McKinsey’s Work for Saudi Arabia Highlights its History of Unsavory Entanglements

For most of McKinsey & Company’s nearly hundred-year history consulting for companies and governments around the world, the firm has enjoyed a reputation for discretion and professionalism in its work. Its name evokes a certain mystique: hiring McKinsey telegraphs to employees and competitors that a company is serious about tackling a particular problem—whether it involves reorganizing its business, cutting costs, or launching a new line of products—and that the company is willing to spend millions of dollars for the most sophisticated advice. At the same time, part of what makes McKinsey different from other firms is its insistence that it not be acknowledged for its work; a client often agrees not to publicly disclose the fact that it has hired McKinsey. Part of what the firm is selling is credit for its ideas, in addition to the ideas themselves. “If McKinsey has a great idea and you follow their advice and everything works out, you never see McKinsey running around saying, ‘That was our idea,’ ” Duff McDonald, the author of “The Firm: The Story of McKinsey and Its Secret Influence on American Business,” told me. “But at the same time, part of the sale is that they take no responsibility for the result. They are saying to the client, ‘You can have all the credit you want, but you cannot push a bad outcome on us.’ ”

The limitations of this model came into sharp focus recently, with the revelation that McKinsey may have inadvertently played a role in Saudi Arabia’s mistreatment of critics. On October 20th, the Times reported that the government of the Saudi crown prince, Mohammed bin Salman, had employed operatives to harass dissidents, including the Saudi journalist Jamal Khashoggi, who was allegedly murdered inside the Saudi consulate in Istanbul, on October 2nd. The article included the revelation that McKinsey had prepared a nine-page report measuring the public perception of certain Saudi economic policies, and cited three individuals who were driving much of the largely negative coverage on Twitter. read more »

France's Perenco, Russia's Gazprombank named in Venezuela graft case

Anglo-French oil company Perenco and Russian financial firm Gazprombank have been identified in testimony by a former Venezuelan state oil company official who said he received millions of dollars in bribes in return for giving them preferential treatment, a source with knowledge of the matter said on Thursday.

Abraham Ortega, a former financial executive at state oil company PDVSA, accepted $5 million in bribes to favor a French oil company and from a Russian bank, U.S. prosecutors in Florida said on Wednesday in a statement. read more »

Goldman Sachs Ensnarled in Vast 1MDB Fraud Scandal

Goldman Sachs is facing one of the most significant scandals in its history, a multibillion-dollar international fraud that investigators say was masterminded by a flamboyant financier with a taste for Hollywood and carried out with help from the Wall Street firm’s bankers.

Federal prosecutors on Thursday unveiled a guilty plea from one former Goldman Sachs banker and announced bribery and money laundering charges against a second banker, as part of an investigation into the alleged embezzlement of billions of dollars from a state-run investment fund in Malaysia. Prosecutors also brought charges against the Malaysian businessman they believe stole some of the money: Jho Low, who spent millions of dollars on gifts to celebrities like the actor Leonardo DiCaprio and the model Miranda Kerr.

The money was used to buy a Picasso painting, diamond necklaces and Birkin bags as well as to pay for the Hollywood blockbuster “The Wolf of Wall Street.” Najib Razak, the Malaysian prime minister who established and oversaw the so-called sovereign wealth fund, lost his re-election bid over the scandal, in which American prosecutors said $731 million of the missing money was deposited into his own bank accounts. read more »

Trump-era rollback of Dodd-Frank leaps forward

The Trump-era rollback of bank regulations took another major step forward Wednesday.

The Fed unveiled its plan for significantly paring back rules for regional and community banks, a move that answers the directive Congress handed regulators earlier this year.

The proposal removes a class of big-but-not-Wall-Street-big institutions from some of the stringent oversight they have faced since the passage of the Dodd-Frank Act in the wake of the financial collapse a decade ago. read more »