6 ms·

I bet McKinsey also never told the Department of Transportation that it was working for both the DoT and major car manufacturers. Executives senior enough to a

I bet McKinsey also never told the Department of Transportation that it was working for both the DoT and major car manufacturers. Executives senior enough to approve hiring McKinsey to study something, whether they're F500 CEOs or government agency heads, know full well that the top consulting firms are all advising their competitors, counterparties, and regulators/regulatees. The facts reported in this article would indeed be scandalous if they included evidence that the FDA team at McK was tipping the pharma teams on private FDA plans or discussions, but that is not the case. If anything, this case is merely illustrative of why major consulting firms have borderline-paranoid cultural norms around never discussing client work outside of the respective client team, even (and especially) to one's own colleagues at the firm who are not staffed on said team.

danso 5y ago
Sure, but the requirement for disclosure seems pretty straightforward: > . McKinsey’s contracts with the FDA, which ProPublica obtained after filing a FOIA lawsuit, contained a standard provision obligating the firm to disclose to agency officials any possible organizational conflicts. One passage reads: “the Contractor agrees it shall make an immediate and full disclosure, in writing, to the Contracting Officer of any potential or actual organizational conflict of interest or the existence of any facts that may cause a reasonably prudent person to question the contractor’s impartiality because of the appearance or existence of bias.”
burkaman 5y ago
Did anybody here read the article? I don't want to keep pasting the same quotes on every comment, but McKinsey just paid $30 million to settle a case where they did the exact same thing to the Department of Justice. Why would they do that if this is normal and nobody cares? The contract language is very clear: they have to disclose potential conflicts (even if "everybody already knows"), and they didn't.
- notyourday 5y ago
  These as fines are too small. It is just a cost of doing business. The fines should be devastating so getting 5-6 of such fines should be a death penalty for the company
  - eesmith 5y ago
    And staff should go to jail.
  - jacobr1 5y ago
    The fines aren't big enough to change their business, but they are quite possibly big enough to change their _proceedures_. I can easily imagine there becomes more stringent internal rules and processes on disclosures, even if they keep doing business the same way in general. If we are talking about fines that could cause the firm to go out of business, we need evidence of actual abuse of position. I'm not sure failure to disclose, by itself, is a sufficient transgression. On the other hand, it seems that it might be fair to penalize firm their fee on the contract, or a meaningful portion of it, on the basis of breach of contract. I'm not sure if that would be higher or lower than the current penalty.
  - twobitshifter 5y ago
    Mckinsey is paying 600 million to states which is 10-20% of yearly profits. https://www.forbes.com/sites/r https://www.forbes.com/sites/r obertzafft/2021/02/07/mckinseys-573-million-absolution--value-for-money--but-for-whom/?sh=517a72c56429
    - nawgz 5y ago
      Yes, which is his point, 10-20% of yearly profits is a literal cost of doing business, and not a particularly damaging one. Most companies would gladly trade 20% profit in order to control information from every side of their industry...
      - robertlagrant 5y ago
        It's less than that if it's a tax write-off too :-)
- throwaway0a5e 5y ago
  >but McKinsey just paid $30 million to settle a case where they did the exact same thing to the Department of Justice. Why would they do that if this is normal and nobody cares? Yes and? This is normal. Nobody cares as long as you do it right. Just because the desk that deals with DOJ did it wrong doesn't mean the desk that deals with FDA did. You see these kinds of complicated, seemingly conflicting, relationships in high finance all the time. In practice it's a non-issue because of how these companies are structured and because they try to keep clients at arms length as a matter of routine business. The business relationship here is very similar to one that AWS and Azure may have with a 3rd party datacenter contractor. Sure one could pay the contractor for tips but in practice that doesn't happen except very rarely because of how everything is structured.
  - burkaman 5y ago
    > Just because the desk that deals with DOJ did it wrong doesn't mean the desk that deals with FDA did. But...they did. They didn't disclose their conflicts, unless the FDA is lying for some inexplicable reason. Again, it's in the article, it's not that long. > You see these kinds of complicated, seemingly conflicting, relationships in high finance all the time. You sure do. > it's a non-issue because of how these companies are structured These companies are structured to make money by any means necessary. Just a few years ago McKinsey corrupted government officials and used them to get contracts with utilities and infrastructure providers. Was there a firewall between the government desk and the utilities desk?

danso 5y ago

Sure, but the requirement for disclosure seems pretty straightforward: > . McKinsey’s contracts with the FDA, which ProPublica obtained after filing a FOIA lawsuit, contained a standard provision obligating the firm to disclose to agency officials any possible organizational conflicts. One passage reads: “the Contractor agrees it shall make an immediate and full disclosure, in writing, to the Contracting Officer of any potential or actual organizational conflict of interest or the existence of any facts that may cause a reasonably prudent person to question the contractor’s impartiality because of the appearance or existence of bias.”

burkaman 5y ago

Did anybody here read the article? I don't want to keep pasting the same quotes on every comment, but McKinsey just paid $30 million to settle a case where they did the exact same thing to the Department of Justice. Why would they do that if this is normal and nobody cares? The contract language is very clear: they have to disclose potential conflicts (even if "everybody already knows"), and they didn't.

notyourday 5y ago
These as fines are too small. It is just a cost of doing business. The fines should be devastating so getting 5-6 of such fines should be a death penalty for the company
- eesmith 5y ago
  And staff should go to jail.
- jacobr1 5y ago
  The fines aren't big enough to change their business, but they are quite possibly big enough to change their _proceedures_. I can easily imagine there becomes more stringent internal rules and processes on disclosures, even if they keep doing business the same way in general. If we are talking about fines that could cause the firm to go out of business, we need evidence of actual abuse of position. I'm not sure failure to disclose, by itself, is a sufficient transgression. On the other hand, it seems that it might be fair to penalize firm their fee on the contract, or a meaningful portion of it, on the basis of breach of contract. I'm not sure if that would be higher or lower than the current penalty.
- twobitshifter 5y ago
  Mckinsey is paying 600 million to states which is 10-20% of yearly profits. https://www.forbes.com/sites/r https://www.forbes.com/sites/r obertzafft/2021/02/07/mckinseys-573-million-absolution--value-for-money--but-for-whom/?sh=517a72c56429
  - nawgz 5y ago
    Yes, which is his point, 10-20% of yearly profits is a literal cost of doing business, and not a particularly damaging one. Most companies would gladly trade 20% profit in order to control information from every side of their industry...
    - robertlagrant 5y ago
      It's less than that if it's a tax write-off too :-)
throwaway0a5e 5y ago
>but McKinsey just paid $30 million to settle a case where they did the exact same thing to the Department of Justice. Why would they do that if this is normal and nobody cares? Yes and? This is normal. Nobody cares as long as you do it right. Just because the desk that deals with DOJ did it wrong doesn't mean the desk that deals with FDA did. You see these kinds of complicated, seemingly conflicting, relationships in high finance all the time. In practice it's a non-issue because of how these companies are structured and because they try to keep clients at arms length as a matter of routine business. The business relationship here is very similar to one that AWS and Azure may have with a 3rd party datacenter contractor. Sure one could pay the contractor for tips but in practice that doesn't happen except very rarely because of how everything is structured.
- burkaman 5y ago
  > Just because the desk that deals with DOJ did it wrong doesn't mean the desk that deals with FDA did. But...they did. They didn't disclose their conflicts, unless the FDA is lying for some inexplicable reason. Again, it's in the article, it's not that long. > You see these kinds of complicated, seemingly conflicting, relationships in high finance all the time. You sure do. > it's a non-issue because of how these companies are structured These companies are structured to make money by any means necessary. Just a few years ago McKinsey corrupted government officials and used them to get contracts with utilities and infrastructure providers. Was there a firewall between the government desk and the utilities desk?