McKinsey & Company facing federal criminal probe: Report

Management consulting firm McKinsey & Company is under a federal criminal investigation over the way it advises bankrupt companies, The New York Times reported Friday.

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Prosecutors are looking into whether McKinsey put its profits ahead of clients’ best interest and used its influence over the companies in violation of Chapter 11 bankruptcy rules, according to the report, which cited unnamed Department of Justice officials.

Gary Pinkus, the company’s chairman of North America, told the Times that McKinsey got an inquiry from the U.S. Attorney’s Office for the Southern District of New York last year, responded and hadn’t gotten any more requests since.

But investigators have interviewed people about McKinsey’s dealings in at least two bankruptcies, according to the report.

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McKinsey was founded in 1926 and operates in 66 countries. It consults for private companies, public agencies and other institutions.

This is not the first time McKinsey has faced scrutiny in the past couple of years. It was one of several companies charged by South African authorities of making reckless, negligent or fraudulent business decisions. McKinsey has also come up in connection to cases against a Ukrainian oligarch and opioid makers, the Times reported.

In February, McKinsey reached a settlement with the Department of Justice’s U.S. Trustee Program related to Chapter 11 cases it handled. The company agreed to pay $15 million for making what officials said were inadequate disclosures related to those bankruptcies.

But the program may not be done with McKinsey. The office is looking at other bankruptcy cases handled by McKinsey, according to the report.

Under the terms of the settlement, the U.S. Trustee Program agreed to not bring any more actions against McKinsey based on past disclosures, unless it found the disclosures contained “misrepresentations or omissions” that would have prevented the company from taking the cases.

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