Big consulting firms take no credit and they accept no blame. This philosophy has enabled McKinsey & Company to profit with ease from work with authoritarian regimes, troubled businesses and corrupt state-owned enterprises. In South Africa, their work at Eskom and Transnet on some of the most infamous State Capture contracts reveals a story of a corporation willing to place profit above principle, and sometimes allegedly even the law. This week Open Secrets focuses on evidence in The Enablers investigative report that shows that McKinsey has not been held accountable for its role in State Capture. While it profited from its role in these contracts it shies away from meaningful responsibility for serious economic crimes.
See The Enablers investigative report here.
McKinsey & Company is the largest of the so-called “Big Three” Management Consulting firms, which includes Bain & Co and the Boston Consulting Group. McKinsey is, however, the name most closely associated with management consulting. It is a global army of 17,000 consultants operating in 133 cities across 66 countries. For their efforts the firm is handsomely rewarded with a total annual global revenue estimated at over $10-billion in 2018.
McKinsey’s client list includes both top corporations and governments with poor human rights records including China, Ukraine’s ousted president Viktor Yanukovych, and state-owned entities in Saudi Arabia. McKinsey resolutely maintains that it makes a positive contribution in these countries.
McKinsey can boldly make this claim due to a central (and controversial) aspect of management consulting — the industry’s opacity. The “Big Three” operate behind a veil of secrecy. Fellow consulting firm Bain & Company, complicit in the destruction of SARS, has long-held a reputation as the “KGB of management consulting”. This is at least partly because of the complex relationship between consultants and their clients where secrecy and obfuscation of the precise responsibilities of each party are in the interests of both.
In this vein — on 25 February 2020 — Open Secrets received a letter from McKinsey requesting corrections for alleged “errors” in The Enablers and related coverage in the Financial Mail. While we have made some additions to our report, on the whole, McKinsey’s meandering seven-page response reflects a refusal of the firm to fully accept responsibility for its role in State Capture and the related economic and social costs. Rather they lay blame at the foot of unscrupulous public sector actors and inefficient SOEs.
They seek to deflect evidence that in its contracts with Gupta associates, Regiments Capital and Trillian Capital Management, McKinsey were delinquent in their duties in the pursuit of lucrative consulting fees. The evidence shows that McKinsey were essential enablers of gross corruption at Eskom and Transnet, and it is past due that they appear before the Zondo Commission to be interrogated in this regard.
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