McKinsey dukes it out with the NYT to deny its alleged $12.3B conflict of interest

McKinsey is fighting back against the NYT’s claims that its investment division represents a conflict of interest with its consulting business.

February 20, 2019

According to a scathing new report from The New York Times, the consulting company McKinsey also operates a secretive $12.3B hedge fund that may benefit from its sister company’s consulting projects.

McKinsey, the largest and most prestigious of ‘The Big 3’ consulting giants, is a notoriously secretive company. But after reporting accused the company of egregious conflicts of interest, ol’ McK’ey is fighting back.

Oh MIO my

Unlike all other major consulting companies, McKinsey operates an investment fund: MIO Partners (the more common name for the “McKinsey Investment Office”) invests billions on behalf of its 30k+ employees.

McKinsey claims that its investment division operates independently of its consulting division, and that MIO was created as an entirely separate entity to compete with Wall Street finance firms in the “war for talent.”

But the NYT claims many MIO directors are former McKinsey consultants. Even worse, it alleges that some of McKinsey’s consulting clients are also MIO investments — a claim McKinsey vehemently denies. 

A quick comeback from ’Kinsey

Hours after the Times published its article, McKinsey’s PR machine had already paid to advertise its rebuttal on Google.

McKinsey said the report was “fundamentally” misleading and insisted that “90% of MIO’s capital is managed by external third-party managers and there is a “strict ‘information barrier’” between the 2 companies.

But regardless of who wins this game of he-said-she-said, these aren’t the first allegations against McKinsey.

The long list of McKinsey’s (maybe) mistakes 

The Times published an article about McKinsey’s role in incubating authoritarian governments in mid-December, and exposed McKinsey’s involvement in a bribery case just 2 weeks later.

McKinsey is such a secretive company that it’s often difficult to trace its investments. But plaintiffs have also accused McKinsey of funneling money to fugitives and investing in unscrupulous pharma giants.

McKinsey is currently tied up in several Justice Department lawsuits due to “pervasive disclosure deficiencies.”  Just yesterday McKinsey settled one of its several lawsuits for $15m — outside of court, of course.

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