The New York Times obtained a copy of McKinsey & Company from 2010, the high powered consulting firm compared its 90-plus-years of doing business as akin to the Marine Corps, the Roman Catholic Church, and the Jesuits. The report describes McKinsey as “analytically rigorous, deeply principled seekers of knowledge and truth.” However, actions do speak louder than words and McKinsey is an amoral technician. McKinsey pushes the envelope in its interpretations of the law. They elude illegality, but their actions feel slippery. Here is a summary:
Federal bankruptcy rules require that financial consultants and advisors in bankruptcy (generally Chapter 11) proceedings. Yet, as documented on this website, McKinsey paid an $11 million fine after it finally revealed that its retirement fund held investments in the companies involved or affected by the restructurings and debt resolutions in those bankruptcies. For example, McKinsey’s retirement fund held interests in two hedge funds that were creditors of GenOn Energy Inc. Yet, McKinsey served as an adviser in the Chapter 11 bankruptcy of that company. Bankruptcy rules require advisers to disclose all interests that may be a conflict of interest. McKinsey did not disclose its retirement fund’s investments in the hedge fund, let alone the hedge funds’ interests. “Not a problem,” was McKinsey’s take because it did not own any interest. Pure balderdash that those working with GenOn’s outcomes could benefit or be harmed by its bankruptcy restructuring. De minimis, said they.
McKinsey provided advice to Janssen Pharnaceuticals on how to market opioids to increase sales. The states of Oklahoma, Massachusetts, and New Jersey used McKinsey records to help build its case that the company engaged in irresponsible marketing of its fentanyl patch. McKinsey also advised Purdue Pharmaceutical on how to “turbocharge” its sales of OxyContin. McKinsey assured that its work supported” the legal prescription and use of our clients’ products” and that it was no longer “advising clients on an opioid-specific business on a global basis.” Does that mean they advise on a local or national basis? No worries, however, when an executive for the company was asked about its aggressive marketing plan using the language from McKinsey’s advice, McKinsey went under the bus. Twice the executive said that the marketing plan consisted of “McKinsey’s words,” not ours. However, McKinsey was not fired, and, in fact, is still used by Janssen today for “different projects.” Nothing illegal, just amoral.
When doing government work at Rikers, a McKinsey partner told government officials and members of his team to use Wickr, a messaging site that automatically deletes messages under a timetable set by the users for hour or days. Certainly avoids all those public records requests on the project — the records automatically disappear. Not illegal, but an interesting approach to transparency on government work.
McKinsey worked for Boeing exploring options for obtaining titanium (in short supply in 2006) for its planes. McKinsey came up with the idea of Boeing investing in a titanium mine in India and thus eliminating the suppliers and thereby obtain titanium at the source. There was a McKinsey PowerPoint slide on a potential investment in a mine in India in cooperation with a Ukrainian oligarch that would require influencing eight government officials, listed in the slide. The partner encouraged Boeing to “respect traditional bureaucratic processes, including the use of bribes.” McKinsey responded by saying that it did not encourage violation of the FCPA, but declined to provide the full slide set on the presentation of the mining opportunity. Let’s see, Ukraine, India, and a mine involved together in an investment in India. What could possibly go wrong?
The list could go on with the power company in South Africa, and the mess with the GSA and contract pricing rules that McKinsey got changed in its favor, something that the OIG concluded “violated requirements governing ethical conduct.” Not illegal, amoral.
Yes, onward march, ye deeply principled consultants seeking knowledge and truth. Just be sure to put it all on Wickr.