading by SEC Enforcement.  Some McKinsey partners and consultants feel betrayed and baffled by the man they trusted to run McKinsey.  The McKinsey alumni and staff are a tight knit group, who literally refer to their firm as “The Firm” - like Harvard Law School graduates refer to their school as “The Law School.”

"If true, it’s an absolute betrayal."  -- Former McKinsey consultant.

If the charges against Gupta prove true, it could be a mortal threat to the firm. Even if there’s no evidence that confidentiality was breached while Gupta was at the firm, being led by a man who would later leak insider information would be devastating. If Gupta is shown to have engaged in similar actions while he was at McKinsey, that could be the end for the Firm.

“At that point, I think we go the way of Arthur Anderson,” another former McKinsey consultant said, referring to the once-prestigious accounting company brought down by its connections to Enron.

For the full story, go to:   [CNBC NetNet, 3/2, "Will Rajat Gupta Destroy McKinsey?"]