December 31, 2018 – The article about McKinsey & Company posted on The New York Times’ website last night, revisits a matter that occurred 12 years ago, and which was previously covered by The Times in 2015. It gives an inaccurate impression of our firm’s practices. The Times is trying to make a story out of what we did not do. McKinsey never recommended our client engage in bribery or other illegal acts.
Readers should know the facts.
By way of background, we have been cooperating since 2014 with the US Department of Justice’s investigation into allegations of unlawful conduct by Dmitry Firtash, a Ukrainian oligarch who has been indicted by US authorities and is reportedly currently resisting extradition in Austria. More specifically:
- Our firm has not served Mr. Firtash, and it is our understanding that the investigation into this matter is not focused on us. The authorities who have access to all relevant information have not charged McKinsey with any wrongdoing.
- The article centers in part on a document we provided Boeing in 2006 to help them evaluate a potential joint venture (JV) with Bothli Trade AG, a mining company that has a connection to Mr. Firtash. Ultimately, the JV did not occur.
- The document included an overview of the potential JV partner’s operations in India, an evaluation of potential models for partnership between the client and the potential JV partner, and an analysis of the market for titanium. The document also contained a section noting unique risks that an association with Mr. Firtash would pose and recommended multiple steps for the client to take, including additional “character due diligence.”
When we were contacted by the US authorities investigating Mr. Firtash, we learned there was an appendix slide in the PowerPoint presentation mentioning the word “bribes.” There is no excuse for including this language in any document. The text was an ill-advised way for the authors to describe what they mistakenly understood to be general market conditions and should never have been used.
However, as we explained to The New York Times’ reporters, McKinsey absolutely did not recommend our client engage in bribery or any other illegal acts. To the contrary: the document included significant questions about Mr. Firtash’s associations and business holdings and additional steps for the client to take before further pursuing anything with Mr. Firtash. For legal reasons, we could not provide the full document to The Times – and cannot reproduce it here – but the journalists understood its contents.
At the heart of The Times’ reporting is nothing we actually did. Instead the journalists seek to make a story out of what we did not do: that we did not advise that the joint venture “scheme” that the article depicts would be “illegal or unwise” due to the possible involvement of bribes as an element of the potential partner’s market strategy.
It is important to be clear about several points the journalists chose to omit or gloss over and why this makes the story being told so misleading:
- The PowerPoint slide referenced is from the appendix of a 35-page document that makes it very clear that there was no recommendation whatsoever for engaging in an act of corruption.
- Indeed, the main body of the document made apparent that there were serious questions to be answered about the JV partner in question.
- It is also clear from the full text of the single slide from which the journalists selectively reference a couple of lines of text, that the author is in fact not recommending anything. It purports to describe an existing strategy of the potential JV partner. It does not give advice.
Our client is a highly respected corporation that did not and does not need us to point out that bribes are illegal or to advise against such conduct. It is therefore preposterous to suggest or imply that we were in any way recommending, endorsing or otherwise suggesting unethical behavior.
We are disappointed that the reporters chose to downplay this critical context, which they clearly viewed as counter to their narrative. And that they used innuendo to suggest that we are being less than truthful. For example, The Times states that “McKinsey initially refused to confirm that the report even existed” before saying that “The Times had obtained a copy.” In fact, as they acknowledged to us before publication, The Times does not have the full document, and certainly has not seen a recommendation in any way to engage in illegal acts. Tellingly, The Times inserts an image of only a few sentences from a slide rather than showing it in full and in context.
McKinsey stands against corruption in all countries where we operate. We have a robust anti-corruption policy that we regularly review to ensure adherence to the highest standards. Indeed, this policy was in place and updated to ensure it meets best practices well before we had any knowledge of this matter.
We welcome scrutiny of our firm and justified criticism. However, this article makes too much of one page and fails to reflect the context, intent and reality of a document that clearly argued for a very different path – one of additional scrutiny and investigation.