#ANewSaudiArabia:

McKinsey’s scandal
Is McKinsey THE consulting company of
authortarian governments?

Business Ethics — 23rd of January 2019

 What we want you to leave you thinking about….

“McKinsey rightly emphasizes the places where its consultants have helped
governmental clients develop policies that have created jobs, improved
education and helped to alleviate poverty—all extremely important
outcomes. But the firm also needs to develop more rigorous protocols for its
government engagements that would address three fundamental issues:

1. When should it decline to engage with a government,

2. How should it respond when a government client asks for advice on a
matter that violates fundamental rights, and
3. When should it extricate itself from existing but inappropriate
government contracts”

- Michael Posner, Forbes

Business Ethics - 23rd of January 2019 2

 Using the lens of Saudi Arabia for a larger analysis of
the firm that reports to no one…

American management consulting firm working for business,

governments, and non-profits all around the world. Widely
considered the most prestigious Management Consultancy.
October 2018
Demands anonymity from clients. Recent questionable
Jamal Khashoggi is killed in a Saudi
activities include: Eskom (South Africa), I.C.E, Porto Rico,
Arabian consulate in Turkey. It is later
Yanukovych (Ukraine), Kashgar (China)…
reported by the that the CIA concluded
600 projects since 2011 in Saudi Arabia that he was assassinated by the Saudi
government. Places spotlight on S.A.
What is a company’s responsibility when advising clients
that violate fundamental rights? Who’s to blame? CEO?

September 2017 October 2018

Jamal Khashoggi a prominent Saudi
critic went into self-imposed exile in the
US. & claims in the first of many articles
for the Washington Post that the Saudi
government blocked him from Twitter
Bombshell New Times article claims to
have a internal report from McKinsey
about critics to the economic austerity
measures in 2015 and makes arrests of
top influencers listed in the report

Business Ethics - 23rd of January 2019 3

 Identification of the stakeholders involved in the
scandal
SAUDI ARABIA ECONOMIC &
KEY PLAYERS IDENTIFIED IN THE SCANDAL
POLITICAL CONTEXT
Saudi Arabia is living a shift in its economic model. The
oil-based economic model is no longer viable. In 2016, Saudi Arabia Authorities
the government has borrowed for the first time $15
bilion to support its spending.
In April 2016, Vision 2030 campaing to diversify
economy through:
- Services
- Entertainment
- Tourism
PREJUDICED STAKEHOLDERS
Mohammed Ben Salman named heir Prince in June
2017. He is perceived as a reformer (Limitation of the
religious authorities over citizens in April 2017,
commercial movies theaters, gender-mixed concert,
women driving permission in Sept. 2017).

His reformer status is questioned with numerous

scandals raised, including Jamal Khashoggi murder in
October 2018.

Business Ethics - 23rd of January 2019 4

 An ethical failure? A lack of thinking about the
consequences? An example of a systemic issue?
Possibility 1: the report was meant to be internal

 Confidentiality
 Professionalism
 Life / Safety endangerment
 Bribery / Fraud

Possibility 2: the report was built for Saudian government

 Public lie
 Commitment to work with anyone who’ll pay (legally)
 Control of their work, often misused

Ethical issue linked its functionning: advising not doing, not acknowledged for its work, client allowed to hide it hired
McKinsey. « You can have all the credit you want, but you cannot push a bad outcome on us ».

 Is McKinsey accountable for anything? Who’s controling this very powerful, influencial, global, connected firm?

Business Ethics - 23rd of January 2019 5

 McKinsey’s current “Responsible Professional
Practice” policy appears to mismatch with our case
MCKINSEY’s ETHICS POLICY COMPARISON WITH THE CASE

Protection of human rights & employees’

The Ten Principles Lack of professionalism without thinking
rights of freedom of association: “Promote
about consequences of their reports on
inclusive and sustainable economic growth,
human rights (harassment of dissidents)
employment and decent work for all”

No clear policy on how to work with

Standing against bribery & corruption in all its
[authoritarian] governments likely to misuse
forms (compliance with anti-corruption laws)
their recommendations (cases of corruption)

Breaches of ethical standards subject to No apparent action was taken first

investigation + appropriate action taken considering the breach

OMBUD program: help deal with Potential conflicts of interest could have led
interpersonal issues or conflicts of interests to those consequences

Supplier Code of Conduct: anti bribery &

corruption (no gift policy; non retaliation for No mention
reports of concern)

Ethically protecting the client’s interests for a Accepting to cover the client’s unethical
ethical & sustainable long term growth objectives was not protecting their interests

Business Ethics - 23rd of January 2019 6

 Solutions to mitigate such a situation in the future

A STEP TOWARDS A MUCH STRICTER PERSONAL INVESTMENT POLICY

Risk analysis for

sensitive
Upgrade vetting contracts
processes (client Train employees
screening) (online tutorials Define a clear
& tests) threshold for
withdrawal Decline future
assignments
Improve due
diligence

Importance of defining its own regulators and conveying them :

- Follow third-party institutions sanctions
- Incentive top management and consultants

Business Ethics - 23rd of January 2019 7

 Thank you!
Business Ethics - 23rd of January 2019 8