McKinsey leader admits global consulting firm has made mistakes
The global managing partner of McKinsey & Co. conceded the consulting firm has made missteps, according to a letter sent to staff.
The company's effective leader, Kevin Sneader, used the private missive, obtained by Fortune, to correct the record on what he called "unfair and inaccurate" media coverage. But he also said there have been moments "when I have paused and thought, 'We should not have done that. It was a mistake.'" A McKinsey representative on Friday confirmed the memo's authenticity to CBS MoneyWatch.
The disclosure comes amid mounting scrutiny of the world's biggest consulting firm. The New York Times last month reported that a McKinsey-owned hedge fund invested in drugmaker Valeant, which bought out other pharmaceutical companies and jacked up the prices of medication. The consultancy also acted as an adviser to Valeant, suggesting a possible conflict of interest between the hedge fund's investments and McKinsey.
McKinsey disputes the report, calling it "fundamentally misleading."
"The Times' central assertion of a conflict of interest between our consulting activity and MIO is wrong," Sneader wrote, alluding to the fund, called McKinsey Investment Office or MIO Partners. "Tellingly, many of the examples described in the story include a line noting that McKinsey had no control over the relevant investments."
Other reports have suggested a connection between the hedge fund's performance and McKinsey's consulting services. The fund owned bonds issued by Puerto Rico while it was advising a Puerto Rican government board on reducing the island's debt.
An independent report concluded that "no McKinsey consultant knew of any financial interest that could have influenced his or her work or had any ability to direct any investment of MIO or its third-party managers," McKinsey said in a statement.
"Evasive and secretive"
Sneader's letter suggests an effort by McKinsey -- which doesn't disclose the names of its clients -- to be more transparent about the work amid the perception that the firm is suspiciously secretive.
"We have a long-standing commitment to client confidentiality, shunning publicity and keeping a low public profile. The problem is that in a world of social media, distrust for business and heightened transparency, our historic approach looks evasive and secretive," Sneader wrote. "That is why likely actions include stepped up efforts to share who we are and what we do with opinion leaders, media and others as well as seeking input from well-regarded external advisors along with the creation of an annual report that attests publicly to what we do."