The Country That Exiled McKinsey



Posted by Ed 6 days ago
A dubious project raises serious questions about the world’s most prestigious consulting firm and its work for corruption-plagued regimes.

In 2010, amid a historic commodities boom fueled by the explosion of China’s economy, international companies began turning their attention to Mongolia as it opened its vast deposits of coal and copper to commercial exploitation.

Mongolia, which is located on China’s northern border, stood to make prodigious sums of money if it could sell that copper and coal to its resource-hungry neighbor.

To make that happen, Mongolia concluded that it needed to lay thousands of miles of railroad tracks. Such a project would cost billions of dollars and throw off hefty fees for construction companies, banks, law firms and consultants of various stripes.

The consulting contracts alone could be worth tens of millions over a decade. And if the railroad expansion worked out, there’d be even more opportunities after that.

McKinsey & Co.’s logo at an office building in Zurich, Switzerland. (Arnd Wiegmann/Reuters)
McKinsey & Co., the global consulting behemoth, was interested. In the fall of 2010, Jimmy Hexter, a senior partner at the firm, began talking with Mongolia’s government about the railroad project.

Hexter had spent decades in the region, at one point running McKinsey’s office in Beijing. He was a veteran of multiple infrastructure projects in Asia, a global leader of the firm’s infrastructure practice and enthusiastic about Mongolia’s potential.

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