According to Senator Marco Rubio from Florida, the world’s largest management and consulting firm McKinsey & Co. “appears to have lied” in regards to its connections with the Chinese government.
Rubio said McKinsey executives told him and his staff in July last year that it had not worked with the Chinese government or its affiliates. According to Rubio, company executives from McKinsey had also repeated Rubio’s assertion in a Zoom call with advisers in March.
Now, a court document, however, reveals the firm acknowledging that it had “commercial connections” to the Chinese government through its work with state-owned companies. The document from September 2020 is a bankruptcy case involving the offshore drilling firm Valaris, in which McKinsey applied to act as an adviser.
Rubio had previously demanded more transparency from the firm, asking it to provide detailed information on its dwellings in China and how it prevents conflicts of interest between its consulting work for the U.S. government and for clients with close ties to the Chinese Communist Party (CCP).
McKinsey has carried out sensitive consulting work for the Pentagon and U.S. intelligence agencies while also performing work for enterprises in China that have openly backed the Chinese military. The company’s work in China has drawn growing scrutiny from lawmakers, who claim it poses risks to national security.
Rubio: McKinsey & Company ‘cannot be trusted’
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In a letter addressed to McKinsey’s global managing partner Bob Sternfels on Dec. 17, Rubio expresses anger over the firm’s activities in China and “feeling misled” about the previous communications his office had with the company.
“It has come to my attention that McKinsey & Company appears to have lied to me and my staff on multiple occasions regarding McKinsey’s relationship with the Chinese Communist Party (CCP) and the Chinese government,” Rubio wrote.
“It is increasingly clear that McKinsey & Company cannot be trusted to continue working on behalf of the United States government, including our Intelligence Community.”
The letter also highlights specific connections between Mckinsey and Chinese companies linked to supporting China’s military buildup. “The bankruptcy court filing also describes numerous other questionable ‘client connections’ that McKinsey failed to acknowledge to my staff and I in the past, including China Construction Bank, China Resources Holdings Company Limited, China Petroleum & Chemical Corporation, and many others,” adding that, “As you well know, any dealings with the Chinese government are necessarily dealings with the [Chinese Communist Party] CCP.”
Analysts have noted that Chinese state-owned enterprises like the ones McKinsey has worked with have clear links to the CCP and have seen its officials embedded within the top layers of leadership.
McKinsey denies wrongdoing
A spokesperson for the firm said that McKinsey did not perform work for the Chinese central government and only provided advice to provincial and local offices. It also added that previous correspondence with Rubio’s office had made all this information clear.
“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 acknowledged having worked on small projects with local and provincial governments related to “economic zones, urban planning and real estate.”
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 source added. “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.”
The bankruptcy disclosure for Valaris cites McKinsey referring to the “Chinese government” but does not specify whether the client is part of a provincial or central government.
According to Liz Hilton Segel, managing partner for McKinsey’s North America operations, the company’s policy prohibits work with political parties or government bodies.
“We do not serve political parties anywhere in the world,” Hilton Segel said and repeated that “to our knowledge, [neither the Chinese Communist Party nor the Chinese government] has ever been a client of McKinsey.”