McKinsey’s role in Ukraine did not end with Mr. Yanukovych’s downfall. “We build leaders who can deliver lasting, meaningful impact for Ukraine’s major companies, its economy and society,” the company wrote on its website
McKinsey quickly became a favorite of Mr. Yanukovych’s successor, Petro O. Poroshenko, an oligarch known as “the chocolate king” for his confectionary business.
McKinsey quickly became a favorite of Mr. Yanukovych’s successor as president, Petro O. Poroshenko.Mykhailo Markiv/Agence France-Presse — Getty Images
From The New York Times:
How McKinsey Has Helped Raise the Stature of Authoritarian Governments
Tents linked by red carpets at a McKinsey & Company retreat this year in Kashgar, China.
By Walt Bogdanich and Michael Forsythe
This year’s McKinsey & Company retreat in China was one to remember.
Hundreds of the company’s consultants frolicked in the desert, riding camels over sand dunes and mingling in tents linked by red carpets. Meetings took place in a cavernous banquet hall that resembled a sultan’s ornate court, with a sign overhead to capture the mood.
“I can’t keep calm, I work at McKinsey & Company,” it said.
Especially remarkable was the location: Kashgar, the ancient Silk Road city in China’s far west that is experiencing a major humanitarian crisis.
About four miles from where the McKinsey consultants discussed their work, which includes advising some of China’s most important state-owned companies, a sprawling internment camp had sprung up to hold thousands of ethnic Uighurs — part of a vast archipelago of indoctrination camps where the Chinese government has locked up as many as one million people.
One week before the McKinsey event, a United Nations committee had denounced the mass detentions and urged China to stop.
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But the political backdrop did not appear to bother the McKinsey consultants, who posted pictures on Instagram chronicling their Disney-like adventures. In fact, McKinsey’s involvement with the Chinese government goes much deeper than its odd choice to showcase its presence in the country.
Participants in the retreat chronicled activities like camel rides on Instagram.
An Instagram post of a bonfire gathering during the retreat.
The Instagram posts from the retreat were in stark contrast to the nearby humanitarian crisis.
For a quarter-century, the company has joined many American corporations in helping stoke China’s transition from an economic laggard to the world’s second-largest economy. But as China’s growth presents a muscular challenge to American dominance, Washington has become increasingly critical of some of Beijing’s signature policies, including the ones McKinsey has helped advance.
One of McKinsey’s state-owned clients has even helped build China’s artificial islands in the South China Sea, a major point of military tension with the United States.
It turns out that McKinsey’s role in China is just one example of its extensive — and sometimes contentious — work around the world, according to an investigation by The New York Times that included interviews with 40 current and former McKinsey employees, as well as dozens of their clients.
At a time when democracies and their basic values are increasingly under attack, the iconic American company has helped raise the stature of authoritarian and corrupt governments across the globe, sometimes in ways that counter American interests.
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Its clients have included Saudi Arabia’s absolute monarchy, Turkey under the autocratic leadership of President Recep Tayyip Erdogan, and corruption-plagued governments in countries like South Africa.
In Ukraine, McKinsey and Paul Manafort — President Trump’s campaign chairman, later convicted of financial fraud — were paid by the same oligarch to help burnish the image of a disgraced presidential candidate, Viktor F. Yanukovych, recasting him as a reformer.
Once in office, Mr. Yanukovych rebuffed the West, sided with Russia and fled the country, accused of stealing hundreds of millions of dollars. The events set off years of chaos in Ukraine and an international standoff with the Kremlin.
Inside Russia itself, McKinsey has worked with Kremlin-linked companies that have been placed under sanctions by Western governments — companies that the firm helped build up over the years and, in some cases, continues to advise.
It has consulted in many sectors of the Russian economy, including mining, manufacturing, oil and gas, banking, transportation and agriculture. A McKinsey official sat on the Russian government’s energy board. Former McKinsey consultants have gone to work in the Russian companies they once advised.
In August, VEB Bank — which is wholly owned by the Russian state, intertwined with Russian intelligence and under United States sanctions — hired McKinsey to develop its business strategy.
There is no indication that McKinsey has violated American sanctions, which prohibit only certain transactions with targeted companies and individuals. But the larger question is whether the company, in pursuing legitimate business opportunities abroad, is helping to shore up President Vladimir V. Putin’s autocratic leadership.
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Other consulting companies serve similar clients, but none have the stature to confer credibility quite like McKinsey, a confidant for 92 years to many of the world’s most admired companies.
In China, it has advised at least 22 of the 100 biggest state-owned companies — the ones carrying out some of the government’s most strategic and divisive initiatives, according to a review of Chinese-language material by The Times.
While it is not unusual for American corporations to work with China’s state-owned companies, McKinsey’s role has sometimes put it in the middle of deeply troubled deals. In Malaysia, the company laid out the case for one of Asia’s most corrupt leaders to pursue billions of dollars from China at a time when he was suspected of funneling vast sums of public money into his own pocket, drawing tens of thousands into the streets to protest against him.
McKinsey defends its work around the world, saying that it will not accept jobs at odds with the company’s values. It also gives the same reason that other companies cite for working in corrupt or authoritarian nations — that change is best achieved from the inside.
“Since 1926, McKinsey has sought to make a positive difference to the businesses and communities in which our people live and work,” the company said in a statement.
“Tens of thousands of jobs have been created, lives improved and education provided thanks to the work we have done with our clients,” it added.
“Like many other major corporations including our competitors, we seek to navigate a changing geopolitical environment,” the company said, “but we do not support or engage in political activities.”
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Still, some analysts, veteran diplomats and experts on global governance see McKinsey’s role in a different light.
While the United States pulls back from international cooperation and adopts a more nationalist stance, major companies like McKinsey are pursuing business in countries with little regard for human rights — sometimes advancing, rather than curbing, the contentious tactics of America’s biggest rivals.
“It is more likely they enable these regimes and likely become complicit,” said David J. Kramer, a former assistant secretary of state. “They don’t want to alienate regimes, or they would lose business.”
Monuments to Kiev’s founders burned during anti-government demonstrations in 2014. The protests led to the ouster of President Viktor F. Yanukovych, a McKinsey client.Efrem Lukatsky/Associated Press
Oligarchs and Autocrats
His bona fides included two criminal convictions and a rigged election that, many assumed, had finally doomed his presidential ambitions.
So it was a bit surprising when McKinsey helped polish the battered image of Mr. Yanukovych and pitch him as something else: a forward-thinking leader with an economic vision of a better future for all Ukrainians.
McKinsey’s role in resurrecting Mr. Yanukovych’s political career has been lost in the clamor surrounding the conviction of Mr. Manafort, Mr. Trump’s former campaign chairman, for secretly taking millions of dollars to help the Ukranian leader win the presidency in 2010.
But McKinsey was financed by the same oligarch who backed Mr. Manafort, and it wrote an economic plan that Mr. Yanukovych wielded to disarm his critics — before discarding much of it after becoming president.
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On his 100th day in office, in a Soviet-era palace adorned with Cossack art, Mr. Yanukovych stiffly briefed the nation, laying out his economic plan. After sipping Cognac and Scotch, legislators and guests packed the hall, where the cameras conspicuously stopped on a man with a bright blue suit and a résumé that touched the lives of virtually everyone in Ukraine.
His name: Rinat Akhmetov, the country’s richest oligarch. As much as anyone, he was the reason for the gathering, and he had reason to feel good.
He had rescued Mr. Yanukovych through a strategy that included hiring two very different consulting groups: Mr. Manafort, whose Russian-linked team had worked for dictators with little regard for human rights, and McKinsey, the purveyor of best practices for the world’s most important corporations.
McKinsey presented Mr. Yanukovych, center, as a leader with a vision of a better future for all Ukrainians.Myshko Markiv/Agence-France-Presse—Getty Images
That these two disparate groups found common ground is a testament to Mr. Akhmetov’s vast business empire and political skill. But for McKinsey, it underscored the risk of consulting in an unstable part of the world, where the company might be perceived as enabling autocratic or corrupt governments.
Mr. Manafort’s job was twofold: to soften Mr. Yanukovych’s reputation and strengthen his Russian-leaning Party of Regions, facilitating his rise to the presidency. McKinsey provided something different — an economic plan that Mr. Yanukovych could use to portray himself as a market-based reformer, tilting to the West.
To ensure that the message got through, Mr. Yanukovych and Mr. Akhmetov pointedly mentioned McKinsey in talks with American officials, according to diplomatic cables released by WikiLeaks. Mr. Akhmetov assured the Americans that his candidate was “a strong McKinsey supporter,” while Mr. Yanukovych emphasized that he had instructed his aides “to work directly with McKinsey experts.”
Diplomats remained wary. A respected Ukrainian journalist warned American officials that Mr. Yanukovych might “sing a song one moment and knife someone the next.”
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There were also questions about Mr. Akhmetov, who had long been suspected of links to organized crime, which he denied. One diplomat called his Party of Regions a haven for “mobsters and oligarchs,” noting that it might be trying to shed that image.
Mr. Akhmetov’s financial ties to Mr. Manafort and McKinsey went beyond politics. He hired both to advise parts of his corporate empire, which included steel, mining, energy, finance, telecommunications, real estate, media, transportation, agriculture and soccer. He also hired former McKinsey consultants to help run his businesses, placing them in senior positions.
Mr. Akhmetov paid Mr. Manafort by wire transfers funneled through a Cypriot shell company, court records show. Other Party of Regions operatives paid Mr. Manafort through shell companies, eventually resulting in his conviction in the United States for failing to declare the money on his tax returns.
Rinat Akhmetov, Ukraine’s richest oligarch, hired both McKinsey and Paul Manafort as consultants for Mr. Yanukovych.Sergei Supinsky/Agence France-Presse — Getty Images
McKinsey, by contrast, was paid through a Ukrainian foundation financed by Mr. Akhmetov and run by a former McKinsey consultant now living in Moscow. Set up to promote economic reform, the foundation also sought to publicize McKinsey — and by extension, Mr. Yanukovych.
To reach its prime audience in the United States, the foundation held two forums on the Ukrainian economy — one at the Four Seasons Hotel in New York and the other in Washington. On the whole, McKinsey’s work was well received.
But the promise of a better future didn’t last long.
Within a few years, Ukraine careened toward economic collapse while Mr. Yanukovych looted the nation, living in a palatial residencesurrounded by a private zoo, a golf course, a garage filled with classic cars and a private restaurant in the form of a pirate ship.
If that were not enough, he was also quietly building an enormous seaside retreat, complete with 40-foot ceilings and an indoor swimming pool, that eclipsed his presidential residence.
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The capital soon turned against him. Mr. Yanukovych had long promised to tie Ukraine to the West by signing sweeping political and trade agreements with the European Union. Then he abruptly reneged, siding with Russia instead.
Protesters flooded the streets for months, chanting pro-Europe slogans. Mr. Yanukovych’s government responded with a heavy hand, culminating in what the European Parliament’s envoy called a “Ukrainian Tiananmen,” referring to China’s deadly crackdown on demonstrators in Tiananmen Square. More than 80 protesters were killed before Mr. Yanukovych fled the country in 2014.
The chaos didn’t end there. Outraged, Mr. Putin pushed into Ukraine, annexed Crimea and stirred up a war that has claimed more than 10,000 lives. The West responded by kicking Russia out of the Group of 8 industrialized democracies and imposing sanctions. The standoff between Mr. Putin and the West had begun.
McKinsey defended its role in Mr. Yanukovych’s rise by saying that the foundation was serious about promoting economic development in Ukraine and featured prominent Westerners on its board. The foundation quietly folded — without achieving its goals — just before Mr. Yanukovych fled to Russia. Neither Mr. Akhmetov nor McKinsey would say how much money McKinsey earned.
“When we concluded that the government was not following through on its stated reform agenda, we ended our work,” McKinsey said in a statement.
Mr. Akhmetov, who publicly broke with Mr. Yanukovych during the protests, declined to speak to The Times. Inside his gold and chrome headquarters, a spokesman said the foundation had been unsuccessful because politicians lacked the will “to embrace the reform agenda.”
But critics like Anders Aslund, a Swedish-born economist who advised the Russian government in the 1990s and later the government of Ukraine, lamented how Mr. Yanokovych’s image had been sold in Western capitals. It was clear, he said, that Mr. Yanokovych “was about power and robbery.”
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McKinsey’s role in Ukraine did not end with Mr. Yanukovych’s downfall. “We build leaders who can deliver lasting, meaningful impact for Ukraine’s major companies, its economy and society,” the company wrote on its website
McKinsey quickly became a favorite of Mr. Yanukovych’s successor, Petro O. Poroshenko, an oligarch known as “the chocolate king” for his confectionary business.
McKinsey quickly became a favorite of Mr. Yanukovych’s successor as president, Petro O. Poroshenko.Mykhailo Markiv/Agence France-Presse — Getty Images
In a speech last November, Mr. Poroshenko praised McKinsey for its 15 years of work in Ukraine. His daughter-in-law also worked for the company during most of his presidency.
Meanwhile, McKinsey has continued to consult for Mr. Akhmetov, sharing the top floor of a Kiev office building with an Akhmetov company. Another Akhmetov company sits a floor below. In fact, Mr. Akhmetov owns the entire building, which includes a business in the lobby fit for an oligarch: an Aston Martin-Rolls Royce dealership.
Building China’s Dream
Workers last month at the site of the East Coast Rail Link in Malaysia. Part of China’s Belt and Road Initiative, the project was suspended in July.Lauren DeCicca for The New York Times
Deep in the Malaysian jungle, a sprawling construction site sits abandoned, the relentless monsoon rain taking its toll on the rusting fields of steel girders.
It is supposed to be a railway — part of China’s signature Belt and Road Initiative, a $1 trillion global undertaking financed by big Chinese loans, and usually built by Chinese companies.
Chief among them is the China Communications Construction Company, a state-owned behemoth whose initials are stenciled in black on the cement plant at the abandoned site.
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China Communications, which was barred for eight years from doing business on some World Bank projects because of a corruption scandal, played a leading role in building artificial islands in the South China Sea that have raised tensions with the United States.
The company’s subsidiary also built a new port for Sri Lanka. But the debt turned out to be such a burden that the Sri Lankan government had to give up the port and hand it over for 99 years — to China.
Sri Lanka’s fate was so alarming that Malaysia’s new prime minister, Mahathir Mohamad, worried that the same thing might happen to him. So he suspended the railway project in July.
“That is not good for us,” Mr. Mahathir said in September. “Malaysian workers have no jobs that they can do. All the work is hired from China. You can see how one-sided it is.”
An abandoned China Communications site for the East Coast Rail Link project in Malaysia.Lauren DeCicca for The New York Times
But for McKinsey, it was anything but one-sided. The company represented both parties involved in the deal.
In 2015, as China Communications was building the artificial islands and still under World Bank sanctions, McKinsey signed it on as a client, advising it on strategy.
Months later, McKinsey won another contract: this one with the Malaysian government, to review the feasibility of the rail line.
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In a confidential PowerPoint report, McKinsey told Malaysian officials that the rail line could increase economic growth in parts of the country by as much at 1.5 percent. It was a figure that the prime minister at the time, Najib Razak, who now has been charged with corruption, liked to cite.
In bullet points, McKinsey also said the project would help improve ties with China — “build the nation-to-nation relationship” — because of its importance in China’s Belt and Road Initiative.
And McKinsey endorsed the idea of heavy borrowing from China, referring to it as a “game changer” elsewhere in the region.
A confidential McKinsey & Company PowerPoint report showing that the company told Malaysian officials that the East Coat Rail Link could increase economic growth in parts of the country by as much at 1.5 percent.
It isn’t hard to see where McKinsey’s enthusiasm for the Belt and Road Initiative came from: The firm had promoted the Chinese policy at the highest levels of the company.
Dominic Barton, McKinsey’s managing partner at the time, made Belt and Road the theme of a keynote address in Beijing in 2015, recounting the Silk Road trade from the second century B.C. onward.
McKinsey’s in-house research group, the McKinsey Global Institute, sprang into action, producing reports — widely cited in the Chinese state news media — extolling the benefits of the Belt and Road Initiative.
Mr. Barton — who has served on the advisory board of China Development Bank, one of the two biggest Chinese lenders to the Belt and Road Initiative — also batted down concerns in a 2015 interview with Chinese state media that the undertaking might be used as a tool to expand China’s global influence.
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“The world is waiting for the ‘One Belt, One Road’ grand blueprint to move from dream to reality,” Mr. Barton and his colleagues wrote in a report published on the company’s Chinese website in May 2015, expressing McKinsey’s enthusiasm to work on it.
The feeling was mutual. Nine of the top 20 Belt-and-Road contractors are or have been McKinsey clients, according to research by The Times and figures from RWR Advisory Group, which tracks such projects.
In 2016, McKinsey’s client, China Communications, won the $13 billion contract to build the Malaysian railroad. McKinsey justified the project at a time when Mr. Najib was widely accused of corruption, buffeted by street protests over the disappearance of hundreds of millions of dollars from a state investment fund, and badly in need of cash from an outside lender like China.
The scandal over the deal has enveloped both of McKinsey’s clients. Mr. Mahatir told local reporters that China Communications, which won a no-bid contract for the railroad, may have deliberately overstated the costs in order to help Mr. Najib and his allies shovel extra money into the investment fund to replenish the missing amounts.
Tony Pua, a Malaysian lawmaker and an aide to the finance minister, said the deal was brokered by a hard-partying Malaysian businessman named Jho Low, who is accused of siphoning off hundreds of millions of dollars from the fund and is now believed to be in China, avoiding a Malaysian arrest warrant.
McKinsey says it has no knowledge of any collusion between China and Mr. Najib. It said that of course it would discuss China’s sweeping Belt and Road plans but rejected the notion that, by representing both sides involved in the project, the company had a conflict of interest in any way. By the time China Communications won the bid, its work for Malaysia had already finished, the firm said.
“Our firm’s rigorous internal policies and procedures” ensure that “we bring an independent perspective” to help each client “pursue its own strategic goals,” McKinsey said.
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But the political backdrop — a government facing crippling corruption accusations and the prospect that Mr. Najib might turn to China for funds to cover his tracks — should have been obvious to McKinsey at the time, argued Bridget Welsh, a professor at John Cabot University in Rome who focuses on Malaysian politics.
“They were choosing to engage with actors that were deeply tainted,” Ms. Welsh said of McKinsey.
A Special Relationship
Installing solar panels on a high-rise in Wuhan, China. McKinsey opened its first office in the country in 1995.Bryan Denton for The New York Times
It was not the first time McKinsey had been drawn into questionable arrangements through its work in China.
The company opened its first office there in 1995, using consultants from the United States and Britain. By the end the decade, McKinsey was on hand to help as Beijing began pushing its moribund state-owned companies to adopt Western-style management, a McKinsey specialty.
The firm landed some big clients. Its star pupil was Ping An, an insurance company set up as part of a state-owned shipping company. Beginning in 1997, McKinsey began a two-decade relationship with the company as it rose from a footnote to one of the world’s biggest insurers.
McKinsey’s success soon reached into the pinnacle of Chinese politics, dragging it — unwittingly and unknowingly, the company contends — into a potential conflict of interest in the most glaring example of official enrichment in the history of the People’s Republic of China.
Always in search of top talent, McKinsey brought on a 27-year-old named Liu Chunhang as a full-time associate in 2002. He had just graduated near the top of his class at Harvard Business School, according to school records, and stayed at McKinsey for less than a year. But in that time, his in-laws took steps that would turn them into billionaires.
Mr. Liu was the son-in-law of Wen Jiabao, the country’s vice premier in charge of finance. Several months later, Mr. Wen became China’s premier, putting him in charge of running the government.
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At the time, McKinsey’s client, Ping An, was preparing for an initial public offering in Hong Kong. The Wen family and its business associates became secret shareholders of Ping An, having acquired their stakes at low cost in late 2002. And as premier, Mr. Wen presided over China’s cabinet, which oversaw the insurance industry and signed off on big I.P.O.s.
According to McKinsey, Mr. Liu left the company in July 2003. It’s not clear whether he played any role in his extended family’s business activities. But when Ping An went public the next year, the Wen family amassed a staggering fortune, largely in company stock. By 2007, the family was worth at least $2.7 billion.
The family of Wen Jiabao, China’s premier from 2003 to 2013, amassed a large fortune when the insurer Ping An, a McKinsey client, went public.Petar Kujundzic/Reuters
Mr. Liu, who is now a senior official at China’s banking regulator, said through a spokesman that he “never worked on any projects for the firm’s Chinese clients,” and that it would be “misleading” to connect him with McKinsey’s work for Ping An.
McKinsey said that Mr. Liu had been hired because he was qualified, not because of his family connections.
“Any suggestion that Mr. Liu was hired or employed for improper purpose is false and extremely misleading,” the company said.
Today, China’s best and brightest clamor to work at McKinsey. Partners in the firm have sat in on Communist Party meetings at companies. More than 90 percent of the company’s 350 consultants in China are of Chinese descent, according to its website.
And the importance of China to McKinsey over all is evident: The firm’s last two managing partners, Mr. Barton and Kevin Sneader, were promoted from the region. Mr. Sneader now runs the entire company from Hong Kong.
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McKinsey’s name has become so prestigious in the country that a Chinese copycat sprang up, adopting the company’s Chinese name.
The copycat firm — Chengdu McKinsey Management Consulting Company — even won a contract to advise Sichuan Province on its economic planning. Its ruse was so successful that the China Economic Weekly, a magazine under the Communist Party’s mouthpiece People’s Daily, wrote a cover article about the spreading influence of the real McKinsey, likening it to an octopus, and marveling at the success of the fake one.
McKinsey said it had not worked on the economic planning in Sichuan Province.
The company, however, has not shied away from contentious programs like “Smart Cities,” worrying scholars and human rights advocates who say the approach will strengthen China’s surveillance state.
Video of traffic in Hangzhou, China. McKinsey has participated in a “Smart Cities” program that collects data from sources like cameras — a concern in an authoritarian state like China.via Reuters
The idea of smart cities is to make them more manageable by collecting data from sources like cameras. In an authoritarian state like China, that raises broad concerns.
“Police patrols cannot be everywhere, for instance, but predictive analytics can deploy them in the right place at the right time,” McKinsey wrote in a report in June.
“It is about political control,” said Samantha Hoffman, a fellow at the Australian Strategic Policy Institute.
McKinsey is now working with Ping An to put smart cities into practice in the Chinese city of Nanning to monitor financial fraud.
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The company has also championed — even parroted, critics say — the Chinese government’s “Made in China 2025” initiative to become a global leader in sensitive fields like artificial intelligence and aerospace, a policy rattling European and American leaders who fear the plans will undermine their economies and set the stage for Chinese dominance.
In October, Vice President Mike Pence warned that “through the ‘Made in China 2025’ plan, the Communist Party has set its sights on controlling 90 percent of the world’s most advanced industries.”
McKinsey has produced at least 10 reports in Chinese focusing on “Made in China 2025.” But earlier this year, China’s government ordered the news media to stop writing about it, given the intense criticism from the United States and Europe. McKinsey’s reports also stopped mentioning the policy.
“They sometimes seem to be almost like an arm of the People’s Daily,” George Magnus, a former chief economist at UBS, said of McKinsey. “Obviously they do it in a slightly more subtle way — sometimes not so subtle.”
Clients Under Sanctions
The head office of VEB, a Russian government-owned bank that is under United States sanctions. Jared Kushner, President Trump’s son-in-law, met in 2016 with the bank’s former chief.James Hill for The New York Times
When Senate investigators wanted to know why Jared Kushner, Mr. Trump’s son-in-law, met with the head of a Russian bank under sanctions shortly after the 2016 presidential election, Mr. Kushner explained that, as far as he had been told, the bank chief had “a direct line to the Russian president.”
It is easy to see how. The bank — Vnesheconombank, or VEB — is owned by the Russian government and overseen directly by Mr. Putin’s inner circle. The bank’s former chief — the one Mr. Kushner met — graduated from the training school of the F.S.B., the successor agency of the K.G.B. The bank has also come under scrutiny in Congress and by the special counsel investigating possible collusion in the 2016 election.
And the bank is a McKinsey client.
In August, VEB hired the consulting firm to develop its business strategy — one of several companies that are under sanctions and that McKinsey advises.
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Sberbank — a state-controlled bank that is on the sanctions list and that sponsored Mr. Trump’s Miss Universe contest in Moscow in 2013 — is also a McKinsey client. In 2016, it agreed to pay the firm up to $5.2 million for advice on restructuring.
Yet another state-owned bank under sanctions, VTB, agreed to pay McKinsey about $4.4 million in 2017 to develop information technology.
McKinsey’s work in Russia is extensive. Its Moscow office, the largest of the Western consulting firms working there, has handled about 2,000 projects, working with market leaders in oil, gas, banking and retail, as well as the mining of diamonds, gold and coal. One of its senior partners is the son of the Nobel Prize-winning novelist Aleksandr Solzhenitsyn.
VEB’s deputy chairman, Andrei Klepach, left, with Yermolai Solzhenitsyn, a senior McKinsey consultant, at a 2016 business conference in the eastern Russian city of Krasnoyarsk.Artyom Korotayev\TASS, via Getty Images
McKinsey is so valued in Russia that even as Mr. Putin and Western nations clashed over Ukraine, a partner in the firm served on a Russian energy commission until 2015, along with several business executives who were either the target of individual sanctions or had ties to companies under sanction.
McKinsey clients help expand Russia’s reach abroad. One of them — PhosAgro, a fertilizer giant with ties to the Kremlin — is pushing hard for new regulations that would give it greater control over Europe’s food supply. The European Union already had concerns about Russian influence over its natural gas supply, much of which came from Gazprom, another Russian company under sanctions that McKinsey has advised on strategy and pricing.
McKinsey says it takes jobs in Russia — or anywhere in the world — only when it believes it can make a positive contribution. McKinsey also says its consulting is not political in nature, but focused on helping people lead better lives.
The firm has plenty of accomplishments to point to. In Russia alone, it upgraded Aeroflot, the national airline, improved traffic flow in Moscow and improved worker safety.
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And McKinsey is far from the only American company working in legal ways with companies under sanctions. Some American officials have long argued that getting involved in the Russian economy not only benefits the American companies working there, but can also help foster better business practices and a greater appreciation for democratic principles overseas.
Others see little evidence of that. Robert G. Berschinski, a State Department official in the Obama administration, said business leaders and policymakers often believed that actively engaging with authoritarian governments would lead to economic reform, which in turn would drive political reform.
“But what is becoming increasingly clear, in Russia, China and Saudi Arabia — in all three of those instances — that belief has not proven to be true,” he said.
China is a prime example, argued Mr. Kramer, the former assistant secretary of state. He said the country had lifted hundreds of millions of people out of poverty, yet companies that do business there “have nothing to point to” showing that Chinese people have been granted more civil or political rights.
In some cases, McKinsey’s work may have made things worse.
The firm produced a report tracking how some of Saudi Arabia’s most important policies were viewed by the public, singling out three individuals who drove often negative conversations on Twitter.
One was later arrested, according to a human rights group. Another said that Saudi government officials had imprisoned two of his brothers and hacked his cellphone. The third — an anonymous account — was shut down.
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McKinsey said it was “horrified by the possibility, however remote,” that the report could have been misused. But the kingdom is a such a vital client for the firm — the source of nearly 600 projects from 2011 to 2016 alone — that McKinsey chose to participate in a major Saudi investment conference in October even after the killing and dismemberment of a Washington Post columnist by Saudi agents.
McKinsey participated in a Saudi investment conference in October that included Crown Prince Mohammed bin Salman, onstage right, despite the recent killing and dismemberment of a dissident columnist by Saudi agents.Tasneem Alsultan for The New York Times
“The world is divided into people who are for beheadings and against beheadings,” said Anand Giridharadas, a former McKinsey consultant and former Times writer. He added that the firm and other companies were lending “their reputation and credibility to a regime that deserves none of that.”
For 19 months, Calvert W. Jones, a University of Maryland professor, crisscrossed the Gulf monarchies in the Middle East as part of her research evaluating the work of management consultants in what she calls “the black box of authoritarian governance.”
“Even if democracy itself remains a distant hope, so the thinking goes, experts might improve the daily lives of citizens in fundamental ways,” Ms. Jones wrote.
Her conclusions are not likely to make it into recruiting videos for consulting companies seeking idealistic college graduates.
“In the beginning, the best of them want to help, want to do real research, provide data and expert opinions,” she said. But after initially speaking their minds, she said, they gradually stop.
“They engage in the art of not speaking truth to power,” she said. “They self-censor, exaggerate successes and downplay their own misgivings due to the incentive structures they face.”
Outside experts might even reduce, rather than encourage, domestic reform, Ms. Jones said, partly because consultants are often unwilling to level with the ruling elite. The issue is becoming increasingly relevant, she said, as “the number of experts circulating around the world continues to grow.”
The expansion is clear enough in the lobby of the Ritz-Carlton hotel in Riyadh on a weekday morning. There, a former Western diplomat quipped, you can watch the consultants departing for their jobs “like bats leaving a cave.”
Reporting was contributed by Mark Rachkevych from Kiev, Ukraine; Chris Buckley from Kashgar, China; Krishnamoorthy Muthaly from Bentong, Malaysia; Hannah Beech from Bangkok; Matt Apuzzo from Brussels; David Barboza from Boston; and Andrew Kramer from Moscow. Research was contributed by Audrey Jiajia Li, Jennifer Jett, Bridget Hickey, Ivan Nechepurenko and Susan Beachy.
A version of this article appears in print on of the New York edition with the headline: Turning Tyranny Into a Client. Order Reprints | Today’s Paper | Subscribe
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