Great article at The Big Picture about McKinsey & Co, the firm for which Rajat Gupta worked. Gupta, was recently sued by the SEC for insider trading.
It’s the classic modern success story. Massive success through massive failure.
McKinsey is a global consulting company, which has managed to make huge amounts of money while achieving the following:
• Advocating side pockets and off balance sheet accounting to Enron, it became known as “the firm that built Enron” (Guardian, BusinessWeek)
• Argued that NY was losing Derivative business to London, and should more aggressively pursue derivative underwriting (Investment Dealers’ Digest)
• General Electric lost over $1 billion after following McKinsey’s advice in 2007 — just before the financial crisis hit. (The Ledger)
• Advising AT&T (Bell Labs invented cellphones) that there wasn’t much future to mobile phones (WaPo)
• Allstate reduced legitimate Auto claims payouts in a McK&Co strategem (Bloomberg, CNN NLB)
• Swissair went into bankruptcy after implementing a McKinsey strategy (BusinessWeek)
• British railway company Railtrack was advised to “reduce spending on infrastructure” — leading to a number of fatal accidents, and a subsequent collapse of Railtrack. (Property Week, the Independent)
It’s rather obvious that these folks shouldn’t be sued. With a sterling record of failure like that, they should be put in charge of the U.S. economy.
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