McKinsey CEO Loses His Cool As Sen. Hawley EXPOSES His Dual Role With US Defense & Chinese Companies.

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how much money do you make off the United States government I don’t know the size of our work with the US government senator in 2021 you made more than $850 million in Consulting work for the federal government with the Department of Defense as your top client you make gobs of money off of our enemies and then you turn around you make gobs of money off of us it’s outrageous frankly listen you shouldn’t be doing any work with the Chinese Communist party and any Enterprise that they own or have have some share in you shouldn’t and if you were serious about ethics you wouldn’t be doing it but it’s particularly outrageous that you then make money almost a billion dollars in a year off the United States government including the defense department Mr sternfels if I could just start with you did I hear you say in your opening statement I’m going to quote you now we have the industry’s most rigorous client selection policy did I get that right we believe that to be true Senator well how is it then that you end up with so many clients who are state-owned Chinese corporations hostile to the United States uh thank you Senator so the basis for my uh answer was we’ve invested over $700 million over the last several years um to put in place a rigorous client selection process that looks at a whole series of factors um well let’s let’s talk about some of your clients like the China Communications construction company this is a firm that is blacklisted by the United States government this is a state-owned Enterprise that is responsible for building artificial islands in the South China Sea probably in direct contention of international law certainly in direct contention to United States security interests you help them develop their Five-Year Plan why is that a good idea Senator our work in China uh overwhelmingly works with uh multinational companies including many of those being us uh and private actually you’ve advised 22 of the 100 biggest state-owned companies in in China that’s a according to the New York Times let’s talk about another one that the Chinese ocean shipping company that’s a state-owned conglomerate that’s played a key role in China’s Naval expansion I’m quoting from NBC news here and beijing’s bid to extend its Global reach this company has been given special status by the CCP and forms the core of China’s defense industrial base this company has provided logistical support to the Chinese Navy’s escort operations in the Gulf of aen and experts say I’m still quoting it serves as the maritime logistical arm for the people’s Liberation Army you’re advising them how much money did you make on that contract uh no Senator we’re not advising them neither did you ever advise them historically we advised on none of the topics that um you had highlighted you you didn’t advise the Chinese ocean Shipping Company not on the topics you describe why is it a good idea to advise them at all they’re a state-owned Enterprise engaged in activity directly contrary to the security interests of this nation and they’re no longer a client of ours sir why have you advise on 22 of the 100 biggest Chinese state-owned Enterprises that number I don’t believe is accurate Senor it doesn’t have anything to do with money does it I don’t believe that number is accurate Senator how much money do you make off the United States government I don’t know the size of our work with the US government senator in 2021 you made more than $850 million in Consulting work for the federal government with the Department of Defense as your top client when you bid for those government contracts did you disclose your work for these Chinese state-owned Enterprises that were conducting activity at to our national security did you disclose it to the Department of Defense Senator we take uh oci incredibly seriously and I’ve even gone beyond what is required around disclosures so that’s a yes we take it incredibly seriously we made all appropriate disclosure Senator uh I’m happy to come back to you on any any details uh specific to the work that we do on the Department of Defense that’s that’s not what that is not what news reports have found and news agencies who’ve looked into this in fact to quote NBC News again and bidding on contracts with the Department of Defense the US Navy and Border Protection you did not disclose your work with Chinese Enterprises and apparent conflict of interest a report in 2021 showed December 2021 that you admitted to providing Services only for provincial and local governments in China but not for the central government in China my question is why should you be able to get any contracts to the United States government if you’re going to advise foreign Nations who are hostile to us and make gobs of money off of them why should you be getting US Government contracts Senator we’ve never worked with the Chinese Communist party or the central government in China to the best of my knowledge you’re working with state-owned Enterprises this is this is China is not a democracy they own these companies these companies are doing the bidding of the Chinese military and you’re making money off of it hand over fist my question is I guess if you want to do that I I guess it doesn’t violate the law but I just wonder why is it that you should then be able to turn around and make $850 million in one year loan off the American taxpayer I mean explain that to me Senator um our work with the federal government uh we stand behind uh we bring well I’m sure you do it’s incredibly lucrative that’s the problem you make gobs of money off of our enemies and then you turn around you make gobs of money off of us it’s outrageous frankly listen you shouldn’t be doing any work with the Chinese Communist party and any Enterprise that they own or have have some share in you shouldn’t and if you were serious about ethics you wouldn’t be doing it but it’s particularly outrageous that you then make money almost a billion dollars in a year off the United States government including the defense department now I am going I have introduced a law that would prohibit you from doing just this and I will continue to push it until we get a vote on it now let me ask you about one of the things since I’ve got you here and I have to tell you since I’m I represent the state of Missouri that has been absolutely devastated by the opioid crisis and I know you know a lot about that because speaking of money McKenzie has made an unbelievable amount of money off of the opioid crisis let me ask you about this New York Times report which found that McKenzie proposed paying a $1 14,810 bounty to pharmacies for each opioid overdose so McKenzie proud of that work Senator uh our work was designed to actually reduce opioid abuse really let me ask you about this I think we’ve got a poster of this We Sell Hope in a bottle this is an advertising campaign you came up with We Sell Hope in a bottle that’s for opioids Hope in a bottle you help Purdue Pharma Market them to Children the Massachusetts Attorney General has filed a lawsuit that has all of these disclosures in it describing how McKenzie Consultants recommended and P push Purdue to turbocharge oxy conton sales McKenzie urged the sackers owners of Purdue to make a clear go noo decision to turbocharge the sales engine the Consultants push the board of directors to turbocharge the sales engine to drive up the sale of opioids that is killing people left and right is McKenzie proud of that work Senator as I had stated in the house um we uh we saw we were too slow in seeing the epidemic unfold around us you help cause the epidemic our no senator uh really you don’t think that helped cause the epidemic you don’t think marketing these drugs to doctors and children helped cause the epidemic do you don’t think you have any part in that Senator what I can say including the state of Massachusetts is we were the first to actually reach a settlement with all all states well sure I mean sure when you’re over a barrel what are you doing for victims right now Senator we’ve reached agreement with the states and municipalities have you set up a compensation fund you sharing some of your profits with them Senator the the settlement details are public well I’m I’m asking you I mean have you have you set up a compensation fund share some of your prodigious profits with the victims who Senator our help destroy our substantial settlements go to exactly that cause you know I’ve sat here and I’ve listened to your responses to my colleagues and it’s it’s the same old thing over and over you don’t want to be accountable for anything that you do but I tell you what this is Unforgettable and frankly unforgivable and your work right now taking money from this government as you help the Chinese Communist party is absolutely unforgivable and I will not rest until it is illegal since 2008 the McKenzie company 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 McKenzie 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 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 Holly uh I agree this is a national security concern I would go further I mean the nature of the work that McKenzie did reportedly involved helping China consider how to outcompete us techn ology 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 interest 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 McKenzie had exercised better judgment about the projects it took on other firms doing business in China are getting raided by the Chinese government often times 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 we can raise here one is the nature of the work another is being a vector for the transfer of information of data and there’s a third concern too where is that some of these firms have mutually irreconcilable obligations to the United States and to China you know China is 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 well that’s 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 the here 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 McKenzie has advised nine of the top 15 Chinese contractors for the belt and Road initiative as of 2018 I mean it’s it’s really it’s Shameless when you think about it it is absolutely Shameless you know interestingly I 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 foyer request McKenzie 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 uh the GAO asking for an analysis of the conflict of interest law and Analysis of the procurement uh and contract awarding process to see if there were any strictures limitations in current law that would prevent companies like McKenzie 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 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-sponsor together introduced and pass 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 um Miss tman do you want to add to this why 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 that this why this is important and why it’s a matter of National Security thank you Senator I I read that GAO report and I am uh I join you in your concern about the lack of uh laws and guidance right now currently guiding Contracting officials on this issue one thing I will note is that the the far Provisions related to conflicts of interest are quite broad uh and could uh capture some of this but most government officials won’t feel comfortable taking this sort of action without uh greater guidance and directives explicitly giving them Comfort uh that they can that they can look to in taking these sorts of actions uh I I share similar concerns as you I I get nervous when things are too restrictive and there’s too many absolutes but I you rais very good points uh about why contract officials need better laws and need to be empowered to make these types of decisions yeah very good uh Mr R let me just ask you because in 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 from your testimony today you’re on the the anything goes side of the spectrum no so you support this bill then uh 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 legit wait a minute they’re the they’re on the march in the Pacific McKenzie 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 you want you want companies to be able to get taxpayer money from the United States and simultaneously get money from the Chinese government my that’s fine my concern Cent 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 I come from a state where our number one Agricultural Product are is soybeans right 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 interest of the United States I think that’s a ridiculous I said with respect to 232 National Security legislation it starts out here the next thing you know is restricting trade with the UK with Israel with our allies how do you know how do you know that’s not going to happen again that’s all I’m asking we need to have guard rails to make sure that our soybean farmers and other producers aren’t harmed like we have been in recent years by our I think that’s the most frankly absurd instance of what aboutism it makes just listening to you say it is refutes itself I’m talk 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 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 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 a billion dollars in taxpayer money McKenzie 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 your hard work on this and support I appreciate it and thanks for holding this hearing