Why Is McKinsey Providing Counsel to Both China and the US?

Members of a Chinese honor guard wear face masks as they march in formation near the Great Hall of the People on Tiananmen Square in Beijing, China, on Feb. 4, 2020. (Mark Schiefelbein/AP Photo)

Commentary

Powerful people, including ex-presidents, have spoken about shadow governments: the idea that real power resides with private individuals, not with elected officials.

“Behind the ostensible government,” warned Teddy Roosevelt, “sits enthroned an invisible government owing no allegiance and acknowledging no responsibility to the people.” The first task of a true statesman, he argued, involves the destruction of “this invisible government, to befoul the unholy alliance between corrupt business and corrupt politics.”

More than a century on, the words of the 26th president of the United States still resonate. In fact, they couldn’t be more appropriate. If alive today, one wonders what Roosevelt would make of McKinsey & Co., the so-called trusted adviser and counselor to some of the world’s most influential organizations and institutions.

In fact, McKinsey is so powerful that it “counsels” both the U.S. government and influential Chinese state-owned organizations, according to a new NBC News investigation. The term “conflict of interest” instantly springs to mind. But, one might respond, where is the conflict exactly? Who cares where the multimillion-dollar deals come from, just as long as they keep coming? Those at McKinsey are free to do business in any way they see fit, as long as it’s legal.

The Biden administration, however, should be more cautious.

As the NBC News report so clearly demonstrates, McKinsey’s willingness to liaise with Beijing and Washington poses a significant national security threat. McKinsey’s consulting contracts with the U.S. government give it access to “military planning, intelligence, and high-tech weapons programs,” according to the report. At the very same time, the same people with access to the Pentagon’s plans are advising Chinese state-run enterprises “that have supported Beijing’s naval buildup in the Pacific and played a key role in China’s efforts to extend its influence around the world.”

McKinsey appears to have a soft spot for despotic regimes. In December 2018, employees attended a retreat in Kashgar, a city in China’s Xinjiang region. Meanwhile, just a few miles away, members of the Uyghur ethnic minority were—and still are—being tortured.

In a bombshell report, The New York Times wrote the following: “At a time when democracies and their basic values are increasingly under attack, the iconic American company has helped raise the stature of authoritarian and corrupt governments across the globe, sometimes in ways that counter American interests.”

That didn’t seem to bother McKinsey consultants, many of whom spent their time riding camels and sitting around blazing bonfires, according to the NY Times report. The consultants lavished praise on their Chinese hosts, with one employee calling the retreat a “Disney-like” experience on Instagram.

Interestingly, shortly after the NY Times report, Dominic Barton, a man who oversaw McKinsey until 2018, became Canada’s ambassador to China. His Wikipedia page even includes his Chinese name, Bao Damin (Chinese: 鲍达民).

Canada's Ambassador to China Dominic Barton, former managing director of McKinsey & Co., waits to appear before the House of Commons Special Committee on Canada-China Relations in Ottawa on Feb. 5, 2020. (Adrian Wyld/Canadian Press)

McKinsey’s other clients include Saudi Arabia and Turkey, two countries with a horrid history of human rights abuses. The consulting firm may have inadvertently played a role in Saudi Arabia’s harsh treatment of critics.

For this piece, I reached out to McKinsey for comment on the matter. I have yet to receive a response.

Considering McKinsey’s track record, why is the Biden administration liaising with the company?

Earlier this year, Matt Stoller, the director of research at the American Economic Liberties Project, warned President Joe Biden to steer clear of the uber-influential management consulting firm. McKinsey, he wrote, has played a significant role in ruining the U.S. spying apparatus with bloated, failed contracts. In Europe, McKinsey “structured France’s terrible coronavirus response.” Back home, meanwhile, it structured New York state’s disastrous coronavirus response. In 2019, as Stoller noted, McKinsey was “caught by the GSA Inspector General for cheating the government out of $65 million.”

Nevertheless, seven months on from Stoller’s piece, the Biden administration is still taking counsel from McKinsey. Interestingly, but not surprisingly, the firm appears to have played a significant role in helping draft and direct the Biden administration’s recent infrastructure bill.

Since its creation almost a century ago, McKinsey has grown to be one of the most influential (and somewhat mysterious) names in consulting. Roosevelt’s warning about those in the shadows should never be forgotten. Sadly, though, the Biden administration seems oblivious to the threat.

Views expressed in this article are opinions of the author and do not necessarily reflect the views of The Epoch Times.