McKinsey On Trial: Where Now For Gove, Barber & Teach First?
In The News, McKinsey & Co., Michael Barber, Teach First, Tories Wednesday, March 16th, 2011
The news that three senior McKinsey & Co consultants are in the dock for the US’s most serious insider trading scandal in generations makes us wonder if this consultancy firm is really the right one to lead UK education policy.
Prosecutors allege that a billionaire hedge fund founder, Raj Rajaratnam, was given tips about McKinsey clients by Anil Kumar, a former senior McKinsey partner and Raj Gupta, former head of McKinsey. Another as yet unnamed McKinsey exec – believed to be David Palecek – is also thought to have been involved.
We have written previously about Teach First’s strong links to McKinsey – Brett Wigdortz is a former employee – but we mustn’t forget also that Sir Michael Barber, described recently by Michael Gove as ‘visionary educationalist’ and key source of wisdom in the Tory White Paper, is a partner at McKinsey and head of its Global Education Practice.
Of course a few bad apples don’t necessarily make a bad lot. And there is no suggestion that either Wigodrtz or Barber were at all involved in the alleged insider trading, but it does call into the question Tory judgement when it comes to choosing who it works with on the future of UK pupils and teacher training and recruitment.
In particular: Is engaging with such a company (where the true story of systematic fraud is only beginning to emerge) really such a good idea? And what does it tell us about the kind of people the Tories like to cosy up to especially given the Coulson phone-tapping affair?
The McKinsey insider-trading scandal, moreover, does further damage to the case for education privatisation. With money comes corruption. It is inevitable that competition and outsourcing will only increase the temptation for employees and businesses to break the law to line their own pockets at great cost to the taxpayer and education.
And by cost we don’t simply mean financial as there are numerous, tragic examples where privatisation and deregulation have been pinpointed as the reason for industrial accidents and loss of life.
Interestingly, the bad apples excuse was also used during the 2001 Enron scandal. If you recall, the execs at this US energy company had been able to hide company debts through some very creative accounting and a lack of proper oversight. When the debts were revealed, shareholders lost billions of dollars, the business folded and thousands of employees found themselves without a job. The long-term effects of the scandal was to see Enron executives sent to prison, the demise of its auditor and Big Five accountancy firm Arthur Andersen and the passing of the Sarbanes-Oxley Act.
You may be wondering why we are telling you this.
Enron’s management consultant: McKinsey.
(Enron’s disgraced former chief exec, Jeffrey Skilling, worked for McKinsey for eleven years. In fact the relationship between the two companies ran so deep that Enron is referred to as ‘the house that McKinsey built’)
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