Did anybody here read the article? I don't want to keep pasting the same quotes on every comment, but McKinsey just paid $30 million to settle a case where they did the exact same thing to the Department of Justice. Why would they do that if this is normal and nobody cares? The contract language is very clear: they have to disclose potential conflicts (even if "everybody already knows"), and they didn't.
>but McKinsey just paid $30 million to settle a case where they did the exact same thing to the Department of Justice. Why would they do that if this is normal and nobody cares?
Yes and?
This is normal. Nobody cares as long as you do it right. Just because the desk that deals with DOJ did it wrong doesn't mean the desk that deals with FDA did. You see these kinds of complicated, seemingly conflicting, relationships in high finance all the time. In practice it's a non-issue because of how these companies are structured and because they try to keep clients at arms length as a matter of routine business. The business relationship here is very similar to one that AWS and Azure may have with a 3rd party datacenter contractor. Sure one could pay the contractor for tips but in practice that doesn't happen except very rarely because of how everything is structured.
> Just because the desk that deals with DOJ did it wrong doesn't mean the desk that deals with FDA did.
But...they did. They didn't disclose their conflicts, unless the FDA is lying for some inexplicable reason. Again, it's in the article, it's not that long.
> You see these kinds of complicated, seemingly conflicting, relationships in high finance all the time.
You sure do.
> it's a non-issue because of how these companies are structured
These companies are structured to make money by any means necessary. Just a few years ago McKinsey corrupted government officials and used them to get contracts with utilities and infrastructure providers. Was there a firewall between the government desk and the utilities desk?
These as fines are too small. It is just a cost of doing business. The fines should be devastating so getting 5-6 of such fines should be a death penalty for the company
The fines aren't big enough to change their business, but they are quite possibly big enough to change their _proceedures_. I can easily imagine there becomes more stringent internal rules and processes on disclosures, even if they keep doing business the same way in general.
If we are talking about fines that could cause the firm to go out of business, we need evidence of actual abuse of position. I'm not sure failure to disclose, by itself, is a sufficient transgression. On the other hand, it seems that it might be fair to penalize firm their fee on the contract, or a meaningful portion of it, on the basis of breach of contract. I'm not sure if that would be higher or lower than the current penalty.
Yes, which is his point, 10-20% of yearly profits is a literal cost of doing business, and not a particularly damaging one. Most companies would gladly trade 20% profit in order to control information from every side of their industry...
