Sydney; and Erin Twyford, the University of Wollongong Sydney, Aug 16 (360info)Daily revelations in the media surrounding the performance and bad behaviour of the consulting industry highlights a growing scandal that threatens more than just the firms involved.
Attention so far has focused chiefly on PricewaterhouseCoopers (PwC), which is not only embroiled in an ugly tax scandal, revealing serious conflicts of interest, but has been linked to the notorious Robodebt scheme. PwC failed to provide a 70-page report to the government on a scheme that was later ruled to be illegal, despite being paid nearly AUD$1 million. Instead, it compiled an eight-page PowerPoint presentation.
Emerging evidence suggests these transparency failures and issues of conflict of interest at PwC are just the tip of the iceberg for the consulting industry.
KPMG has been accused of submitting inflated invoices and billing the Australia's Department of Defence for hours never worked and Ernst & Young (EY) was working for gas giant Santos while advising the New South Wales state government on new gas developments.
Pressure is mounting, particularly due to a Senate inquiry shining a light on a system in which consulting firms are allowed to police their own behaviour.
Such is the apparent disdain some of the international firms hold for transparency and accountability in the Australian arms of their businesses, Boston Consulting Group, commissioned for more than AUD$64 million since 2021, have denied the opportunity to appear at the Senate inquiry.
In a similar move McKinsey and Company which has 650 employees in Australia and currently signed up to an estimated AUD$56.4 million worth of government work over the past two years, will follow the same tactic.
This repeats a 2021 inquiry into Australia Post where the pair refused to front the politicians.
Key to this issue is that governments worldwide, including Australia's, rely heavily on consultants.
In 2021, the global consulting services market was valued between $USD700 billion) and $USD900 billion. This universal reliance on consulting firms illustrates the Big Con.
Mazzucato and Collington's book, The Big Con: How the Consulting Industry Weakens Our Businesses, Infantilises our Governments and Warps our Economies, highlights how consulting firms are structured to maximise returns to partners.
It means the firms regularly engage in unethical behaviour, which continues to go unchecked in the absence of regulation. In our submission to the Senate inquiry into consulting, we mentioned the case of Bain & Co, a Boston-based global management consulting firm, which illustrates state capture by the consulting industry.
The British Government banned Bain & Co from tendering for government contracts for three years because of ''grave professional misconduct'' in South Africa. Subsequently, during Jacob Zuma's two-term presidency, the South African Treasury imposed a 10-year ban on Bain from tendering for government contracts for its role in state capture.
State capture refers to cases where private interests influence a state to seek private advantage. As a result, there is growing pressure for private sector companies to remove Bain from their database of suppliers.
Similarly, consulting firm McKinsey and Co. agreed to pay $USD573 million to US authorities as part of a settlement for its role in the opioid crisis, which has killed hundreds of thousands of Americans.
The action was taken against McKinsey because of its conflict of interest in failing to disclose to the US government's medicine regulatory body, the Food and Drug Administration (FDA), its work with Purdue Pharma the manufacturer of the synthetic opioid Oxycontin.
McKinsey continued to advise Purdue after it pleaded guilty to charges in 2007 that it misled regulators over the risks of the drug leading to the company's bankruptcy.
These examples indicate the potential for action against consulting firms if the appropriate mechanisms exist.
Various Australian governments spend billions of dollars of taxpayers' money yearly on external contractors and consultants.
The NSW state government spent AUD$1 billion on consultants between 2017 and 2022. Australia's top consulting firms secured a record AUD$2 billion worth of Commonwealth taxpayer-funded work in 2021–22, with Accenture taking top billing for the second consecutive year. Australia's leading players offering consulting services include the 'Big Three' consultants Accenture (formerly Arthur Andersen), McKinsey, Boston Consulting Group and the 'Big Four' accounting firms (PwC, Deloitte, KPMG and EY).
Despite this enormous expenditure, there is no transparency about what is provided and the knowledge these consulting services produce. Reporting of perceived or actual conflicts of interest is limited to self-reporting and self-regulation.
Currently, in Australia, there are three Parliamentary inquiries into the consulting industry and its relationship with the Commonwealth government.
The first, a Parliamentary Joint Committee on Corporations and Financial Services Inquiry, has heard accurate allegations of, and responses to, misconduct in the Australian operations of the significant accounting, audit and consultancy firms (including but not exclusive to the Big Four) via a detailed investigation and analysis of regulatory, technical and legal settings, and broader cultural factors.
The second is a Senate Economics References Committee Inquiry into Australian Securities and Investments Commission investigation and enforcement.
The third is a Senate, Finance and Public Administration References Committee inquiry into the management and assurance of integrity by consulting services (Consulting services).
In our submission to the Senate inquiry (Consulting services), we raised concerns about conflicts of interest, the culture of consulting services firms and the apparent lack of transparency and accountability for consulting arrangements. We highlighted that the consulting industry in Australia is an unregulated activity.
This is because the unique structure of these consulting firms as partnerships means that regulation is focused on the individual via their membership in a professional accountant body or as a registered auditor or tax agent. This form of regulation is self-regulation in terms of codes and ethical practices. There are few enforcement measures for integrity breaches and unethical behaviour by consultants and firms.
Professional bodies, such as the accounting professional associations, take limited action about the misdemeanours of their members who are partners at Big Four consulting firms.
Instead, information about the failures of transparency, conflicts of interest and unethical behaviour at these firms has resulted from the actions of various whistle-blowers and investigative journalists.
This information has revealed that, despite their significant revenue, these Big Four firms are secretive partnerships, not companies, and do not have to disclose where their money is coming from, even though they are among the most powerful private institutions in the world. Most of their income growth comes from governments and large multinationals in work that does not even attempt to avoid conflicts of interest.
Besides consulting, the Big Four also help multinationals minimise tax while simultaneously acting as 'gatekeepers' in auditing the same big companies.
The dominant role played by the Big Four accounting and consultancy partnerships in transnational corporations' accounting and auditing practices is a global issue of concern, not just a problem for Australia.
PwC's Australian tax scandal was initially limited to one partner until PwC was forced to admit that multiple senior partners were involved after a cache of internal emails was released by a parliamentary committee at the start of May.
The emails showed that PwC's embattled Australian affiliate misused confidential government tax information for commercial gain, creating a crisis that threatens to extend beyond national borders.
This behaviour by individuals is consistent with a broad culture of conflict of interest, given that PwC provided advice to Treasury about international tax shifting while at the same time advising clients how to sidestep these laws.
When the OECD's 2015 Final Report on the Base Erosion and Profit Shifting (BEPS) Action Plan to tax transnationals was adopted in Australia in 2016, PwC was already devising tax practices to sidestep the new law.
The Treasurer at the time, Joe Hockey, was concerned about the rise of opaque structures such as the ''double Irish, Dutch sandwich'' that involved sending profits through one Irish company, then to a Dutch company and back to another Irish company in a tax haven.
Such schemes were particularly popular with US tech firms, including Google (which has said it no longer uses the loophole).
PwC tax partner Collins signed confidentiality agreements with the Australian government and fed intelligence on the government plans to PwC personnel in Australia and abroad.
The firm used that information to give more than a dozen US companies an early warning of the changes, netting additional fees and potentially depriving Australia of tax revenue.
It has since been revealed in Senate estimates that the Australian Tax Office became aware in 2016 that a handful of multinationals ''suspiciously and quickly'' sought to restructure operations in response to new tax avoidance rules.
Specifically, the Australian Tax Office was concerned by tax schemes marketed by PwC that threatened the country's tax take and suspected confidentiality breaches.
Information was passed to the police, but it did not initially result in a full investigation. Treasury has since referred the matter to the Australian Federal Police, citing new evidence. The tax office also formally referred the issue to the Tax Practitioners Board in 2020, which led to Collins being deregistered for two years. The tax board passed on 144 pages of internal PwC emails to the Senate.
The question of which colleagues received Collins' communications and what they did with the information has become a central part of future inquiries. While the scandal is Australia-centric, PwC used its global network to profit from privileged information, drawing in other parts of one of the world's biggest professional services firms.
Its admitted failings are now subject to a police investigation, and governments worldwide will be taking note amid a growing reliance on private consultants to formulate public policy and public services.
There are now multiple investigations into the leak, including by the Australian Federal Police, and PwC has been banned from winning further work from the federal and several state governments.
Given that for decades, PwC has provided tax advice to transnational companies, including miner Rio Tinto, meat giant JBS, energy company Chevron and explosives maker Orica, the current investigations could extend into the US, UK and Europe, partly because the emails show PwC's Australian partners have shared the secret government information with PwC partners globally. Consider a report published in 2020 by the Global Alliance for Tax Justice, which outlines how corporate' profit shifting', otherwise known as 'tax avoidance', cost countries $USD427 billion in lost tax revenue in that year alone.
Nowhere is this kind of behaviour more evident than in the global fossil fuel industry. Australian Tax Office data for the eight years from 2013 to 2021 shows nine companies, including ExxonMobil Australia, Chevron, Santos, Peabody Coal, Yancoal Australia and QGC Upstream (a subsidiary of Shell), paid zero corporate income tax over that period.
Those nine along with 16 other energy and resource companies with significant financial interests in fossil fuels disclosed revenue of about AUD$1,425 billion. They paid an average of less than 1 percent income tax on that revenue.
A host of offshore tax havens also enable manipulations of the Australian tax system. Contrary to popular opinion, four wealthy countries the US, Netherlands, Luxembourg and the UK and their 'independent' territory of the Cayman Islands are responsible for 47 percent of global tax losses.
These firms are housed outside of Australia, where tax on earnings from Australian government receipts does not feed back into the Australian economy. For example, Accenture plc is an Irish-American professional services company based in Dublin, specialising in information technology services and consulting. A Fortune Global 500 company, it reported revenues of USD$61.6 billion in 2022.
With this behaviour, management consultants are enablers of the new public management movement in which governments adopt structures, techniques and processes from the private sector to deliver public services.
Consultants translate what they consider to be appropriate practices to novel public sector settings. The significance of the consulting industry as the shaper of a new public sector is widely acknowledged. Given the positioning of new public management as a movement with private-sector management practices and the use of the private sector to deliver public services as its fundamental reference point, the arrival of management consultants in public services is not surprising.
Mazzucato and Collington outline how the consulting industry reached the core of global economies and governments. The 'Big Con' is possible in today's economies because of the unique power that consultancies wield through extensive contracts and networks and the illusion that they are objective sources of expertise and capacity.
An entrenched relationship exists between the consulting industry, hollowed-out and risk-averse governments, and shareholder value-maximising firms. Mazzucato and Collington demonstrate that our economies' reliance on companies such as McKinsey, Boston Consulting Group, Bain & Company, PwC, Deloitte, KPMG and EY stunts innovation, obfuscates corporate and political accountability and impedes our collective mission of halting climate breakdown. In Australia, at the Commonwealth government level, there has been a failure to account for how the performance of consultants is measured publicly. As outlined in our evidence to the Senate Inquiry, the Treasury considers all consultants responsible for their performance management. A change in June 2023 means that suppliers must notify federal public servants if their personnel have had adverse findings against them as part of a new ''notification of significant event clauses'', including an update to procurement rules introduced by the Department of Finance. The revised regulations emphasise that public servants ''must consider ... a potential supplier's relevant experience and performance history when assessing value for money''. Still, this approach relies on consultants self-reporting their performance and is profoundly inadequate, especially given the track record of these firms.
Nevertheless, what is the alternative? Mazzucato and Collington highlight that the Big Con has not only made millions for consulting firms but has hollowed out the public service They propose a new vision, for the civil service to rebuild capability in public sector organisations.
It is essential to recognise the government as creating rather than wasting value. This requires implementing learning and adaptive processes, empowering risk-taking within public sector organisations and evolving the narratives around the government's role in the economy. Busting them up is the only solution to these issues (for financial markets, the conflicts of interest are just as untenable between the tax and audit divisions as the auditors are there to sign off the accounts as "true and fair" while the tax advisers are there to advise corporations on how to most aggressively aviod paying tax in Australia). Policymakers and the media will play a crucial role in this transformation. With a combined effort, we can end the Big Con once and for all and restore an independent public service to its rightful place at the centre of government. (360info.org) AMS AMS
(This story has not been edited by Devdiscourse staff and is auto-generated from a syndicated feed.)
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McKinsey and Company, the nearly century-old firm that is the one of the largest consulting agencies in the world, made headlines earlier this year with its rapid embrace of generative AI tools, saying in June that nearly half of its 30,000 employees were using the technology.
Now, the company is debuting a gen AI tool of its own: Lilli, a new chat application for employees designed by McKinsey’s “ClienTech” team under chief technology officer (CTO) Jacky Wright. The tool serves up information, insights, data, plans, and even recommends the most applicable internal experts for consulting projects, all based on more than 100,000 documents and interview transcripts.
“If you could ask the totality of McKinsey’s knowledge a question, and [an AI] could answer back, what would that do for the company? That’s exactly what Lilli is,” McKinsey senior partner Erik Roth, who led the product’s development, said in a video interview with VentureBeat.
Named after Lillian Dombrowski, the first woman McKinsey hired for a professional services role back in 1945, Lilli has been in beta since June 2023 and will be rolling out across McKinsey this fall.
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Roth and his collaborators at McKinsey told VentureBeat that Lilli has already been in use by approximately 7,000 employees as a “minimum viable product” (MVP) and has already cut down the time spent on research and planning work from weeks to hours, and in other cases, hours to minutes.
“In just the last two weeks, Lilli has answered 50,000 questions,” said Roth. “Sixty six percent of users are returning to it multiple times per week.”
How McKinsey’s Lilli AI works
Roth provided VentureBeat with an exclusive demo of Lilli, showing the interface and several examples of the responses it generates.
The interface will look familiar to those who have used other public-facing text-to-text based gen AI tools such as OpenAI’s ChatGPT and Anthropic’s Claude 2. Lilli contains a text entry box for the user to enter in questions, searches and prompts at the bottom of its primary window, and generates its responses above in a chronological chat, showing the user’s prompts and Lilli’s responses following.
However, the are several features that immediately stand out in terms of additional utility: Lilli also contains an expandable left-hand sidebar with saved prompts, which the user can copy and paste over and modify to their liking. Roth said that categories for these prompts were coming soon to the platform, as well.
Gen AI chat and client capabilities functions
The interface includes two tabs that a user may toggle between, one, “GenAI Chat” that sources data from a more generalized large language model (LLM) backend, and another, “Client Capabilities” that sources responses from McKinsey’s corpus of 100,000-plus documents, transcripts and presentations.
“We intentionally created both experiences to learn about and compare what we have internally with what is publicly available,” Roth told VentureBeat in an email.
Another differentiator is in sourcing: While many LLMs don’t specifically cite or link to sources upon which they draw their responses — Microsoft Bing Chat powered by OpenAI GPT-4 being a notable exception — Lilli provides a whole separate “Sources” section below every single response, along with links and even page numbers to specific pages from which the model drew its response.
“We go full attribution,” said Roth. “Clients I’ve spoken with get very excited about that.”
What McKinsey’s Lilli can be used for
With so much information available to it, what kinds of tasks is McKinsey’s new Lilli AI best suited to complete?
Roth said he envisioned that McKinsey consultants would use Lilli through nearly every step of their work with a client, from gathering initial research on the client’s sector and competitors or comparable firms, to drafting plans for how the client could implement specific projects.
VentureBeat’s demo of Lilli showed off such versatility: Lilli was able to provide a list of internal McKinsey experts qualified to speak about a large e-commerce retailer, as well as an outlook for clean energy in the U.S. over the next decade, and a plan for building a new energy plant over the course of 10 weeks.
Throughout it all, the AI cited its sources clearly at the bottom.
While the responses were sometimes a few seconds slower than leading commercial LLMs, Roth said McKinsey was continually updating the speed and also prioritized quality of information over rapidity.
Furthermore, Roth said that the company is experimenting with enabling a feature for uploading client information and documentation for secure, private analysis on McKinsey servers, but said that this feature was still being developed and would not be deployed until it was perfected.
“Lilli has the capacity to upload client data in a very safe and secure way,” Roth explained. “We can think about use cases in the future where we’ll combine our data with our clients data, or just use our clients’ data on the same platform for greater synthesis and exploration…anything that we load into Lilli, goes through an extensive compliance risk assessment, including our own data.”
The technology under the hood
Lilli leverages currently available LLMs, including those developed by McKinsey partner Cohere as well as OpenAI on the Microsoft Azure platform, to inform its GenAI Chat and natural language processing (NLP) capabilities.
The application, however, was built by McKinsey and acts as a secure layer that goes between the user and the underlying data.
“We think of Lilli as its own stack,” said Roth. “So its own layer sits in between the corpus and the LLMs. It does have deep learning capabilities, it does have trainable modules, but it’s a combination of technologies that comes together to create the stack.”
Roth emphasized that McKinsey was “LLM agnostic” and was constantly exploring new LLMs and AI models to see which offered the most utility, including older versions that are still being maintained.
While the company looks to expand its usage to all employees, Roth also said that McKinsey was not ruling out white-labeling Lilli or turning it into an external-facing product for use by McKinsey clients or other firms entirely.
“At the moment, all discussions are in play,” said Roth. “I personally believe that every organization needs a version of Lilli.”
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Consulting firms provide businesses with professional advice based on thorough research of a specific industry or area. As a result, consultancy firms have robust sources and research data -- and now McKinsey & Company has launched an AI chatbot to helps its clients access this information.
On Thursday, McKinsey unveiled Lilli, its AI-powered search tool that gives clients and consultants easy access to the firm's vast stores of knowledge.
Also: Otter.ai partners with Slack to share meeting insights with your team
When asked a question, Lilli scans the firm's databases and identifies five to seven relevant pieces of content, summarizes key points, includes links, and even identifies experts, according to a press release from McKinsey.
McKinsey has a robust knowledge base that consists of more than 40 curated knowledge sources, 100,000 documents and interview transcripts, and a network of experts that spans 70 countries. A tool like Lilli makes it easier to place those rich sources in the right hands.
"Lilli aggregates our knowledge and capabilities in one place for the first time and will allow us to spend more time with clients activating those insights and recommendations and maximizing the value we can create," says Erik Roth, a senior partner with McKinsey.
Also: How to use the new Bing (and how it's different from ChatGPT)
Since Lilli was designed with clients and consultants in mind, both were used to pilot the model. Ultimately, both clients and partners can use the firm's body of knowledge for everyday business applications and in their attempts to increase productivity.
As part of the press release, several McKinsey partners share their accounts of incorporating Lilli into their workflow for different use cases, including preparing for work with clients, and getting ready for meetings and presentations.
"I use Lilli to look for weaknesses in our argument and anticipate questions that may arise," said Adi Pradhan, an associate partner at McKinsey.
"I also use it to tutor myself on new Topics and make connections between different areas on my projects."
Also: Google is beefing up AI-powered search on Google Chrome for iOS and Android
McKinsey has more than 70 experts working on Lilli who ensure it is deployed cost effectively and safely. The firm plans to scale Lilli across the business to thousands of colleagues by the end of the year.
Many enterprises are choosing to build their own generative AI models. This strategy allows companies to cater a language model to their specific business requirements and can also help to ensure that sensitive company data stays protected.
Together with McKinsey and Bain, the Boston Consulting Group (BCG) is one of the Big Three US-based global consulting firms. McKinsey and Bain have been deeply implicated in several cases linked to State Capture and corruption in South Africa: Bain in connection with its work at the SA Revenue Service and McKinsey at multiple sites of capture but most notably at Eskom and Transnet.
Although BCG has not featured in the saga of South African State Capture, evidence from Angola and Saudi Arabia reveals that the firm is no stranger to profiting from its relationships with kleptocrats, politicians and companies involved in economic crimes. BCG, like the other two of the Big Three, is well-versed in this business model.
Open Secrets made several attempts to contact BCG in Boston, Munich and Johannesburg with questions about its work and conduct in Angola and Saudi Arabia, but no response was received.
BCG was established in 1963 and has offices in more than 90 cities across 50 countries and regions across the world, with operations in Africa, Asia Pacific, Central and South America, Europe, the Middle East and North America. The firm has a large executive committee to manage its operations in different regions, with Rich Lesser serving as its global chair based in New York.
The firm set up operations in Johannesburg in 2011, and its website promotes its work in Africa as having a heavy focus on renewable energy and addressing the climate crisis. Yet BCG’s global offices also have an extensive list of clients to whom it provides tailored advice and business models, including those implicated in corruption and other crimes, including in southern Africa. Angola’s Isabel dos Santos was one of those clients.
Luanda Leaks: Consultant to a kleptocratic dynasty
Isabel dos Santos rose to international fame under the guise of being a “self-made billionaire” from Angola, enjoying the company of some of the wealthiest celebrities and business moguls in the world and living a life of extreme opulence.
According to Forbes, Dos Santos was “once the richest woman in Africa”, featuring on both the Forbes Billionaires and Africa’s Billionaires lists with an estimated net worth of $1.4-billion as of 2020. However, she was removed from these lists in January 2021 after her assets were frozen following revelations of the full extent of her role in looting the Angolan state.
Dos Santos was born in Baku, Azerbaijan and is the eldest child of Russian-born Tatiana Kukanova and former Angolan president José Eduardo dos Santos, who ruled with an iron fist from 1979 to 2017. Dos Santos’ parents divorced in 1979, and she moved to London with her mother in that same year. After schooling and working in London, she returned to Angola in the late 1990s and immediately began to profit from a financial empire that benefitted the Dos Santos family to the disadvantage of the Angolan people.
During his tenure in public office, José dos Santos seized control of almost all state entities, including Sonangol, the oil company that functioned as the bedrock of the regime and Angolan economy. In the wake of the collapse of world oil prices in 2014, the president issued a decree that called for the restructuring of Angola’s oil sector, and invited Wise Intelligence Solutions, a company owned by Isabel dos Santos, to put together a team of consultants to advise on this process. Dos Santos Snr appointed his daughter as the director of Sonangol in June 2016 through a presidential decree.
Isabel dos Santos’ exploitation of Sonangol, as well as a complex web of corrupt deals and contracts, beginning in 1980 and spanning the entirety of the 2000s, was revealed by Luanda Leaks, an investigation by the International Consortium of Investigative Journalists (ICIJ) and 36 media partners into Dos Santos and her business empire. Luanda Leaks exposed how the Dos Santos family acquired and moved public funds to offshore jurisdictions, with the help of powerful Western firms including BCG.
Enter BCG
BCG’s Angolan windfall was a deal to modernise Sonangol, secured with the help of Isabel dos Santos. According to evidence in Luanda Leaks, BCG along with other consulting firms received millions of dollars in payments from a Dubai firm linked to Dos Santos — Matter Business Solutions — in connection with the corrupt 2017 project to “modernise” Sonangol.
The evidence shows that BCG entered into contracts with and received funds from private companies that were fronts for Dos Santos and her connections. These front companies were used by Dos Santos to transform Angola’s public funds into her personal fortune, and arguably should have raised red flags at BCG and the other firms that were involved.
BCG was initially brought on board by Wise Intelligence Solutions, Dos Santos’ firm, in 2015, when its consultants put forward a plan that outlined ways to revive the state-owned oil company. BCG was hired by Wise and received more than $3.5-million to consult on the project. Wise’s consulting contract was then transferred to Matter Business Solutions, which was owned by a close friend of Dos Santos, Paula Oliveira. Matter Business Solutions went on to contract with global consulting giants, BCG, PwC and McKinsey.
Documents and bank statements from the investigations further revealed that in total BCG received $31.2-million, while PwC and McKinsey received $21.4-million and $15.4-million, respectively, in consulting contracts. According to Luanda Leaks, these payments were actioned by Matter Business Solutions, a front for Dos Santos, and played a pivotal role in the network that she used to move Angola’s public funds into offshore accounts that were linked to her and her late husband, Sindika Dokolo. Money was syphoned from Sonangol into Matter Business Solutions, and other companies linked to Dos Santos and her associates, leaving the state entity with little more than $300 in its bank account.
All this was eventually uncovered after her father ceded the presidency in 2017. After she was fired in 2017, the new Sonangol chair announced that Dos Santos had approved more than $135-million to be spent on consulting fees. But this wasn’t the only dodgy project that BCG was involved in that contributed to the economic decline of Angola; it had received a lucrative contract years before it worked for Sonangol.
‘Begotten of gold’
As the ICIJ investigation shows, BCG, alongside consulting giant PwC, played a crucial role in maintaining Dos Santos’ business dealings, with BCG facilitating the operation of a “failing jewellery business that was acquired with Angolan public money”. de Grisogono, now bankrupt, was a luxury jeweller established in Switzerland whose name means “begotten of gold”.
Dos Santos’ husband Dokolo and Angola’s diamond trading company Sodiam made a $120-million investment in de Grisogono to acquire a controlling stake in the company in 2012. Under this new ownership structure, de Grisogono hired consultants from BCG and placed several of them in top leadership roles.
In 2013, the company named a BCG project leader, John Leitão, as its CEO, who described BCG’s role as “shadow management”, which BCG later disputed. While millions of dollars of Angolan money were pumped into the business, it could not survive the millions spent on extravagant parties and Sodiam’s soaring debt. The result was that the already struggling firm filed for bankruptcy in 2020, following the release of Luanda Leaks.
BCG walks away — Angolans feel the pain
Consulting firms like BCG avoided legal responsibility for their conduct because of a low legal bar for vetting clients. Unlike banks and other financial institutions, whose due diligence requirements have increased since the Global Financial Crisis in 2008, consulting firms are permitted to operate with limited scrutiny.
Responding to the exposé of its role in Angola, BCG insisted that it adequately “reviewed the payment structures and contracts … to avoid corruption and other risks”.
Yet this response does not account for the fact that it still paid money to and received money from companies with opaque ownership structures, that were owned by, or affiliated with, Dos Santos and Dokolo. These individuals were using the fronts to loot state-owned enterprises, with grave consequences for Angolan people, but BCG was content to do business with them and retained these business relationships after several global banks had cut ties with Dos Santos due to questions about the sources of her wealth.
Angola’s economy is heavily reliant on oil and diamond exports, and the oil crisis of 2014 had a dire impact on the already struggling country which had emerged from a brutal civil war just over a decade earlier. After the war ended, the government pledged that revenue from oil and diamond exports would go towards rebuilding the economy and strengthening infrastructure and civil institutions that had been destroyed in the war. However, Angola today paints a different picture.
According to the World Bank, more than 32% of Angolan people live in poverty, and underinvestment in key social sectors such as education and healthcare has had disastrous consequences. Contrary to those early promises, funds that could have been made to strengthen education, healthcare, housing and other crucial infrastructure were invested into state entities that were pillaged to line the pockets of Dos Santos, her associates and her consultants.
Reputation laundering in Saudi Arabia
This pattern of providing services to clients with insufficient concern for the possible human cost is also apparent in BCG’s relationship with the Crown Prince of Saudi Arabia, Mohammed bin Salman (MBS).
MBS has fostered close relationships with several Western firms which have been instrumental in strengthening his rise to power. BCG, McKinsey and Booz Allen are the top consulting firms that have provided extensive services to MBS and have continued to cultivate and enjoy extremely beneficial relationships with the kingdom. This is despite human rights groups calling on global leaders and corporations to distance themselves from the Saudi government following the brutal state-sanctioned murder of Jamal Khashoggi, a Saudi Arabian journalist and critic of the Saudi government.
Saudi Arabia has a notorious reputation for human rights violations that persists to this day, including brutal repression by security forces, torture and executions, abuse and exploitation of migrant workers, discrimination based on gendered and religious grounds, lack of freedom of expression and continued violations of international humanitarian law in the war in Yemen.
These violations have been rife under MBS’s leadership, with human rights groups calling for global powers such as the US to hold him and other Saudi Arabian officials to account. While the long list of human rights violations is a cause for outrage and condemnation, consulting firms have not been deterred.
BCG’s connection with MBS goes back to 2015, when he was appointed as minister of defence. Following this appointment, BCG was awarded a contract to facilitate the process of reconstructing and improving the ministry’s procurement systems as well as the way it handles its personnel and finances.
It was also reported that the managing director of BCG’s operations in the Middle East, Joerg Hildebrandt, had cultivated a personal relationship with MBS. In February 2016, consultants from BCG and McKinsey accompanied five representatives from the Saudi royal court to Washington, DC, to attend a series of think tanks in which they made presentations to Gulf experts about MBS’s plans to “remake Saudi life”.
BCG has also been instrumental in the development of Saudi Arabia’s economic blueprint, called Vision 2030, an ambitious plan which, among other things, aims to lessen the country’s dependency on oil revenue. BCG is also a key adviser to the prince’s foundation, Misk, a non-profit organisation that specialises in running programmes focusing on education and entrepreneurship as well as culture and the creative arts for youth.
The firm has helped shape and strengthen significant parts of MBS’s rule, and while the prospects of modernising Saudi Arabia have been presented as an important way forward for the kingdom by BCG, injustice continues to persist against the people of Saudi Arabia at the hands of its ruler and the consultants on his payroll.
BCG’s work for MBS and Saudi Arabia can be described as reputation laundering — transforming despots to debutantes by guiding kleptocratic actors through a process of rebranding. While this has traditionally been the foray of PR firms like Bell Pottinger, reputation laundering is a growing industry that includes lawyers, accountants, image consultants and consultancy firms like BCG, Bain and McKinsey.
BCG has also been implicated in a highly controversial plan to build the megacity Neom in the northwestern province of Tabuk, on Saudi Arabia’s Red Sea coastline. It has been reported that BCG has struck a multimillion-dollar deal in relation to the construction of this city. While it has been claimed that this is “virgin” territory, much of the region is home to the Huwaitat people, who are being forced to leave the area by Saudi officials to make way for the new city.
This subsequently led to the death of Abdul Rahim al-Huwaiti, one of the Huwaitat people and a campaigner against the project. The Saudi authorities sentenced three other Huwaitat people to death after they were convicted of “terrorism” for resisting forced removal from their homes, and sentenced three others to harsh prison terms, ranging from 27 years to 50 years. Josh Cooper, the deputy director of ALQST, a Saudi human rights watchdog, said that the firms involved in this contract, including BCG, are complicit in the violence against and the arrests of Huwaitat people.
Accountability for some
It was reported in December 2019 that Isabel dos Santos had been sanctioned by the US “for her involvement in significant corruption by misappropriating public funds for her personal benefit”. After the publication of Luanda Leaks, authorities in Angola, Portugal, Malta and the Netherlands announced that they had filed lawsuits against and were investigating her and her companies, many of which ceased operations. In November 2022, Interpol issued a Red Notice for Dos Santos, which called for her arrest for charges related to her creation of corrupt financial mechanisms between 2015 and 2017.
January 2023 saw Portuguese authorities raiding the Lisbon offices of BCG, along with those of PwC. Authorities conducted these searches in response to a request from the Angolan government, which is seeking records pertaining to the loss of public funds from Sonangol, which BCG is implicated in.
The concerted efforts of the Angolan government, under João Lourenço who took over as president in September 2017, in addressing the legacy of corruption left by former president Dos Santos have seen the removal of several individuals in the Dos Santos family network from positions of power in Angola.
The cooperation between the Angolan government and Portuguese authorities in the raiding of BCG’s offices marks a positive step in holding the powerful firm to account for the role it played in enabling fraud and corruption in Angola. However, the firm continues to deny any wrongdoing, and there have been no further steps to hold the firm or any of its consultants to account.
BCG walks free
The “world-class” reputations of consulting firms such as BCG, McKinsey and Bain have provided a veneer under which individuals like MBS and Dos Santos can sanitise their images and line their pockets while repressing and impoverishing their people.
On the one hand, the legal requirements to vet their clients aren’t as stringent as other financial institutions and professional firms, which enables them to avoid accountability when their clients are implicated in corruption or human rights abuses.
On the other hand, legal mechanisms don’t cover or punish the type of reputation laundering that consulting firms like BCG specialise in, despite the high human cost that results from this.
The involvement of consulting firms with despots and in global money laundering networks is glaring, and their impunity must be challenged. Exposing their work is one way of doing this, but stronger legal frameworks to hold them accountable are also required. While some of the politicians mentioned here have been subjected to a significant amount of scrutiny, and action taken against them in some instances, BCG remains unaccountable. DM
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CENTURY CITY, Calif., Aug. 10, 2023 /PRNewswire/ -- Automus Consulting, Inc. is excited to announce the addition of Magdalena Krol, Executive Vice President Organizational Change Management to the leadership team.
Magdalena has over 15 years leading and implementing technology projects across various industries (travel, banking, manufacturing, and non-profits) and managing change resulting from technology implementations (ERP – Oracle, SAP, Workday, ITSM, HRS, Smartsheet), innovation programs and software development. Formerly based in New York, Magdalena is partnered with senior management and technology professionals across industries from around the globe. As the VP of Program Management at Citigroup in New York, Magdalena spearheaded the delivery of a multi-national program of anti-money laundering (AML) software in compliance with new federal regulations. At AARP, Magdalena led an innovation program and innovations champions network across 50 state offices and set up operations of the AARP Innovation Lab at the Washington DC headquarters.
Magdalena shared "I'm super excited to join the dynamic and fast-growing Automus team. Since I started working with Automus, I have been impressed with the high caliber and strategic approach of its management and with deep experience, knowledge, and high quality of work delivered by its team members. I look forward to growing Automus's OCM practice."
"Magda's approach and beliefs align with Automus's core values. The belief that Organizational Change Management should focus on human factors – how people perceive the change and how it can be approached to make it less frightening to the average employee. Partnering with client's HR and key stakeholders, developing a group of change champions, as well as building a robust change management and training plan are some of the key success factors in our OCM approach," said David Binkley CEO.
Automus Consulting Inc.
Founded in 2022, Automus is led by a seasoned executive team with deep experience implementing Oracle SaaS, Automus looks to drive innovation and automation within the Oracle SaaS ERP/SCM/EPM/HCM applications space. Headquartered in Century City, CA. Automus will be servicing clients nationwide with its consultants from both its US and India locations.
For more information, visit the Automus website: https://automus.com
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SOURCE Automus Consulting, Inc.
PHOENIX, Aug. 18, 2023 /CNW/ - 4Front Ventures Corp. (CSE: FFNT) (OTCQX: FFNTF) ("4Front" or the "Company") announced today that it intends to issue 750,000 share purchase warrants to an arm's-length consultant under a consulting services agreement. Each warrant will be exercisable at C$0.14 into one class A subordinate voting share of the Company for a period of 4 years. In accordance with the policies of the Canadian Securities Exchange, the issuance of warrants will not occur prior to five business days from the date of this announcement.
About 4Front Ventures Corp.
4Front is a national, vertically integrated multi-state cannabis operator who owns or manages operations and facilities in strategic medical and adult-use cannabis markets, including California, Illinois, Massachusetts, Michigan, and Washington. Since its founding in 2011, 4Front has built a strong reputation for its high standards and low-cost cultivation and production methodologies earned through a track record of success in facility design, cultivation, genetics, growing processes, manufacturing, purchasing, distribution, and retail. To date, 4Front has successfully brought to market more than 20 different cannabis brands and over 1800 products, which are strategically distributed through its fully owned and operated Mission dispensaries and retail outlets in its core markets. As the Company continues to drive value for its shareholders, its team is applying its decade of expertise in the sector across the cannabis industry value chain and ecosystem. For more information, visit https://4frontventures.com/.
Cautionary Note Regarding Forward-Looking Statements
Certain statements in this press release may be considered forward-looking, such as statements regarding the issuance of the Warrants and the Company's potential to drive value for its shareholders. Forward-looking statements are typically identified by words and phrases such as "anticipate," "estimate," "believe," "continue," "could," "intend," "may," "plan," "potential," "predict," "seek," "should," "will," "would," "expect," "objective," "projection," "forecast," "goal," "guidance," "outlook," "effort," "target" or the negative of such words and other comparable terminology. However, the absence of these words does not mean that a statement is not forward-looking. Any forward-looking statements expressing an expectation or belief as to future events is expressed in good faith and believed to be reasonable at the time such forward-looking statement is made. However, these statements are not guarantees of future events and involve risks, uncertainties and other factors beyond 4Front's control. Therefore, you are cautioned against relying on any of these forward-looking statements. actual outcomes and results may differ materially from what is expressed in any forward-looking statement. Except as required by applicable law, including Canadian and U.S. federal securities laws, 4Front does not intend to update any of the forward-looking statements to conform them to actual results or revised expectations.
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SOURCE 4Front Ventures Corp.
View original content: http://www.newswire.ca/en/releases/archive/August2023/18/c9809.html
Is the QR code a relic of pandemic-era dining, or is it the future of restaurants? The answer probably depends on the type of eatery you’re in. While restaurants of all stripes embraced QR codes during the height of Covid-19, usage of the technology varies considerably these days.
Take downtown Minneapolis staple Zen Box Izakaya. Like many restaurants, Zen Box began using QR codes in May of 2020 to reduce contact. But by late 2022, physical menus were back. “We’re starting to see that in a full-service restaurant, the customer experience starts to diminish [with QR codes],” says Lina Goh, general manager of Zen Box Izakaya.
Across town at the Eat Street Crossing food hall, though, Goh and her husband John Ng own and operate a separate quick-service restaurant called Sushi Dori, where QR codes are still heavily used. As Goh was weighing the pros and cons of the technology, she says she found that QR codes work better in a quick-service setting.
Beth Perro-Jarvis and Mary Van Note, retail consultants with Ginger Consulting, say that tracks with ongoing trends in the hospitality industry. The fancier the restaurant, they say, the less likely consumers will want to use a QR code.
Restaurants have a lot to consider when deciding whether to use QR codes. On the one hand, customers like the freedom of being able to go at their own pace, and they generally require less labor for the restaurants. Certainly, some customers like being able to order without having to talk to people.
At the same time, some QR code systems might require additional credit card fees for restaurants. There’s also the potential for fraudulent transactions or smaller tips for servers. Sometimes, QR codes can make it more difficult for customers to get their questions answered and for them to modify a food order.
Perro-Jarvis and Van Note say that restaurants tend to like QR codes because they are efficient, though they can seem impersonal. But Perro-Jarvis maintains that QR codes don’t necessarily have to mean reduced human connection when dining.
“Technology is adding more humanity in some ways than it is taking it away,” she says.
For example, restaurants could use QR codes to streamline the logistical aspects of ordering and paying for food, freeing up the servers to spend more time ensuring the customers are having a positive experience.
Putting the decision of whether to use QR codes in the hands of the customers is the best option because people like having choices, according to Van Note.
“If you can choose, I think that’s great,” Van Note says.
A pre-pandemic trend?
Although the pandemic increased the usage of QR codes in restaurants, some, like Centro, were already considering using them before the pandemic.
“We were already moving in that direction for tableside ordering on your phone,” says Centro CEO Jami Olson. “We were really thinking about having to teach people and really get them used to [QR codes] because it was such a new thing … [The pandemic] forced people to learn how to order with their phones because that was the only way to do it.”
Olson says she was hoping the QR codes would reduce communication errors, eliminate lines, and appease the customers who want things to be quick. Now, there are usually no lines at Centro’s three Minneapolis locations, and customers can order food and pay at their own leisure.
Olson says she calls the model “fast casual 2.0” because her restaurants still provide a hospitable environment by welcoming customers and making servers available for any questions. Furthermore, she still wants to accommodate all people, so Centro does provide the option to order at the counter or from a server.
Although the pandemic made customers more familiar with QR codes, it didn’t necessarily increase customers’ love of them. In a 2023 survey commissioned by food distribution giant U.S. Foods, 76% of respondents said they prefer in-person menus over QR codes, with older generations having a higher preference for physical menus.
Mani Subramani, associate professor of information and decision sciences at the Carlson School of Management, says QR codes became connected to Covid-19, and, for some consumers, they remain an unwanted memory of the pandemic.
However, Subramani says QR codes have a lot of potential for restaurant owners. “I think the QR code is a valuable source of data,” he says.
For example, restaurants could use QR codes to track customer preferences, habits, or even dietary restrictions. Based on past choices, a digital menu could also recommend new dishes for customers. As another example, restaurants could send automated texts to customers who haven’t visited in a while, perhaps dangling incentives like a free drink for returning.
Subramani says restaurant owners could be missing out on the full potential of QR codes if they’re only using it to speed things up.
“There are two paths,” Subramani says. “One, you use [QR codes] to make things faster, cheaper, better. [Or] you use the system … to truly understand what is happening, what a customer prefers.”
Thoucentric, set up in 2015, has been working with companies in the global consumer and packaged goods (CPG) industry, new-age tech and startup ecosystems. It has an employee base of more than 450 business and technology consultants across six locations. The acquisition will result in Xoriant’s headcount jumping by 10% from its current base of 5,000, the press release said.
“Through this strategic acquisition, Xoriant aims to enhance its services by incorporating consulting into its portfolio. This addition paves the way for a comprehensive global provision of consulting, technology, and transformative solutions,” the press release added.
Xoriant’s proficiencies in artificial intelligence (AI) and data, cloud, security, and operational services along with Thoucentric's expertise in domain knowledge and digital consulting will help clients reach their digital transformation goals, the release said. According to sources privy to the matter, estimated Thoucentric's revenue is approximately $10 million on an annual basis.
In January, private equity firm ChrysCapital had acquired Xoriant, a software engineering and digital IT services provider to Fortune 100 companies. This is the second buyout from ChrysCapital's ninth fund and its ninth business services buyout since inception. The financial details of the deal were not disclosed. Sources, however, told ET that the company had been acquired for $250 million.
“Our customer needs and market-facing trends show that they are seeing higher value. Therefore it becomes important for us to graduate in terms of our competency and capabilities to drive that value,” said Sukamal Banerjee, chief executive at the company.Discover the stories of your interest
“We are into digital engineering work. The primary driver for this acquisition is capability–they have significant domain knowledge in process consulting, change management and business application implementation in supply chain, sales and distribution, finance areas,” Banerjee told ET. Banerjee was appointed as the head of the Silicon Valley-based firm in March. He previously worked with HCLTech for more than 26 -years and most recently led digital engineering business across technology semiconductor and telecom markets. Reportedly, these businesses contribute more than $1 billion annually to HCLTech's revenue.
