McKinsey advised Rostec on commercial and operational improvement

24 May 2022 3 min. read

McKinsey & Company provided consulting services to Russian weapons manufacturer Rostec at the same time it was advising the US Department of Defense (DoD), according to an NBC News investigation. The news arrives as the New York-based management consultancy continues to face criticism over conflicts of interest, aiding states hostile to the United States, and general corporate immorality.

Rostec is a large defense conglomerate that dominates Russia’s defense sector. The company’s hundreds of subsidiaries manufacture engines for Russian cruise missiles, military attack helicopters, and night vision goggles, among numerous other weapons systems.

Rostec is run by Sergei Chemezov, who was a KGB colleague of Vladimir Putin’s in East Germany. McKinsey’s links to Rostec date back to at least 2010, according to Russian media reports cited by NBC News.

McKinsey advised Rostec on commercial and operational improvement

McKinsey says its work with Rostec did not directly involve weapons. “This work concerned core commercial and operational topics of the sort that we routinely advise our clients on all over the world,” company spokesperson Neil Grace told NBC.

The spokesperson rejected conflict of interest allegations, citing strict rules and firewalls that act as safeguards: “As we have stated previously, McKinsey complies with all applicable U.S. contracting laws, including those regarding conflicts of interest. When we serve the U.S. government, we do so through a separate legal entity with separate operational structures and separate information technology where required.”

Beyond Rostec, McKinsey worked with 21 of Russia’s 30 biggest companies prior to the country’s invasion of Ukraine, including SberBank, VTB Bank, Gazprom, and Rosneft.

Approximately a week after Russia launched its military offensive against its western neighbor, McKinsey and its rivals Bain and BCG announced they were pulling out of Russia and suspending business operations.

McKinsey has previously been criticized for advising Chinese state-owned enterprises – including now blacklisted China Communications Construction Company – that have supported Beijing’s efforts to strengthen its naval network and assert control over disputed territory in the South China Sea.

Vladimir Putin and Sergei Chemezov

“At this point, no one should be surprised by McKinsey’s relationships. Whether it is with Russia, China, or some unethical foreign firm, McKinsey is constantly working against American interests to make a profit,” Senator Marco Rubio told NBC News in an email.

US authorities have not charged McKinsey with violating contracting laws in its work with Russia or China, and there are no allegations the firm has damaged US national security.

The firm was recently grilled by lawmakers for advising opioid manufacturers at the same time that it provided consulting services to the US Food and Drug Administration (FDA).

McKinsey previously agreed to pay $641 million to settle allegations from US states that it helped drive the opioid epidemic through marketing and sales advisory work for Purdue and other pharma companies. McKinsey admitted no wrongdoing in the settlement agreement.