No they are most certainly not. Corruption is in McKinsey's DNA. Outside of the specific harms that McKinsey has caused across the country and across the world, management consulting groups in general have been utilized to sidestep legal protections against corporations within a shared industry colluding against each other. Companies like McKinsey, Bain, Accenture, etc., have been instrumental in the rapid increase of executive compensation, flat comp for workers compared to inflation, intentionally unsafe practices and corner-cutting to save money, and just generally creating as many negative externalities as possible in the name of feeding the beast that Milton Friedman created with his rhetoric about the primacy of the shareholder.
A good read on this topic is "When McKinsey Comes to Town" by Forsyth and Bogdanich. There's a whole chapter dedicated to the South African bribery scandal. Sagar was not just a bad apple -- the company itself is the rot.
This should all serve as a warning to the wealthy on what will happen if they continue distancing themselves from accountability. It’s a zero sum game.
It's about as relevant to bring this up now as it would have been to do so when people celebrated the death of Bin Laden, and I'm sure you didn't at the time. The latter even had an arguably better reason behind his acts that wasn't solely personal greed.
More broadly, anyone that claims you can improve anything by sending randoms who read some books to companies and 'consult' there is selling you a fantasy.
Also politically harder for middle managers to just ignore what the expensive consultants are suggesting
You can't fix one fantasy with another fantasy.
"big 3" are for management consulting? Bain, Boston, and mckinsey? Or does deloitte fit in there? Anyway neither here nor there.
Why?
> all these laws do is put Western companies at a tremendous disadvantage
While attempting to address a serious problem. You could say this of any law.
> compared to Chinese ones.
Not a standard I care about or am willing to be held hostage to. Moral sacrifice to capture international business is pretty gross. Probably why it wasn't even hard to pass the law.
The explanation I've heard before is that when you need anything from a thoroughly corrupt government, as simple as a building permit or a visa for a foreign employee involved in a project, officials will simply not process your request without a bribe. They believe it is owed. End of story.
I don't like the explanation in the slightest. But I do see how it might shut down opportunity if you can't overpower the obstacles, and aren't willing to bribe.
The utility of US laws against bribing foreign officials is to break down the expectation by those officials of a bribe. But, from a game theory point of view, if China is willing to bribe, this becomes much less effective.
People just assume Africans are the same as Europeans and Asians, etc. because they’ve had it hammered into their minds all their lives, but reality is that we are all quite different and that’s good in some ways and bad in others, but it’s different.
It’s usually the opposite…powerful governments rule with an iron fist but are internally marred by corruption and incompetence.
We are not talking about North Africa here, we are talking about South Africa and South Africa like places, which would mean sub-Saharan Africa, not Egypt or Algeria or Tunisia. You lack refinement and do not contribute anything useful, and may want to reflect on why you have that contrarian compulsion. No one is talking about North Africa. All the intelligent people here know we are talking about Africa in the context of South Africa. You clearly lack fundamental skills to distinguish such things.
and: https://www.hup.harvard.edu/books/9780674979796
to my christmas list. I don't think the law or war are appropriate tools for establishing international morality, but maybe the right ones are somewhere in these.
There are several examples of bribes being publicized and the guilty company losing out on big contracts as a result (e.g. from ECHELON spying).
Is that the same ExxonMobile that was caught in a bribery corruption scandal in Liberia in Africa? [1]
Or perhaps you're talking about the same ExxonMobile that was caught bribing government officials in Kazakhstan in Asia? [2]
[1] https://www.business-humanrights.org/en/latest-news/full-rep...
In the end, who cares?
Certainly not the lawmakers
And some think that FCPA enforcement and huge fines targeted at European companies like BNP Paribas motivated the creation of the EU tech extortion apparatus.
As explained in other threads, McKinsey made almost the same amount of profit (adjusted for inflation) as the fine. So the message is:
- the effective fine (profit minus fine) is approximately 0, if you get caught.
- if you don't get caught, you get a profit of 120M.
I would say a lot of people here are not grounded, but in more of an anxious way than an evil profit minded kind of way (which may sound mythical but I’ve seen it blatantly in other company cultures)
What do you mean by "anxious way" ?
Very convincing.
Plenty of companies do actions (like Uber) where they lose money for market share. So, penalizing McKinsey by making them forfeit profit isn't as big a punishment as it may seem.
It's a bit akin to if you were to steal a car, sell it, pay yourself a fee for that action and then have to return any money beyond that fee to the owner of the car. It's clearly a net gain for you still.
HN numbers are wild.
Speeding isn't worth a $100 fine.
But if you only get caught 1/100 times you speed...
You take that 85 Million and invest it (likely into growing a business unit but lets ignore that) and over 10 years it becomes greater than 85 million.
Otherwise though, McKinsey was awarded $209M in federal gov contracts in Canada over 12 years, so the numbers themselves don't seem relatively outrageous in terms of what McKinsey makes news for.
They're usually pervasively, profoundly corrupt across many levels and will often actively encourage a culture of massive bribes by creating a regulatory environment so stifling that no other means of getting any project or major process done exists. Often they'll simply ignore their own laws to stop investment projects until someone coughs up money on an extra-official basis.
I'm not talking about these governments honestly and in good faith creating and applying regulations for the well-being of their own nation. I'm referring to laws so byzantine that they're in place more as a dragnet for bribes, which is applied only selectively on a pay as you go & stop when you don't basis.
Aside from these governments no longer doing that, what should private interests do, cease all investment and business in certain countries?
I think community service by the c-suite, at $10/hr should suffice.
Shouldn't it go to the south african government, since south africas taxpayers were the ones harmed?
> Of course, the company of concern is Eskom, the underperforming state electricity monopoly whose incompetence has dragged the South African economy down.
What exactly you think was deregulated? In general and in this particular case.
https://www.youtube.com/watch?v=AiOUojVd6xQ
Great video by John Oliver, as always.
The harmed party
But also the trading reputation of a country is kinda a common good that individuals can profit by tarnishing, which makes it a prime target for very-valid and probably-a-good-idea regulation of that sort.
It's a good question to ask why Chinese companies are allowed to get business in Africa with bribery, and the US then doesn't allow its companies to compete on a level playing field with China.
Why should the US take a stance at all? Why not let South Africa deal with it? It's not harming the US, is it?
And if they don't operate in the US, it's not the US's business to police something a company that has no presence in it does.
It's very simple and consistent. Americans and American companies are subject to American laws. People and companies who are in America are also subject to American laws. If you are neither American nor in America, you are not.
Nearly every country in the world follows a very similar set of rules regarding jurisdiction.
Your earlier comment justified it being illegal on the grounds that US companies bribing foreign governments is anti-competitive against other US companies that do not do so.
That's an economic justification, not a moral justification. But if we are considering it economically rather than morally then we do have to consider what happens in the case of a foreign country where bribery is common and there are companies other than US companies that are competing there.
In that case not allowing US companies to bribe does indeed level competition among US companies--they all lose equally to non-US companies. Is that actually a better economic outcome than allowing US companies to bribe (and thus compete with foreign companies) in countries where bribery is normal?
That's a complicated question.
It also might be a national security question if we continue heading into a new cold war kind of world. Is it better to have US companies operating in countries the US would like to influence even if those companies have to bribe to do so, or for US companies to stay out and cede influence to companies from countries on the others sides of that cold war?
Actually, no. As a general principle, countries do not pass/enforce laws regarding potential criminal activity that their citizens commit against citizens of other countries while in those other countries.
To take an extreme example, if you murder a citizen of a foreign country while in that foreign country, your home country is generally not going to charge you with murder. If you come back home, they may extradite you to that foreign country at that country's request, since you broke the law there. But because you were in the foreign country and the victim was also foreign, it's not within domestic jurisdiction.
Laws against bribes paid abroad break this rule. And in 2022 it was found that only two countries in the world actively enforce bribery outside their borders -- the US and Switzerland [1].
So no, your assertion that this is how nearly every country in the world operates, is completely false. It's actually a gigantic exception.
(Things operate differently for military forces, war crimes, etc. But we're talking about regular civilian/corporate law here.)
[1] https://us.transparency.org/news/exporting-corruption-2022-s...
This is because the US wants other countries to confidently allow free trade or event privileged relations with it.