GOP lawmakers seek investigation of consulting firm over its work in China
WASHINGTON — A group of Republican lawmakers are demanding a federal investigation into U.S. consulting firm McKinsey over its work with the Chinese government and state-owned companies, while the company is reportedly revamping its Chinese operations to reduce risks.
A letter – signed by Representative John Moolenaar of Michigan, Senator Marco Rubio of Florida and Senator Joni Ernst of Iowa – asks the Justice Department to investigate whether McKinsey’s $480 million contracts with the Defense Department are compliant. are with federal law, when the consulting firm also advised China’s national and provincial governments and state-controlled companies. The three accuse McKinsey of misrepresenting its relationship with the Chinese government.
“McKinsey’s activities pose a serious risk to U.S. national security and may have failed to meet McKinsey’s obligations under federal law,” Thursday’s letter said.
McKinsey declined to comment on the letter but has defended its practices in China in the past. The company says it follows “the most rigorous and comprehensive customer service policies in our industry.”
The consultancy has also said that it does not work for the ruling Chinese Communist Party or the central government, but mainly for multinationals and private Chinese companies.
Lawmakers’ scrutiny of McKinsey’s relations with Beijing comes as the U.S. and China become increasingly competitive. US politicians will re-examine business ties to ensure that Beijing and its military would not grow stronger with American help. Beijing has also grown wary of American companies.
The Biden administration has done that export controls imposed to block China’s access to advanced computer chips and limited US investment in China in areas such as microelectronics, quantum information technologies and artificial intelligence. Last month a report from the Republican Congress was published red flags raised that partnerships between American and Chinese universities could help Beijing develop crucial technology for military advancement.
American companies, which have built up experience in China over the past decades, are now adapting to the new geopolitical reality. The Wall Street Journal reported this week that McKinsey has cut back on government-affiliated clients in China and cut its workforce there by nearly 500 people, or about a third.
The letter from Republican lawmakers accuses McKinsey of helping China “rapidly develop its military and economy” through its consulting services. It says McKinsey failed to disclose its work with the Chinese government in acquiring U.S. defense contracts, which totaled more than $480 million since 2008 and gave McKinsey “access to classified or otherwise sensitive national security data.”
Bob Sternfels, McKinsey’s global managing partner, told the Senate Homeland Security Committee’s subcommittee on investigations in February that “we have never, to my knowledge, worked for the Chinese Communist Party or the central government in China.”
The letter alleged that McKinsey may have misrepresented its relationship with the Chinese government, citing public information and documents.