Earlier this year, I surveyed the record of the consulting firm McKinsey. A stint at McKinsey is a common item on the résumés of many who end up influential in other parts of society. McKinsey’s business model tends toward a kind of soulless technocracy that can make it so attractive to the morally uncertain products of our higher-education system who emerge from said system sure primarily of one thing: that they should be telling people what to do. (Transportation secretary Pete Buttigieg being the quintessential example.)
These are only two of the reasons why, as I wrote in May, “a commitment to free markets in the abstract does not oblige conservatives to defend McKinsey in particular.” Additional reasons to be uncomfortable with McKinsey arise from its record of dealing with foreign governments. Such dealings have been nefarious in multiple countries, but nowhere worse than in China:
Meanwhile, outside of the U.S., McKinsey has helped to facilitate the economic rise of China, in a manner beyond even the mere investment and engagement of other American companies with Chinese business. According to the New York Times, “In China, it has advised at least 22 of the 100 biggest state-owned companies — the ones carrying out some of the government’s most strategic and divisive initiatives.” One of McKinsey’s Chinese clients helped construct that nation’s artificial islands in the South China Sea, an obvious military venture. And perhaps most shocking, a few years ago some McKinsey employees attended a corporate retreat in Xinjiang Province, riding camels and relaxing in high-class resorts just a few miles away from Uyghur concentration camps.
Yesterday brought news that McKinsey’s relationship with the Chinese government goes deeper than it had previously admitted. According to NBC:
The management consulting firm McKinsey & Co. has acknowledged a commercial connection to “the Chinese government,” according to a court document, even though the firm told a senator it had no business ties to the Beijing regime.
According to Sen. Marco Rubio, R-Fla., McKinsey told him in July 2020 that it did not work with the Chinese government or the ruling Communist Party. Company executives repeated the assertion in a Zoom conference call in March with Rubio’s advisers, according to Rubio.
But in a bankruptcy case involving the offshore drilling firm Valaris, in which it applied to act as an adviser, McKinsey disclosed a commercial connection to the “Chinese government,” according to a September 2020 court document.
McKinsey, naturally, denies wrongdoing:
A spokesperson said that McKinsey did not perform work for the Chinese central government, only for provincial and local governments in China, and that it had made that clear in previous correspondence with Rubio’s office.
“We have been consistent and transparent in all of our communications with Sen. Rubio’s office,” the spokesperson said. In its July 2020 letter with Rubio, McKinsey had said a small part of its work in China was with local and provincial governments related to economic zones, urban planning and real estate, the spokesperson said.
The disclosure in the bankruptcy case “reflects an accurate description of client service that includes local and provincial government, and is entirely consistent with the type of work we communicated openly about with the Senator’s office,” the spokesperson said. “In no way does it refer to work for the Central Government, Communist Party of China or the Central Military Commission of China, none of which are clients of McKinsey, and to our knowledge, have never been clients of McKinsey.”
But, as Rubio points out, “any dealings with the Chinese government are necessarily dealings with the CCP.” Moreover, this same disclosure also revealed ties between McKinsey and Shenzhen Dajiang Baiwang Technology Co., “a manufacturing facility specializing in unmanned aerial vehicles that is owned by the Chinese drone maker DJI.” Just yesterday, the Treasury Department added DJI to a list of Chinese technology firms it was essentially cutting off from the U.S. market. According to the Treasury Department, the companies “actively support the biometric surveillance and tracking of ethnic and religious minorities in China, particularly the predominantly Muslim Uyghur minority in Xinjiang.”
Good on Senator Rubio for forcing this disclosure. And shame on McKinsey for its supporting America’s enemy.