McKinsey hits back at New York Times accusations in Asia and beyond

20 December 2018 Consultancy.asia

McKinsey has returned fire on criticism levelled at the firm from influential media outlet the New York Times with the release of a special statement.

After a sustained pounding from the New York Times over the past year, the global strategy and management firm McKinsey & Company has finally hit back, refuting numerous claims made by the US media outlet in its latest lengthy report on the firm’s alleged support of authoritarian activities in Asia and other parts of the globe – classifying the report as ‘deeply misleading’ and going so far as to suggest that the Times was persuing the story with an agenda.

“Yesterday’s New York Times article painted a misleading picture, one that selectively uses a handful of client engagements and one office retreat to fundamentally mischaracterise our firm’s presence in large parts of the world,” McKinsey countered in a media statement. “In building their narrative, the reporters ignored or discounted facts that did not support their argument. They used innuendo and implied causality to build a deeply misleading account of how we operate.”

Holding its punches to a degree, the McKinsey statement further alleges evident bias in the New York Times’ reporting; “We became concerned the Times was pursuing this story with an agenda when a client forwarded us an email they received from one of the authors of yesterday’s article seeking information about connections, ‘no matter how tenuous,’ between our firm and ‘institutions that support anti-democratic activities’ in a certain country.”

The press release was in direct response to a lengthy Times article which detailed McKinsey’s engagements with a number of state-owned or connected entities and political actors in China, Malaysia, Ukraine and Russia eventuating in political scandals or alleged business corruption, and follows a sustained peppering by the Times in recent months including lengthy penetrations of McKinsey’s direct or peripheral involvement in scandals in South Africa and Saudi Arabia.

While noting that there was no indication that McKinsey had violated any American sanctions in relation to its latest reporting, the article suggests the firm has been complicit in enabling authoritarian regimes. “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,” the Times wrote, without any trace of irony as to the current US domestic political climate.McKinsey hits back at New York Times accusations in Asia and abroadContinuing with its defence as a globally operating firm, McKinsey states that it engaged with the Times’ reporters to explain the firm’s approach to client service and selection. “(W)e fundamentally disagreed with the assertion that our colleagues in Southeast Asia, China, Eastern Europe and the Middle East should not be serving clients where we have a demonstrated record of making a positive difference in the countries where they live, and on behalf of their fellow citizens. Together, these countries represent more than two billion people.”

One of the primary threads in the Times’ report concerned McKinsey providing consultancy for 22 of the 100 biggest state-owned companies in China – including the China Communications Construction Company (CCCC) – as well as for the Malaysian government, then led by disgraced former prime minister Najib Razak, which selected CCCC for a $13 billion contract to construct the now abandoned East Coast Rail Link project as part of China’s Belt and Road initiative – a massive international development programme which McKinsey has heavily championed.

Here, the Times’ report cited a confidential McKinsey presentation in which the strategy firm suggests the rail project had the potential to increase economic growth in certain parts of the country by up to 1.5 percent, while further promoting the idea that such a project would help improve bilateral relations and, according to the Times, endorsing ‘the idea of heavy borrowing from China’ – the firm then widely ‘extolling the benefits of the Belt and Road Initiative’ in the media and through in-house publications. McKinsey, in response, said that of course it would discuss China’s sweeping Belt and Road plans.

“Broad swaths of the Times’ narrative are at fundamental odds with how our firm works, such as the article’s insinuation that we have somehow orchestrated our work across multiple clients to support China’s Belt-and-Road initiative,” McKinsey countered. “To portray us as working behind the scenes to advance any government’s agenda – across independent client teams and projects – is simply untrue. We also dispute the inference that our client service on individual projects related to China’s Belt-and-Road initiative is somehow inappropriate. Each engagement was conducted and evaluated on its merits and not in any way as part of a coordinated effort to advance the initiative.”

“Like many other major corporations, including our competitors, we seek to navigate a changing geopolitical environment, but we do not support or engage in political activities,” the firm continued. “In Malaysia, we evaluated the feasibility of the proposed East Coast Rail Link. Our role was limited to studying socio-economic impact and financial feasibility. We played no role in the Malaysian government’s selection of [CCCC]. Most importantly, in this engagement we abided by one of our values: we told our client the truth. We advised that the project was not financially sustainable as scoped and recommended an alternative approach. This alternative approach was unfortunately not adopted by the government.”

Meanwhile, in what a appears to be a coordinated counter-offensive, McKinsey Global Managing Partner Kevin Sneader has opened up after intense criticism of the firm’s activities in Saudi Arabia in the wake of journalist Jamal Khashoggi’s murder and subsequent revelations a McKinsey document may have led to a crackdown on Twitter-based critics of the administration, telling the Australian Financial Review in an exclusive interview that the he was proud of the firm’s extensive record in the Kingdom and that it was acting as a ‘force for good.’