From McKinsey’s 57-page handbook entitled, “Bankruptcy 101,” we have the following:
“In representing a bankrupt company, we must avoid conflicts of interest and the appearance of conflicts of interest.”
. . .
Failure to adequately disclose material connections may result in severe penalties and fines.”
McKinsey did not disclose in any of its bankruptcy work that it has a $25 billion hedge fund, MIO, that manages retirement funds for McKinsey employees retirees, and former employees. And MIO had investments in the bankrupt companies, creditors, and a whole web of connections. Seems material enough and has all the appearances of a conflict.
McKinsey paid a $15 million fine to settle a case, without admitting guilt, brought by the Justice Department, for failure to disclose conflicts. McKinsey continues to resist, denying that there is a conflict and even expressing outrage that the proprietary company document, Bankruptcy 101, made its way to a reporter. (New York Times reporter, Mary Williams Walsh)
Someone please, take these folks aside and tell them how the cabbage is cut, conflicts-wise. We can’t take the denials any longer. And heed one more piece of advice in the handbook — you do not want your actions showing up “in the Wall Street Journal.” The Barometer is guessing that those who did not disclose will defend their actions as follows, “The book said Wall Street Journal.We only made it into the New York Times.” For the love of ethics, McKinsey, give it a rest. Things are just sounding silly now.