The US-based international management corporation McKinsey § Company, which has recently come to an agreement with the Turkish government for the ‘New Economic Program’, is revealed to covertly own treasury bonds in Puerto Rico.
According to Euronews, the giant American consulting firm has led to a conflict of interest since it did not publicly announce its assets of treasury bills valuing a huge amount, which is at least §20 million, in Puerto Rico, where it is advising the government in the Caribbean Sea island. However, the company’s confidential investments have ignited debates and criticisms.
The Turkish government also announced last week to work with McKinsey. Turkey’s Minister for Treasure and Finance, Berat Albayrak, announced in his statement on September 27 that the Office for Costs and Transformation, which was formed recently within the scope of Turkey’s ’New Economic Program’ (YEP), came to an agreement with the US-based international management corporation McKinney & Company.
As the American firm is carrying out a consultancy service for Puerto Rico’s government that has faced a huge economic challenge in exchange for $50 million, it also has a decisive role in the payment of its receivables from the government. Considering that McKinsey tries to minimize the risks for its investments in this country, this has paved the way for a conflict of interest while Puerto Rico tries to pay its debts with minimum losses.
Although the conflict of interest should have been declared to the courts and the public opinion in Puerto Rico, McKinsey is revealed to have concealed its investments by exploiting some exemption regulations for consulting firms in the law. A control board that is in charge of managing the crisis in Puerto Rico has launched an investigation and prepared a report on the US firm following the revealed allegations. The report has stated that the investment department and the consulting department of the American company act separately from each other.
MCKINSEY HAS HUGE AUTHORITY OVER PUERTO RICO
McKinsey has a determining role in adjusting the payment of Puerto Rican treasury debts so as to “overcome” the financial crisis of island country within the scope consultancy service. Therefore, the American firm is also “authorized” in deciding how to repay the treasury bills it owns in Puerto Rico.
This is not the first example of the McKinsey-led conflict of interest. 13 companies that worked with the consulting corporation in the US appealed to the courts in May since it did not publicly reveal its interests.
An unincorporated territory of the United States located in the northeast Caribbean Sea, Puerto Rico, with the highest per capita debt load in the world, announced that it could not pay back its debts in 2015. In June 2016, the US Congress approved a new law to establish a Control Board over the Puerto Rico government, which has been responsible for restructuring the country’s debts and supervising its infrastructural projects. The consulting firm McKinsey has also taken the role in determining how much money is available to repay the island’s lenders.
MCKINSEY: ‘AN IMF PROGRAM WITHOUT THE IMF’ IN TURKEY
As the giant consulting firm is working with some countries and multinational monopolies around the globe, some leading Turkish economists have defined Turkish government’s new economic plan and the agreement between the Turkish government and McKinsey as “an IMF program without the IMF”.
“The company they have decided to work with is also specialised on privatisation. Berat Albayrak, on the other hand, is the Deputy Chairman for the Wealth Fund, Inc. Can you imagine what could happen in such circumstances?” said Korkut Boratav, Turkey’s celebrated Marxist economy professor. The ‘New Economic Program’ projects a “flexible working model” and a “reform in severance allowances”, revealing a comprehensive pro-market attack on Turkey’s working people.
Former Turkish energy diplomat, Mehmet Öğütçü, who worked for several international institutions such as the OECD and NATO, has claimed that McKinsey prepared Iraq’s first constitution draft in 2015 following the request of Washington. “No one can say that this weird constitution had no role in Iraq’s existing conditions,” he said. Stating that the American consulting firm also prepared Saudi Arabia’s “Vision 2030”, he added that the Turkish government preferred McKinsey to the IMF with the aim of reassuring the international markets.
Having been founded by James O. McKinsey and Marvin Bower in 1926, McKinsey & Company is an international management corporation based in New York with 27,000 employees. The company serves several multinational monopolies and large investment groups, but it is not the only thing they do – McKinsey’s domain also involves, interestingly, “public administration”, as well.
