Macron Goes on Defensive Over Use of McKinsey and Other Consultants

https://www.nytimes.com/2022/03/31/world/europe/macron-france-consultants-mckinsey-campaign.html

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PARIS — In a sedate presidential race overshadowed by pandemic and war, it’s the one issue that has so far managed to ruffle an otherwise supremely confident President Emmanuel Macron: McKinsey.

Yes, McKinsey, the American consulting firm.

With about a week left before the French go to the polls, McKinsey and its proximity to Mr. Macron’s government has unexpectedly emerged as a campaign issue — putting Mr. Macron on the defensive and forcing his ministers to try to extinguish the controversy.

The other presidential contenders, frustrated for months by Mr. Macron’s refusal to debate, have seized on McKinsey as a way to hit at what polls have long shown to be one of his great weaknesses: Mr. Macron’s image as an arrogant and aloof president of the rich, prone to a solitary and secretive decision-making style, out of touch with the concerns of ordinary French people.

The issue had been percolating for a few weeks since the release of a damning report by the Senate showing that McKinsey and other firms — highly paid and politically unaccountable private consultants — earned at least $1 billion last year to do work on sensitive matters for the government.

That amount followed already yearly increases in work for McKinsey and other consulting firms during Mr. Macron’s five-year presidency and a sharp acceleration during the coronavirus pandemic and France’s vaccine rollout.

The 380-page Senate report, which stemmed from a four-month inquiry, described the firms’ influence on the government as “tentacular,” detailing how private consultants routinely sat in on ministry meetings and anonymously wrote government reports.

It added that the government’s use of consultants had become “a reflex,” with consulting firms being “involved in most of the major reforms” in France, such as the overhaul of housing benefits or of unemployment insurance.

The issue rose to the surface this week after Mr. Macron finally began holding full-fledged campaign events and was confronted several times with it. Mr. Macron reacted angrily, at times justifying the practice of hiring consultants and then trying to deflect responsibility.

“I’m not the one who signs the contracts,” Mr. Macron said during a campaign stop in Dijon, eastern France this week, adding, “a lot of stupid things have been said in recent days.”

But as the issue stuck, the government went on the defensive, scheduling a news conference for Thursday and then moving it up to Wednesday evening at the last minute.

Chloé Morin, a political scientist at the Jean-Jaurès Foundation, a Paris-based think tank, said that the issue struck several sensitive chords among the French public and played on a particular vulnerability for Mr. Macron, a former investment banker who as a politician has made it his mission to bring businesslike efficiency to the structures of the state.

“One of the criticisms leveled at Emmanuel Macron since 2017 is that he is the president of the rich, a president of the private sector, a president who’s from the world of finance, and in France, there is a great distrust of the world of consultants and finance,” Ms. Morin said. “And so this revives the image of a president serving the interests of big donors and big banks.”

Before entering politics, Mr. Macron worked at the investment bank Rothschild. As president, while the overall economy has grown, his policy mix of tax cuts and deregulation has tended to favor the wealthy.

Mr. Macron’s presidency is also remembered for a series of disdainful comments he has leveled at ordinary people and their everyday concerns — an attitude that fueled the Yellow Vest movement of demonstrations against Mr. Macron’s economic policies.

The growing reliance on private, confidential consultants also reinforces the impression of Mr. Macron’s management style. As president, he has embraced, more than any of his immediate predecessors, the concentration of powers afforded the presidency in France’s Fifth Republic. During his presidency, as well as during his campaign for re-election, Mr. Macron has governed largely in secrecy, relying on his right-hand man, the general secretary of the Élysée Palace, Alexis Kohler.

Caroline Michel-Aguirre, a French investigative reporter who co-wrote “The Infiltrators,” a book on the growing presence of consulting firms within the state apparatus, said that the government’s use of consulting firms “was set up in a secret way” and posed “a democratic issue.”

“It took the involvement of the National Assembly, our book, a Senate inquiry commission and a controversy for the government to finally announce” that it would publish figures on government contracts with consulting firms, Ms. Michel-Aguirre said.

Mr. Macron remains the favorite going into the first round of voting on April 10. But he has slipped a bit in the polls. His main rival, the far-right leader Marine Le Pen, has been visiting communities in rural France and focusing laserlike on a single issue: the rising cost of living, made worse by the war in Ukraine and increasing fuel prices.

Ms. Le Pen and most of Mr. Macron’s other political opponents have seized on the consulting firms to accuse Mr. Macron of selling off the state.

The Senate’s report said that the situation raised issues about the state’s “sovereignty in the face of private firms” and about “the proper use of public funds.”

The opposition-led report focused on McKinsey, even though it represents only 1 percent of government consulting spending and earned far less than French consulting firms. The Senate described McKinsey as having an outsize influence.

Karim Tadjeddine, the head of the public sector for McKinsey’s French branch, has known Mr. Macron for years, having worked with him as part of a government commission in 2007 and participated in his 2017 election campaign, according to leaked emails from WikiLeaks. Many former McKinsey employees have also joined Mr. Macron’s campaign or administration.

“These are people who talk to each other, who know each other, who have been on different commissions together and who, in the end, helped Emmanuel Macron to come to power, sometimes with a bit of a conflict of interest,” Ms. Michel-Aguirre said.

Amélie de Montchalin, a junior minister in charge of the public sector, pushed back against the criticism, saying at the news conference on Wednesday that there was “nothing to hide” and denouncing what she called “gross manipulations” from political opponents.

Ms. de Montchalin said that the government had taken note of the Senate report and would limit the use of consulting firms in the future, while introducing rules to regulate the practice.

The Senate report also targeted McKinsey as an example of the sometimes questionable work of consulting firms for the government. The American firm was paid half a million dollars for an advisory mission on “the future of teaching,” which did not yield any tangible results according to government accounts cited in the report.

Asked about that mission during a parliamentary hearing in January, Mr. Tadjeddine appeared incapable of describing it in concrete terms.

What’s more, the senators accused McKinsey of not having paid any corporate tax in France for at least a decade, thanks to an elaborate scheme of tax avoidance.

In a statement released on Saturday, McKinsey said that it respected “applicable French tax and social rules” and that “its operating subsidiary paid six years of corporate income tax” in France from 2011 to 2020. A spokesman for the company said it declined to comment further.

Olivier Dussopt, a junior minister for public accounts, said at the news conference that an inquiry into McKinsey’s French branch had been opened at the end of last year, but he declined to comment on the investigation, which is still underway.