I’ve relished the past few weeks. There is little that could make me happier than seeing two of the largest US-based management consultants, McKinsey and Bain, getting their comeuppance.
All I can think of that would satisfy me more would be the sight of a few of their partners discarding their sharply cut suits in exchange for orange overalls and being led away shackled to the likes of Brian Molefe, Anoj Singh and Tom Moyane.
My only sympathies would lie with the prison warders and the other inmates compelled to share their workplace and accommodation with such unsavoury characters.
Now that Bain has been banned from government contracts and McKinsey slapped with criminal charges, it would, in the name of non-discrimination, only be fair for the ban to be extended to McKinsey and for criminal charges to be laid against Bain.
My understanding is that McKinsey has only been charged for its conduct at Transnet. I trust that the National Prosecuting Authority will get around to looking at how it looted Eskom and charge the consultancy for that as well.
The SA government should not take this personally. Though McKinsey and Bain clearly identified the SA public sector as an easy mark, it’s not only public money that they’re after. I vividly recall receiving a call from a prominent SA business person immediately after Corruption Watch (for which I used to work) announced that it was referring McKinsey’s conduct to the US justice department for possible criminal prosecution.
I expected that I would be remonstrated with for questioning the integrity of business royalty. Instead I was offered assistance in taking on McKinsey, which it appears had ripped off the business person’s firm in a manner similar to how state-owned enterprises had been treated. It would only be right and proper for SA’s business associations to advise their members to take the same distance from the two firms as the public sector has.
Lucrative conflicts
Nor is it only the prospect of grabbing SA money that arouses its well-honed predatory instincts. In their recently published book When McKinsey Comes to Town, New York Times investigative journalists Walt Bogdanich and Michael Forsythe lay bare the hypocrisy and unadulterated greed that characterised the global McKinsey modus operandi, all the while presenting while it presented itself as a “values-driven organisation”.
Want to know how to do lucrative interest conflicts? Go to McKinsey. It has managed to work for multiple firms within the same sector and for their regulators; it has worked for big tobacco while simultaneously advising healthcare providers dealing with the consequences of tobacco and the US Food & Drug Administration; it can tell you how to reduce carbon emissions while advising fossil fuel companies.
Want to “right size” your company (that is, fire employees)? McKinsey is the gold standard: Bogdanich and Forsythe cite a 2013 book in which the author wrote that McKinsey may be “the single greatest legitimiser of mass layoffs than anyone, anywhere, at any time in modern history”.
Want to peddle an addictive drug? McKinsey is your man: when Purdue Pharma’s sales of its deadly opioid OxyContin began to level off, it went to McKinsey, which advised Purdue on how to “turbocharge” sales, including advising it to offer a rebate to retail pharmacies based on the number of their customers who overdosed on the deadly drug. A former McKinsey employee characterised the firm’s philosophy as “We don’t do policy. We do execution.” You’d better believe him!
High-flying consultancies
Both companies have paid back the astronomical fees they extracted from SA public institutions, but in no way does this represent restitution. How does one calculate the continuing damage done by Bain to the SA Revenue Service’s ability to optimise the tax revenues necessary to support the economy and the poorest members of the population? How does one calculate the damage done by McKinsey to Transnet and Eskom? The Zondo state capture commission got it wrong when it applauded McKinsey for returning its fees — it should rather have recommended criminal prosecution.
And what of the individual perpetrators? Both firms’ leaders in the period when they looted the SA public purse — Vikas Sagar of McKinsey and Vittorio Massone of Bain — were quickly spirited out of the country when their conduct was exposed. Sagar has now been indicted for his role in looting Transnet. But what action did their firms take? Were they fired or “let go”? If the latter, did their severance packages recognise them for the rain they made for their companies? Both are now leading high-flying consultancies in their home countries.
And what of those in their head offices? Don’t believe they didn’t know what was going on in SA — McKinsey’s contract with Eskom was said to be its largest in Africa. Did the Bain head office never ask Massone how he managed to persuade the SA president to climb into his pocket?
One final secret that should be exposed: we will not miss them. I have had the misfortune to sit through presentations by these companies to various state-owned enterprise boards on which I served. Trust me, they offer nothing other than snake oil in Krug champagne bottles.
I recall one presentation — I can’t remember by which of the two firms — in which the presenters forgot to remove the word “Malawi” from the presentation. They had clearly pulled a previous presentation in another country out of the bottom drawer and dished it up to an SA parastatal. SA, Malawi — both suckers, there for the taking.
The competitive advantage of both companies is not their wisdom or managerial experience; it is their address books, the presidents, ministers and CEOs they have on speed dial. The kind of people who think because another country or another company thought their obscene fees worthwhile, we should have them as well. Or even better, the kind of president or CEO who sees them for what they are and calculates that the more he pays them, the greater his share of the proceeds.
We don’t need either Bain or McKinsey’s corrupting influence in our country. We have quite enough of the home-grown variety. Good riddance to bad rubbish.
• Lewis, a former trade unionist, academic, policymaker, regulator and company board member, was a co-founder and director of Corruption Watch.
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