McKinsey has mastered the art of not speaking truth to power

By | December 15, 2018

The New York Times reports:

When Senate investigators wanted to know why Jared Kushner, Mr. Trump’s son-in-law, met with the head of a Russian bank under sanctions shortly after the 2016 presidential election, Mr. Kushner explained that, as far as he had been told, the bank chief had “a direct line to the Russian president.

It is easy to see how. The bank — Vnesheconombank, or VEB — is owned by the Russian government and overseen directly by Mr. Putin’s inner circle. The bank’s former chief — the one Mr. Kushner met — graduated from the training school of the F.S.B., the successor agency of the K.G.B. The bank has also come under scrutiny in Congress and by the special counsel investigating possible collusion in the 2016 election.

And the bank is a McKinsey client.

In August, VEB hired the consulting firm to develop its business strategy — one of several companies that are under sanctions and that McKinsey advises.

Sberbank — a state-controlled bank that is on the sanctions list and that sponsored Mr. Trump’s Miss Universe contest in Moscow in 2013 — is also a McKinsey client. In 2016, it agreed to pay the firm up to $5.2 million for advice on restructuring.

Yet another state-owned bank under sanctions, VTB, agreed to pay McKinsey about $4.4 million in 2017 to develop information technology.

McKinsey’s work in Russia is extensive. Its Moscow office, the largest of the Western consulting firms working there, has handled about 2,000 projects, working with market leaders in oil, gas, banking and retail, as well as the mining of diamonds, gold and coal. One of its senior partners is the son of the Nobel Prize-winning novelist Aleksandr Solzhenitsyn.

McKinsey is so valued in Russia that even as Mr. Putin and Western nations clashed over Ukraine, a partner in the firm served on a Russian energy commission until 2015, along with several business executives who were either the target of individual sanctions or had ties to companies under sanction.

McKinsey clients help expand Russia’s reach abroad. One of them — PhosAgro, a fertilizer giant with ties to the Kremlin — is pushing hard for new regulations that would give it greater control over Europe’s food supply. The European Union already had concerns about Russian influence over its natural gas supply, much of which came from Gazprom, another Russian company under sanctions that McKinsey has advised on strategy and pricing. [Continue reading…]

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