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European Governments and Consulting Firms: Suspicious Affairs by Hélène de Lauzun

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Commentary

European Governments and Consulting Firms: Suspicious Affairs

The considerable challenges faced by governments around the world caused by the COVID pandemic have led them to resort regularly and systematically to consulting firms to help them overcome their management and administrative difficulties.

Consulting firms appear as an ideal solution for a clueless political class. They give off a mystique of political independence and seriousness; they are empowered to bypass the blockages and inertia of public administrations and resolve the problem in a modern way. Adaptable, flexible, efficient in the service of a better mastery of the issues: so many reassuring mantras that politicians who are adept at rhetoric gargle with them. 

But the consulting firm of the 21st century could well be the new face of the Soviet control commission—a machine with fixed codes and pre-formatted processes designed to mask facts and the banality of postmodern sovereignty.

In many ways, using a consulting firm to solve entrenched problems is misdirected good intentions. The remedy is surficial only; scratch a little and you find the extent of a crisis of politics, disavowed in favor of technocratic management. Faced with the inability to assume difficult choices with courage,in this circumstance the political leader prefers to resort to a form of stipendiary expertise to justify his reforms. The consultant has the advantage of being, apparently, neutral. This neutrality is an illusion of course. The big consulting firms are at the service of an ideological program by default, that of the liberal and rootless postmodern world. But above all, the consultant has a very big advantage (or a very big disadvantage): he is not elected, so he is not accountable to anyone. Just as the transparency of legislation varies greatly from one country to another, consulting firms can in some cases prosper with impunity and accumulate juicy contracts, before the pot of gold is eventually discovered.

In France, the scandal broke in 2021 regarding the involvement of firms in the management of the pandemic by the French government. Some areas of the government’s vaccine strategy were entrusted to the American consulting firm McKinsey, as well as to several other firms (Accenture, Citwell, and JLL), according to revelations made by Le Canard Enchaîné and the POLITICO website. These external consulting services would have amounted to €2 million per month for McKinsey, according to the newspaper Le Point, and €1.2 million for Accenture, according to Mediapart. Other firms had also been approached, such as Roland Berger and Deloitte. 

There is an element of snobbery in calling on these prestigious firms, foremost among which is McKinsey. It is ‘serious.’ By using their services, legislators buy a reputation—since they advise the big players in the world, both private companies and governments—a reputation for knowing how to monetize advantageously: McKinsey posted a turnover of €8.3 billion in 2019 according to Forbes magazine

McKinsey knows how to maneuver skillfully to preserve its interests. McKinsey & Company France Inc. has its offices on the Champs-Elysées, but its headquarters are in Wilmington, in the state of Delaware in the United States, also the home of U.S. President Joe Biden. Interestingly, a company that owns a mailbox in this state, without carrying out any real activity there, is exempt from paying income tax. According to Le Monde, McKinsey only pays a symbolic tax rate of $175 per year, which allows it to remain in compliance with French labor law.

The connections between McKinsey and France are thick and many, beginning with Emmanuel Macron. The French president established a close relationship with McKinsey early on, when he was still a finance inspector in 2007, a relationship that deepened when he later joined the Rothschild bank. During the 2017 presidential campaign, the Macron email leaks, “MacronLeaks,” revealed collaboration between members of McKinsey and La République En Marche, the party launched by candidate Macron. Although investigations did not find any invoice from the firm in the campaign accounts of the party, Macron created an interministerial directorate for public transformation (DITP) immediately after his election in 2017, within which he intended to cultivate his past relationships. The director of the structure, Thierry Cazenave, is a former friend of Macron and oversees all assignments commissioned from private consultancies, such as McKinsey.

COVID is not the only subject for which Emmanuel Macron and his ministers have used the services of the American firm. McKinsey also provided its expertise on the thorny issue of pension reform and national education reform. 

In the last few weeks, the members of the government had to defend themselves before parliamentarians on their excessive use of consulting firms. A Commission of Inquiry was created in the Senate, charged with analyzing the influence of consulting firms on public policies. An operation conducted at the Ministry of National Education aroused the skepticism of the commission: “You obtained a €498,600 contract to evaluate changes in the teaching profession. Can you tell us what this mission has led to?” asked Senator Eliane Assassi to the McKinsey representative. The answers given to the questions of the investigators were clearly not up to standard, and were rather perfect examples of administrative verbiage and political cant: 

Our role was to accompany the DITP and the ministry in organizing a seminar in conjunction with a number of international organizations to reflect on what the major trends in the education sector were and the expected changes in the teacher market.

This response, delivered by consultant Karim Tadjeddine, the associate director of McKinsey in the Paris office, where he is co-responsible for the Public Sector activity, didn’t succeed in convincing his audience. 

The same thing happened regarding the firm’s supposed help with the pension reform: “It was a question of thinking about the areas of evolution of the CNAV (the administration in charge of pensions) to ensure that they better carry out their missions, in view of the eventual reform and in general to improve their functioning,” explained Thomas London, associate director of McKinsey Paris for the Health sector, leaving the senators rather skeptical of the consultant firm’s purpose.

As legislators are spending large sums on consulting companies, the salaried employees of state agencies, elected to make diagnoses and propose solutions through reports, although of no real practical use, continue to be paid. 

Conflicts of interest are taking on proportions that are difficult to defend in the context of the pandemic. Take, for example, the problem posed by the Fabius family, recently in the news. Former Prime Minister Laurent Fabius sits on the Constitutional Council, and has validated step by step all the restrictions induced by the government’s health policy—a policy implemented by his own son, Victor Fabius, the associate director of McKinsey’s Consumer Affairs practice. 

France is not the only country to have entrusted its reforms and communication to consulting firms. As one of our columnists revealed in December, Spain’s national recovery plan integrated recommendations from KPMG, the British-Dutch multinational professional services network, and PriceWaterhouseCoopers (PwC). In addition, Deloitte Touche Tohmatsu Limited had been hired to advise the Spanish Ministry for Ecological Transition and Demographic Challenge. In Italy, McKinsey reemerges in a decisive role in the implementation of that country’s recovery plan at Mario Draghi’s request. It is as if the whole of the European political class were capitulating in deference to a global non-elected team to command the challenges that certain countries dare not face alone. 

The same business model has been repeatedly visited by the President of the Commission, Ursula von der Leyen who has family and friends inside of McKinsey (her own son works for them). The American firm received millions to advise the German military on its reforms when Ursula von der Leyen was the Federal Republic’s defense minister—from 2013 to 2019. Von der Leyen appointed former McKinsey partner Katrin Suder to the position of state secretary of armament, in office from 2014 to 2018. Suder has since become the head of a newly created Digital Council, tasked with advising the federal government on the digitization of Germany. 

This symbiosis between government and McKinsey—and other consulting networks—has not gone unnoticed. Von der Leyen has been accused of outrageous use of consulting firms, of McKinsey and others. Accenture is also in the crosshairs. The German Court of Audit pointed out as early as August 2018 the very large amount that the German Ministry of Defense had allocated to consulting expenses. €100 million in 2015 and then €150 million in 2016 were reportedly spent on consulting contract fees, even though much smaller sums had been publicly declared. 

The nebulous conditions of contracting with each of the consulting firms have also been denounced by the audit court. An investigation by Der Spiegel in 2018 revealed that the consultants had access to confidential documents and often had ministerial e-mail addresses: it was as if the staff of the consultancies were acting as substitute government personnel. In response, a parliamentary committee of inquiry was opened in February 2019, which, however, did not prevent Ursula von der Leyen from assuming the highest European office shortly thereafter.

So far, no European government has had to suffer consequences from collusion with consultancies. Yet, this is a fundamental political problem, which undeniably contributes to the delegitimization of public authority and to the crisis of confidence of citizens with regard to their elected officials, who are supposed to be accountable to the people and to their institutions.

Hélène de Lauzun studied at the École Normale Supérieure de Paris. She taught French literature and civilization at Harvard and received a Ph.D. in History from the Sorbonne. She is the author of Histoire de l’Autriche (Perrin, 2021).

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