McKinsey and BCG accused of withholding information on Saudi ties

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Four consulting firms, including McKinsey and BCG, have been accused of failing to comply with a US congressional subpoena of documents related to their work with Saudi Arabia’s sovereign wealth fund.

The chief executives of the firms, which also include Teneo and the deal advisory business led by Michael Klein, have been summoned to explain themselves at a Senate committee hearing next week, as lawmakers step up a probe into Saudi Arabia’s use of “soft power” in the US.

The inquiry began as a result of an agreement by the Saudi Public Investment Fund to take a stake in golf’s US-based PGA Tour, but has grown into a broader examination of the PIF’s investments in the US.

“The records sought by these subpoenas are critical to the ongoing inquiry into efforts by authoritarian governments, like Saudi Arabia, to deploy soft power or use other influence strategies inside the United States, including the PIF’s use of investments in US entities and cultural institutions to exert influence,” said senator Richard Blumenthal, chair of the permanent subcommittee on investigations on Thursday.

The PIF has sued the four consulting firms in Saudi Arabia to prevent them turning over much of the material that the subcommittee wants, winning an effective injunction in the domestic courts. It has permitted only a fraction of the requested documents to be provided to the US inquiry, saying the release of some could “harm the national security, interests, policies or rights” of the kingdom, according to its legal action.

At the hearing scheduled for Tuesday, the firms’ leaders will have to “explain their companies’ respective work for the PIF and why they each believe their company’s obligation to respond to a duly issued congressional subpoena should be contingent on the acquiescence of a foreign power”, Blumenthal wrote to his fellow committee members.

McKinsey challenged the PIF’s lawsuit, according to a letter sent by the firm to Blumenthal, which was seen by the Financial Times, but the case is yet to be resolved in Saudi Arabia.

With a deadline to respond to the subpoena set to pass on Friday, BCG has produced just 91 pages of records, all but two of which are calendar invitations where all of the event attendees’ names are redacted, according to the subcommittee.

McKinsey has produced 1,548 pages of records, 862 of which are calendar invitations or emails containing publicly available news clippings, it said. The remaining records include seven PowerPoint presentations and one report that each include several partially or fully redacted pages.

Both firms have lucrative businesses in Saudi Arabia, and their work for the PIF has been cited in media reports highlighted by the subcommittee.

McKinsey worked on a commercial blueprint for the LIV Golf tournament, the PIF’s upstart rival to the PGA Tour, according to a person familiar with its involvement, while Teneo has provided public relations advice to the PIF for several years.

Klein acted as an adviser on the agreement between the PIF and the PGA Tour, which is designed to reunify golf and end a bitter legal dispute over the launch of LIV Golf.

The four firms declined to comment ahead of Tuesday’s hearing, although McKinsey confirmed that its global managing partner, Bob Sternfels, would appear. The PIF also declined to comment.

Additional reporting by Sara Germano