In a Congressional hearing, Senator Hawley voices his concerns about McKinsey & Company's dual consulting roles with the U.S. government, especially the Defense Department, and with the Chinese government. McKinsey has reportedly advised China on projects that could have strategic implications, such as their Belt and Road initiative. This dual role represents a potential conflict of interest due to the sensitive and sometimes contradictory nature of the consultancy.

The issue raises national security concerns as McKinsey's advisories to China appear to contradict its responsibilities to its U.S. clients, which include advising on technological dominance. This situation prompted a legislative push for clearer restrictions on consulting firms representing both U.S. and Chinese interests. The lack of current laws to prevent such conflicts highlights the importance of proposed legislations like the "Time to Choose Act."

Main takeaways from the video:

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Key Vocabularies and Common Phrases:

1. outrage [ˈaʊtˌreɪdʒ] - (noun) - A strong reaction of anger, shock, or indignation. - Synonyms: (fury, indignation, anger)

I think any normal American who's sitting out there and hears that would be absolutely outraged by it, and rightly so.

2. consultancy [kənˌsʌlˈtænsi] - (noun) - A professional practice that gives expert advice within a certain field, especially business. - Synonyms: (advisory, consulting firm, firm)

McKinsey has done nearly a billion dollars in consulting work for the United States government.

3. shameless [ˈʃeɪmləs] - (adjective) - Showing a lack of shame or moral scruples. - Synonyms: (brazen, bold, unashamed)

I mean, it's really. It's shameless when you think about it.

4. conflict of interest [ˈkɒnflɪkt ʌv ˈɪntərɪst] - (noun phrase) - A situation where a person or organization is involved in multiple interests, one of which could possibly corrupt their motivation or decision-making. - Synonyms: (clash, clash of interests, sequence of interests)

So there's a clear conflict of interest there.

5. vector [ˈvɛktər] - (noun) - An organism or medium that transmits something from one place to another, used metaphorically to imply a channel for transmission. - Synonyms: (carrier, transmitter, conduit)

Another is being a vector for the transfer of information and data.

6. irreconcilable [ɪˌrɛkənˈsaɪləbl] - (adjective) - Made up of parts or elements that cannot coexist or be brought into harmony. - Synonyms: (incompatible, uncompromisable, discordant)

Some of these firms have mutually irreconcilable obligations to the United States and to China.

7. strictures [ˈstrɪktʃərz] - (noun) - Restrictions or strictures, especially legal ones. - Synonyms: (limitations, regulations, constraints)

...awarding process to see if there were any strictures, limitations in current law...

8. proponent [prəˈpoʊnənt] - (noun) - A person who advocates a theory, proposal, or project. - Synonyms: (advocate, supporter, promoter)

They are, for example, a major proponent and promoter of China's Belt and Road initiative.

9. subpoena [səˈpiːnə] - (noun) - A legal document ordering an individual to attend court. - Synonyms: (summons, warrant, court order)

China's basically saying, if you want to comply with the subpoena from this committee, you can't...

10. whataboutism [wɒtəbaʊtɪzm] - (noun) - The technique or practice of responding to an accusation or difficult question by making a counter-accusation or raising a different issue. - Synonyms: (distraction, evasion, misdirection)

I think that's the most frankly absurd instance of whataboutism.

Hawley Blasts McKinsey’s CCP Ties, Rebukes Witness For Comparing Consulting Firms & Soybean Farmers

Senator Hawley, you're recognized for your questions. Thank you very much, Mister chairman, thank you for calling this hearing. Thanks to each of the witnesses for being here today on this important topic. Doctor Doshi, if I could just start with you.

Since 2008, McKinsey has done nearly a billion dollars in consulting work for the United States government. A billion dollars. And its top client has been the Defense Department. In fact, it's got contracts with the Defense Department, with the US Department of the Navy, with the Homeland Security Department, with Customs and Border Patrol. I think in 2021 alone, McKinsey had Defense Department or other security agency contracts worth $850 million. It's absolutely extraordinary.

And yet, at the same time, they're also doing business with the chinese government. They are simultaneously taking a billion dollars from the United States and its security agencies and also getting money from not just China in general, from the chinese government and chinese controlled entities. Explain to us why that is a problem.

I think any normal American who's sitting out there and hears that would be absolutely outraged by it, and rightly so. Why are they getting taxpayer money advising our military and simultaneously advising the chinese military? But just explain to us, why is this a national security concern?

Well, thank you, Senator Hawley. I agree. This is a national security concern. I would go further. I mean, the nature of the work that McKinsey did reportedly involved helping China consider how to outcompete us technology firms, how to strengthen made in China 2025. The goal was to help them advance their goals for technological dominance. And that is directly at odds with the interests not just of the us government, but also of the corporate clients they had in the United States that they were also advising.

So there's a clear conflict of interest there. And it's also, you know, the kind of conflict of interest that even if McKinsey had exercised better judgment about the projects it took on, other firms doing business in China are getting raided by the chinese government. Oftentimes, that means that their data is no longer secure. And if they have us client data on those servers, well, that's now Chinese data.

So there's a lot of concerns, I think, that we can raise here. One is the nature of the work. Another is being a vector for the transfer of information and data. And there's a third concern, too, which is that some of these firms have mutually irreconcilable obligations to the United States and to China.

China's basically saying, if you want to comply with the subpoena from this committee, you can't, because we have a data security law saying you can. That's three different kinds of conflicts beyond the one, senator, that you just identified.

That's terrific. You know, as we think about the different things that McKenzie has advised China on, they are, for example, a major proponent and promoter of China's Belt and Road initiative. So here they are again, taking a billion dollars in contracts from the United States military, simultaneously advising China on their Belt and Road initiative, which is meant to undermine our military and also to undermine american companies all across the world.

McKinsey has advised nine of the top 15 chinese contractors for the Belt and Road initiative as of 2018. I mean, it's really. It's shameless when you think about it.

You know, interestingly, I recently obtained a document related to a contract, just to give one example, involving semiconductors. So, semiconductors, McKenzie entered into a contract with the us government, our Defense Advanced Research Project agency DARPA, in 2021, related to semiconductors. The DoD asked McKenzie if there was any conflict that they might have with the chinese government.

According to these documents recently released to me, pursuant to a FOIA request, McKinsey submitted documentation, said that there were, there were no conflicts, no conflicts at all. And in fact, as we, as we now know, they were simultaneously advising the chinese government on a very similar project. I mean, this, to me, it seems like such common sense.

The chairman and I wrote to the, the GAO asking for an analysis of the conflict of interest law and analysis of the procurement and contract awarding process to see if there were any strictures, limitations in current law that would prevent companies like McKinsey from simultaneously making billions from the United States and making billions on China. That report has just come back just a couple of days ago.

And what it shows is that there are no such restrictions in United States law currently, which is why our legislation, the time to choose act, which the chairman and I co sponsored together, introduced and passed this committee almost unanimously. I think only one no vote is so important because it would prevent what we see on this poster behind me.

Miss Tilletman, do you want to add to this, why this sort of common sense set of restrictions telling consulting firms you can't consult for the us government and rake in billions from american taxpayers, and consult for our chief adversary at the same time, why this is important and why it's a matter of national security?

Thank you, senator. I read that GaO report, and I join you in your concern about the lack of laws and guidance right now currently guiding contracting officials on this issue. One thing I will note is that the far provisions related to conflicts of interest are quite broad and could capture some of this. But most government officials won't feel comfortable taking this sort of action without greater guidance and directives explicitly giving them comfort that they can, that they can look to in taking these sorts of actions. I share similar concerns as you.

I get nervous when things are too restrictive and there's too many absolutes. But you raise very good points about why contracting officials need better laws and need to be empowered to make these types of decisions.

Yeah, very good. Mister Riley, let me just ask you, because your exchange with Senator Paul I thought was illuminating. You said that there's a continuum between banning everything on the one end and then everything goes on the other end. So I take it from your testimony today, you're on the anything goes side of the spectrum?

No. So you support this bill then? As I mentioned in my comments earlier, we support the goals, but we're concerned that it leads to a slippery slope. Potentially we 100% support legislation that would advance our national security and protect our national security. I will say, based on the conversation I've heard this morning, if these companies are giving China advice, either they're giving pretty bad advice or China's not taking it very well because their economy is on the downhill slide instead of going up.

If they are legitimate, well, wait a minute. They're on the march in the Pacific. McKinsey advised them on building out islands in the South China Sea at the same time it was getting defense contracts. So I guess is your position that you are opposed to? You want companies to be able to get taxpayer money from the United States and simultaneously get money from the chinese government?

That's fine. My concern center is how do you differentiate between that, how you draw the line between that and a soybean farmer which depends on China for its exports. And simultaneously, the soybean farmer isn't advising the chinese military on how to take over the United States.

I come from a state where our number one agricultural product are soybeans. We are a state of soybean farmers. And I can tell you I think they would take great offense to you comparing them to a consulting firm that is taking a billion dollars in money from the United States military while simultaneously advising the chinese military on how to harm the United States.

Are you saying that soybean farmers harm the security interests of the United States? I think that's a ridiculous thing. I said with respect to 232 national security legislation. It starts out here. The next thing you know, we're restricting trade with the UK, with Israel, with our allies.

That's not the case. How do you know that's not going to happen again? That's all I'm asking. We need to make rails to make sure that our soybean farmers and other producers aren't harmed like we have been in recent years by our government. I think that's the most frankly absurd instance of whataboutism.

It makes history just listening to you say it refutes itself. I'm not talking about hypotheticals. I'm talking about what has actually happened, and I don't want to see that repeat.

You're talking about something that is not in this bill, and you're equating soybean farmers with a consulting firm that is advising the chinese military. It's absolutely absurd. I'm equating national security. Here you are opposing. Opposing. In the name of you represented taxpayers, you are here testifying in favor, apparently, of allowing a company to take tax money.

This is tax money. This is a billion dollars in taxpayer money McKinsey is raking in, while also going to our chief adversary, selling our secrets, essentially, and making money from them. What could be worse for the american taxpayer? I can't think of anything, which is why this bill passed overwhelmingly in this committee. And I thank you all for your testimony today.

Thank you, Senator Peters, again, for your hard work on this and support. I appreciate it. And thanks for holding this hearing.

Business, Economics, Politics, National Security, Mckinsey & Company, Conflict Of Interest, Senator Josh Hawley