10 November 2019

Least Surprising News of the Day

There is now an investigation of the consultant McKinsey & Company over what appears to be egregious self-dealing in its bankruptcy consulting:
McKinsey & Company, the elite consulting firm that advises many of the world’s largest and most powerful institutions, is facing a federal criminal investigation of its conduct advising bankrupt companies, according to five people familiar with the matter.

Prosecutors and other Justice Department officials in New York and Washington are trying to determine if McKinsey used its influence over insolvent companies in violation of the rules of Chapter 11 bankruptcy — where billions of dollars can change hands — by quietly steering valuable assets to itself or favoring its own clients over other creditors.


In the past two weeks, investigators have conducted interviews about McKinsey’s actions in the bankruptcies of at least two companies, Alpha Natural Resources, a coal producer, and SunEdison, an alternative energy company, said one of the people, who was questioned by F.B.I. agents.

The judges overseeing both those cases have already suggested that questions over McKinsey’s conduct could best be resolved by the Justice Department — either with civil actions or criminal charges.

In addition to the previously unreported criminal investigation, an investigation by the Office of the United States Trustee, a division of the Justice Department that polices the conduct of companies in the bankruptcy system, is underway.

The office, which can seek civil penalties and make criminal referrals to prosecutors, has told judges in at least three other bankruptcy cases that it was examining McKinsey’s practices. The firm said it had responded to questions from the United States Trustee.
American business is rotten to its core, and McKinsey is just a particularly brazen and corrupt avatar of this situation.

I'm sure that they will get off with a fine of a few bucks, so in the end, it's just a cost of doing business.

H/t Eschaton.


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