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McKinsey creates new ethics role after $641m opioid fallout

McKinsey is offering some staff nine months’ pay to leave the firm.

McKinsey & Co is beefing up its ethics department after a series of high-profile controversies, including helping Purdue Pharma ‘turbocharge' opioid sales.

The management consulting giant is hiring for a newly created position with its global “ethics allegations management team”. The “specialist” will be responsible for “intake and triage of matters” that could present a risk to the firm. McKinsey is also looking to replace its ethics director, a position that helps “ensure we uphold a distinctive culture of integrity and ethical behavior across our firm”, according to the job description, with a salary that ranges from $235,000 to $314,000.

“We are continually improving these processes and capabilities, which includes these ethics roles,” said Neil Grace, a McKinsey spokesperson. The company has more than more than quintupled internal risk, legal, ethics and compliance staff over the last eight years, he said.

A lack of oversight at McKinsey has previously resulted in some well-publicised unsavoury entanglements. The consulting firm has paid out $641-million to resolve ongoing lawsuits over its opioid work. Its South African branch has been ensnared in a corruption scandal and the company received sharp criticism for moving too slowly to cut ties with Russia after its invasion of Ukraine.

In 2019, the firm adopted “more rigorous” client selection policies, which required analysing whether its work would hurt people, particularly vulnerable populations. The company says it has invested nearly $700-million over five years to bolster its risk management teams and processes.

When Nick Lovegrove worked at McKinsey as a managing partner about a decade ago, the ethics and compliance department “barely existed”, he said.

“Nowadays McKinsey gets a lot more allegations made against it,” said Lovegrove, who’s now a professor at Georgetown University’s McDonough School of Business. “That’s not necessarily because it’s doing more bad things, but because the recent highly-publicized cases have both raised its profile and made it seem more vulnerable.”

The ethics group, which reports up to chief compliance officer Daniel Trujillo, also handles conflict of interest cases. In 2019 McKinsey agreed to pay $15-million to end a federal probe into whether it violated disclosure rules designed to prevent conflicts of interest in corporate bankruptcies. It’s still facing a lawsuit from restructuring expert Jay Alix for allegedly concealing such conflicts.

The ethics specialist will team up with “investigators and subject-matter experts”, according to the job description, and present information “for key audiences”. The ethics director, meanwhile, will oversee internal probes of  “any alleged violation” of policies or regulations.

Many companies have ethics and compliance czars — McKinsey’s Trujillo previously served in a similar role at Walmart. Most of them joined the C-suite in the wake of the 2000s-era scandals at Enron, WorldCom and Tyco, or following the 2010 Dodd-Frank Act. More recently, they’re tasked with evaluating the potential dangers of the boom in artificial intelligence.

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