As the French government was preparing to roll out its coronavirus vaccine campaign in December 2020, it hired US-based consulting firm McKinsey to advise on logistics.
But despite the fact France paid €4 million to McKinsey, and an additional €7 million to other private consulting firms, its vaccine campaign initially lagged behind the rest of Europe.
The government’s reliance on consultants has now become a liability for president Emmanuel Macron, who is seeking re-election this year, in a scandal being dubbed “l’affaire McKinsey.” Just four days before voters head to the polls for the first presidential election round on April 10, France’s financial prosecutor, an arm of the justice ministry, said it opened a preliminary investigation into the role of private consulting firms used by the state.
Why France’s increasing reliance on consultants is being investigated
A Senate report (pdf, French) published last month found the government spent nearly €894 million (about $976 million) on consultants last year, more than double than Macron’s first year in office in 2018.
McKinsey received more money from the government than any other consulting firm during the pandemic, bringing in more than €12 million. The report estimated one private consultant costs the French state €1,500 per day.
While the hiring of private consultants by governments is nothing new (the UK also spent millions on consultants for its pandemic response), the Senate report also alleged that McKinsey has skirted paying corporate taxes in France for at least a decade.
The French unit of McKinsey has previously said it paid “over €422 million in French taxes and social-security contributions” between 2011 and 2020. In an April 6 statement the firm said it will continue to respond to questions from French authorities, and that it respects French fiscal and social rules. France’s economy minister Bruno Le Maire promised today (April 7) that McKinsey will pay all the taxes it owes to the government, while Macron commended the justice ministry for opening a fraud investigation.
“When a company makes money in a country, they must pay taxes,” Macron told the French broadcaster TF1. The president reiterated his support for new global rules on minimum taxation, which he has argued would help keep firms like McKinsey on the hook for the earnings they reap abroad. He has denied any impropriety in the way his cabinet handled the consulting contracts.
Covid-19 was a boon for McKinsey in France and abroad
While many consulting firms suffered revenue losses and layoffs at the start of the pandemic, covid-19 turned out to be a boon for some, particularly McKinsey.
In the first four months after covid-19 began the firm secured $100 million worth of contracts with US state, city, and federal agencies, according to ProPublica.