Top Republican lawmakers are demanding that McKinsey be barred from securing federal contracts in the United States following revelations that a think-tank led by the consulting firm provided policy recommendations to the Chinese central government. Marco Rubio, Vice-Chair of the Senate Intelligence Committee, and Michael McCaul, Chair of the House Foreign Affairs Committee, accuse McKinsey of compromising U.S. security through its think-tank’s involvement in Beijing’s 13th five-year plan in 2015.
McCaul expressed shock at a U.S. company allegedly supporting the Chinese Communist Party’s efforts to develop policies violating international trade rules and jeopardizing American national security. The accusations stem from an FT report revealing that the Chinese government’s central planning agency commissioned McKinsey-led think-tank Urban China Initiative (UCI) to produce research for Beijing’s 2016-2020 five-year plan.
Bob Sternfels, McKinsey’s global managing partner, claimed ignorance of the firm working for the Chinese central government, but lawmakers argue that McKinsey provided false information about its relationship with the Chinese Communist Party. Rubio insists that further scrutiny is needed to understand McKinsey’s role in developing China’s five-year plans.
In response to the lawmakers’ statements, McKinsey rejected the allegations, emphasizing its long history of supporting the U.S. government. McKinsey has been awarded $1 billion in contracts from the U.S. federal government since 2008. However, it faced controversy and exclusion from consulting for the Food and Drug Administration for the past three years due to conflict of interest accusations related to its work for opioid manufacturers.
The UCI’s work for Beijing in 2015 involved a 310-page book advising increased cooperation between the Chinese military and business, advocating policies to push foreign companies out of sensitive industries. McKinsey’s in-house research arm contributed to the book, according to Lola Woetzel, UCI founder and co-chair, who is one of McKinsey’s senior partners in China.
Republican Senator Josh Hawley joined Rubio and McCaul, stating that McKinsey and any consulting firm aiding China should be banned from obtaining U.S. government contracts. Democrats on the House China committee expressed deep concern, pledging to investigate the matter. McKinsey, with annual revenues of about $16 billion globally, now faces increased scrutiny and calls for accountability regarding its alleged collaboration with the Chinese government.
Based on FT story on the subject.
