Corruption at McKinsey

Congratulations to Yves Smith (nakedcapitalism.com) for her comments on the indictment of former McKinsey managing director Raj Gupta for insider trading.

Perhaps the rot at McKinsey started in the New York Office. That’s where partners drooled over Jeff Skillings’ success at Enron through the 1990s.

After I successfully managed a high-profile McKinsey engagement at the Bank for International Settlements, at any rate, several Swiss partners wanted to know why I wanted to leave the firm. I sheepishly explained my career-managing partner in New York, my home office, had gone to some length to build a case against promoting me in my first and only year there prior to my Swiss assignment.

But it seemed premature, especially in light of the Swiss decision to move me immediately into an engagement management role on my arrival in Zurich. Imagine my surprise a few months after the end of my Swiss assignment when I learned my career-managing partner had decamped to help run strategy at Lehman.

I was the only former Lehman banker in the New York Office at the time. You don’t suppose my advisor/tormentor had worried I knew of his discussions with my former Lehman colleagues and wanted to take a few preemptive swings at my credibility, just in case, do you?

In any event, said advisor, Jim Rosenthal, went on to add value to Lehman on a full-time basis. There he helped transform Lehman from the wonky bond house that had absorbed Salomon into an agile own-account mortgage-derivatives shop that tried to thrive, like First Chicago before it, on thin strips.

So at least one former New York McKinsey partner matched Jeff Skillings’ achievement.