Dear Commons Community,
For nearly a century, McKinsey & Company has advised corporations, non-profit entities, and governments on a host of issues. Its studies are cited frequently in newspapers, magazines, and scholarly publications. According to an investigation that included interviews with 40 current and former McKinsey employees, the New York Times has an article this morning highly critical of McKinsey for work that supports autocratic governments. Here is an excerpt:
“At a time when democracies and their basic values are increasingly under attack, the McKinsey has helped raise the stature of authoritarian and corrupt governments across the globe, sometimes in ways that counter American interests.
Its clients have included Saudi Arabia’s absolute monarchy, Turkey under the autocratic leadership of President Recep Tayyip Erdogan, and corruption-plagued governments in countries like South Africa.
In Ukraine, McKinsey and Paul Manafort — President Trump’s campaign chairman, later convicted of financial fraud — were paid by the same oligarch to help burnish the image of a disgraced presidential candidate, Viktor F. Yanukovych, recasting him as a reformer. Once in office, Mr. Yanukovych rebuffed the West, sided with Russia and fled the country, accused of stealing hundreds of millions of dollars. The events set off years of chaos in Ukraine and an international standoff with the Kremlin.
Inside Russia itself, McKinsey has worked with Kremlin-linked companies that have been placed under sanctions by Western governments — companies that the firm helped build up over the years and, in some cases, continues to advise.
It has consulted in many sectors of the Russian economy, including mining, manufacturing, oil and gas, banking, transportation and agriculture. A McKinsey official sat on the Russian government’s energy board. Former McKinsey consultants have gone to work in the Russian companies they once advised.
In August, VEB Bank — which is wholly owned by the Russian state, intertwined with Russian intelligence and under United States sanctions — hired McKinsey to develop its business strategy.
There is no indication that McKinsey has violated American sanctions, which prohibit only certain transactions with targeted companies and individuals. But the larger question is whether the company, in pursuing legitimate business opportunities abroad, is helping to shore up President Vladimir V. Putin’s autocratic leadership.
Other consulting companies serve similar clients, but none have the stature to confer credibility quite like McKinsey, a confidant for 92 years to many of the world’s most admired companies.
In China, it has advised at least 22 of the 100 biggest state-owned companies — the ones carrying out some of the government’s most strategic and divisive initiatives, according to a review of Chinese-language material by The Times.
While it is not unusual for American corporations to work with China’s state-owned companies, McKinsey’s role has sometimes put it in the middle of deeply troubled deals. In Malaysia, the company laid out the case for one of Asia’s most corrupt leaders to pursue billions of dollars from China at a time when he was suspected of funneling vast sums of public money into his own pocket, drawing tens of thousands into the streets to protest against him.
McKinsey defends its work around the world, saying that it will not accept jobs at odds with the company’s values. It also gives the same reason that other companies cite for working in corrupt or authoritarian nations — that change is best achieved from the inside.
“Since 1926, McKinsey has sought to make a positive difference to the businesses and communities in which our people live and work,” the company said in a statement.
“Tens of thousands of jobs have been created, lives improved and education provided thanks to the work we have done with our clients,” it added.
“Like many other major corporations including our competitors, we seek to navigate a changing geopolitical environment,” the company said, “but we do not support or engage in political activities.”
Still, some analysts, veteran diplomats and experts on global governance see McKinsey’s role in a different light.
While the United States pulls back from international cooperation and adopts a more nationalist stance, major companies like McKinsey are pursuing business in countries with little regard for human rights — sometimes advancing, rather than curbing, the contentious tactics of America’s biggest rivals.
“It is more likely they enable these regimes and likely become complicit,” said David J. Kramer, a former assistant secretary of state. “They don’t want to alienate regimes, or they would lose business.”
The article goes on to paint a troubling picture of this major American institution. Worth a read.
Tony
This entry is licensed under a Creative Commons Attribution-NonCommercial-ShareAlike 4.0 International license.
