Chelsea's new job is high-power

Bingo! A brief search of Google immediately finds Clinton era criminal activity linked to McKinsey and Co. The stench of endless democrat corruption is overwhelming.

(from Reuters, 4/5/02)Six banks, two law firms added to Enron suit At least six investment banks and two law firms that advised Enron Corp and auditor Andersen will be added to a huge shareholder class action suit over the bankrupt energy trader's collapse, sources close to the case said on Thursday.

... Consultants McKinsey and Co, the firm which former Enron chief executive Jeff Skilling left to join Enron, and possibly other banks are expected to be named, the sources said. ...McKinsey ...could not be reached for comment after business hours.

Reference for further research: http://www.rediff.com/money/2002/apr/05enron.htm

You got me. I especially like the part about it being secretive. This is perfect for a Clinton. I suppose cheating, disloyalty to country and friends, lying, scamming and stealing are qualifications for the job.

I didn't know they the students at Standford got either and A or B. That sounds about right. It's all for the children.

Another example of the incest rampant in politics/business. This is a particularly bitter pill since my son was just laid off his job in Houston as a ripple-result of the Hewlett Packard takeover of Compaq. A Rice graduate, wife, baby, and mortgage, he has worked hard for everything he has. We just aren't well-connected enough to have cronies in the parasite class to hand him a taxpayer-financed job.
One step to solving this inequality(the dems favorite word) would be to make every last foundation pay their full freight in taxes, so they wouldn't have so much spare cash laying around for all these leftist causes. I'd like to see every foundation pay at least as much as every corporation, and then we'd see the fat cat Kennedys and others howl!!!

You can bet the farm that McKinsey & Co is engaged in immoral, illegal and corrupt activities.

Handing out jobs for political favors should be illegal.

McKinsey & Co will now be handling all the sales of military intelligence, missle technology, and nuclear secrets from Hillary's access on the Senate Armed Services to the Chinese military.

McKinsey & Co will now be brokering the bribe money to flow to Hillary and other democrats for all those billions in tax advantages and concessions they sneak into huge congressional legislation at 4 AM.

McKinsey & Co should be on Freeper's Radar Screens.

The good news; We get to _____ the little _____ for many years to come.

The little drunk is definitely a serious party girl. Did you see her wasted in the photo with Courtney Love?

Didn't Chelsea start Stamford with Ken Starr's daughter? Wonder where she is now.

W-9 form to show she isn't an illegal alien?

One major thing I would like to see done is the legal requirement that all donors to 501c3 organizations (foundations, think tanks, presidential libraries, etc.) be published, just like political donors to parties are published. There is NO reason for this information to be secretive, and who knows how much illegal foreign money arrives here and is funneled through these organizations? Where does the Sierra Club get all its money? Who funds ANSWER? How many millions from China sit in the Clinton Library account? Where does Jesse Jackson get all of his money>

Much mischief is done through these organizations, and I would like to see this loophole closed.

I think her first assignment should be as a management consultant for the Iraqi regime. But she needs to get over there ASAP. Her duties will be difficult, even for one of such brilliance, so she'll need help. Maybe between 60 Minutes episodes and Sen. Armed Svcs Comm. meetings mom and dad can join her.

First, they need to round up as many Iraqi leaders as they can - especially Sodom. Then, they need to take them to a nice big outdoor plaza and have a rally. Pick a bright sunny day. Get plenty of flags to wave. She needs to be sure to televise it! And don't forget to get plenty of landmarks and points of reference on camera so others who may be interested can join the "fireworks".

Maybe she'll be an advisor to the liquor industry?

Voted Most Likely to Get a Cushy Job Because of Blackmail...

GRRRRRetching

How fascinating. What a mysterious job description, this "consulting". Mostly doesn't it amount to buying some influence with a Senator and former president?

How many millions from China sit in the Clinton Library account?

Good points. And for that matter what is the precise funding mechanism for the "investors" who gave $20 million advances for the Clintons' books, that no one will buy, books that will hit the discount tables faster than a democrat pocketing a bribe?

And who precisely actually funds those $200K a night "speech fees" the the disbarred and impeached Bill gets three times a week, every week?

Another American success story!!!!!!!!

Well, this is an interesting little article....
View: Original Format
Newsgroups: fido7.mo.economics
Date: 2002-07-03 07:41:48 PST

--===BW Online | July 8, 2002 | Inside McKinsey===--

JULY 8, 2002

COVER STORY

Inside McKinsey

Enron isn't its only client to melt down. Suddenly, times are trying for the
world's most prestigious consultant

Shortly after Enron Corp. tumbled into bankruptcy last December, McKinsey &
Co. Managing Partner Rajat Gupta was worried. It wasn't only because former
Enron CEO Jeffrey K. Skilling was once a McKinsey & Co. partner and loyal
alum. Or that his firm had advised the giant energy trader for nearly 18 years
on basic strategy, even sitting in on boardroom presentations to Enron's
directors. Or even that many of the underlying principles of Enron's
transformation, including its "asset-light" strategy, its "loose-tight"
culture, and the securitization of debt, were eagerly promoted by McKinsey
consultants. if(window.boxAdParams + "" == "undefined"){ document.write ('');
} else{ document.write (''); }

Gupta was worried about something much more immediate: Had McKinsey crossed a
legal line that would drag it into the unfolding morass? In a stunning
exercise for the world's whitest of white-shoe management consultants, Gupta
dispatched his chief legal counsel to McKinsey's offices in Houston to review
the firm's work at Enron. The mission was to find any evidence linking
McKinsey to the massive fraud behind Enron's business model.

The lawyer came back with good news: There were no shredded documents, a la
Arthur Andersen LLP, and, more important, says Gupta, there was nothing in the
files to show that McKinsey ever helped Enron engineer its controversial
off-balance-sheet financing or its financial reporting strategy. "In all the
work we did with Enron," maintains Gupta, "we did not do anything that is
related to financial structuring or disclosure or any of the issues that got
them into trouble. We stand by all the work we did. Beyond that, we can only
empathize with the trouble they are going through. It's a sad thing to see."

Still, outsiders marvel that the secretive partnership has not been drawn
into the debacle, given its extensive involvement at Enron. "I'm surprised
that they haven't been subpoenaed as a witness, at least," says Wayne E.
Cooper, CEO of Kennedy Information, a research and publishing firm that keeps
tabs on consultants. "There was so much smoke coming out of the Andersen
smoking gun that all the firefighters went after that one. McKinsey was lucky.
They dodged a bullet."

The bad news, however, is that Enron, which was paying McKinsey as much as
$10 million in annual fees, is just one of an unusual number of embarrassing
client failures for the elite consulting firm. Besides Enron, there's
Swiss-air, Kmart, and Global Crossing--all McKinsey clients that have filed
for bankruptcy in relatively short order. And those are just the biggest.
McKinsey also finds itself improbably lining up with other creditors to
collect unpaid fees from recently bankrupt companies that soared during the
late '90s only to crash later. Battery maker Exide Technologies and NorthPoint
Communications Group Inc., an upstart telecom provider, are two such examples.

All of which raises uncomfortable questions about the world's most
prestigious--and enigmatic--consulting firm. Did McKinsey's partners get
caught up in the euphoria of the late '90s and suffer lapses of judgment? And
if so, what does that say about the quality of its expensive advice? Did it
stray from its core values? What accountability does it--or any consulting
firm--have for the ideas and concepts it launches into a company?

After all, McKinsey was a key architect of the strategic thinking that made
Enron a Wall Street darling. In books, articles, and essays, its partners
regularly stamped their imprimatur on many of Enron's strategies and
practices, helping to position the energy giant as a corporate innovator
worthy of emulation. The firm may not be the subject of any investigations,
but its close involvement with Enron raises the question of whether McKinsey,
like some other professional firms, ignored warning flags in order to keep an
important account.

The breakdowns of such visible clients could not have come at a more trying
time. Instead of celebrating the end of his third and final three-year term as
managing director, Gupta, 53, finds his firm roiled by a rare and potentially
disruptive downturn in its business. Like most other consulting firms,
McKinsey rode the e-business wave to record revenues--and record partner
payouts--in 2000. When the boom turned to bust, the firm was stuck with far
too many consultants and not nearly enough assignments. The utilization rate,
or billable time, of its consultants has fallen to its lowest level in more
than 32 years: just 52%, vs. the heady 64% level during the dot-com boom.

That's not to say that McKinsey has lost its standing. The firm remains the
high priest of high-level consulting, with the most formidable intellectual
firepower, the classiest client portfolio, and the greatest global reach of
any adviser to management in the world. Most of the firm's top clients pay $10
million a year and up in fees, while McKinsey's largest client--which it
declines to name--doled out $60 million for its advice last year. McKinsey
serves 147 of the world's 200 largest corporations, including 80 of the top
120 financial-services firms, 9 of the 11 largest chemical companies, and 15
of the 22 biggest health-care and pharmaceutical concerns.

McKinsey partners learn early on to protect and cultivate their client
relationships. The firm says that it has served more than 400 active clients
for 15 years or longer. It may be the priciest of the management consultants,
but longtime clients say it gives top service. "McKinsey will bring its most
senior people in to discuss the things they would do if they were in our
shoes," says Klaus Kleinfeld, CEO of Siemens Corp., a longstanding client.
"You have lunch. You have dinner. And then projects evolve. Very often,
competitive bidding doesn't happen."

Gupta shows little concern over the meltdown of high-profile clients. "In
these turbulent times, with our serving more than half the Fortune 500
companies, there are bound to be some clients that get into trouble," he says
matter-of-factly. "We wouldn't have as many ongoing client situations if we
didn't do good-quality work." And to be fair, McKinsey was hardly the only
consultant to tie up with some high-flying upstarts in the '90s that later
crashed.

When he became McKinsey's managing partner in 1994, Gupta's challenge was
clear: He had to keep up McKinsey's growth while ensuring that size would not
destroy the ethos of the close-knit partnership or undermine the firm's
guiding principles. McKinseyites refer to these precepts, laid down by the
firm's early leader, Marvin Bower, with near-religious conviction. Among the
high-minded goals: Hire the best people and urge them to always put the client
first--ahead of the interests of the firm.

In Gupta's early days as managing partner, some colleagues argued for keeping
McKinsey small, to safeguard its culture and quality. Gupta was of another
mind: He aggressively expanded abroad, opening up far-flung branches
throughout Asia and Eastern Europe. In all, he expanded McKinsey's network to
84 worldwide locations from 58, boosted the consulting staff to 7,700 from
2,900, and lifted revenues to $3.4 billion from $1.2 billion in 1993.
Meanwhile, the number of partners grew from 427 to 891. "It's a less personal
place than it used to be," says Nancy Killefer, a senior partner in
Washington, D.C. "In the old days, you knew everybody. That's not possible
anymore."

Some observers believe the changes in McKinsey's culture went even deeper.
Quietly, some current and former McKinsey consultants say the firm strayed
from some of the ingrained values that have long guided the firm. Through the
dot-com boom, for example, McKinsey allowed its focus on building
agenda-shaping relationships with top management at leading companies to slip,
as the firm took on some distinctly downmarket clients and projects.
Increasingly, McKinsey began advising upstarts and divisional managers at less
prestigious companies.

Worse, some argue, there was a noticeable tilt toward bringing in revenue at
the expense of developing knowledge--a claim McKinsey vehemently disputes. "In
[an earlier] era, the whole place had this tremendous focus on ideas," recalls
a former McKinsey consultant. "I think knowledge has taken a backseat to
revenue generation. The more revenues you create, the more your compensation
and standing in the firm increases."

Gupta downplays any shift in priorities. "The pendulum does swing a little
bit. I'd say that client development in the last year or two is more in the
forefront, simply because that is the biggest need right now," he says, using
McKinsey-speak for bringing in new business.

Perhaps the most visible example of this shift, say observers, was the rise
of Ron Hulme, an affable, low-key senior partner and a leader of its energy
practice, who managed the Enron account from McKinsey's Houston offices. Like
many of the firm's consultants, Hulme penned essays extolling the virtues of
Enron. As McKinsey's annual billings climbed higher and higher at Enron--at
one recent point exceeding $10 million--Hulme commanded greater influence in
the firm, helping to lead partner conferences and key initiatives. Some
insiders even considered him a potential successor to Gupta, though that's now
an unlikely prospect, given Enron's collapse. "Despite his young age, he had
tremendously high standing and power that derived from the Enron
relationship," says a former McKinseyite. Hulme declined to comment.

Hulme did not initiate McKinsey's Enron business. Like many of the deepest
and most lucrative corporate relationships, it began with one consultant who
instantly impressed a client with his brilliance and insights. Jeffrey
Skilling, then McKinsey's partner in charge of the worldwide energy practice,
began advising Enron in the late '80s, but the relationship was cemented when
he joined Enron in 1990 with the mandate to create a new way of doing
business. Skilling, who once said he felt as if he were "doing God's work" at
McKinsey, had proposed that Enron create a portfolio of fixed-price purchase
and supply contracts that would supposedly eliminate supply risks and minimize
the price fluctuations of the spot market for trading natural gas.

After joining Enron, Skilling repeatedly turned to McKinsey teams for
analytical help and advice. "They infiltrated Enron with Jeff, and he was just
the tip of the iceberg," says a former McKinsey consultant who worked at
Enron. "There were all sorts of McKinsey people who went in over the years.
They were so happy they had Enron locked up."

Indeed, several other prominent McKinsey consultants migrated to Enron as
employees, including partner Doug Woodham, who left the firm in 1994 for a
four-year stint as vice-president at Enron Capital & Trade Resources, where he
led a team that developed an electric power and natural gas hedge fund. As
Enron work became more financially driven, McKinsey teams there increasingly
drew on partners with expertise in trading, risk management, and investment
banking. At any given time, McKinsey had as many as 20 consultants at the
energy company, several stationed in Enron's offices.

By and large, most of McKinsey's assignments at Enron were tactical or
technical in nature: doing the prep work for entering new markets, formulating
strategy for new products and services, and deciding whether Enron should
acquire or partner with another company to gain access to a pipeline. But
McKinsey also helped Enron formulate its now-discredited broadband strategy,
in which it built a high-speed fiber network to support the trading of
communications capacity. Among other things, McKinsey, over about six months,
helped to gauge the size and growth of the market. And, like Enron and many
others, it didn't see the telecom meltdown coming. McKinsey also helped to set
up the finance subsidiary that Enron later portrayed as its growth engine, and
also assisted the firm with its commodity risk management operations.

A former Enron senior executive says McKinsey consultants wielded influence
throughout the organization. "They were all over the place," he says. "They
were sitting with us every step of the way. They thought, `This thing could be
big, and we want credit for it."' The extent of its work there and its access
to senior management exposed the firm to much of Enron's inner workings. Over
the years, McKinsey partners Hulme and Suzanne Nimocks had numerous one-on-one
discussions with Skilling, according to former Enron executives.

Richard N. Foster, a senior partner, even became an adviser to Enron's board,
attending a half-dozen board meetings in the 12 months up until October, 2001.
Foster was frequently asked to step out of those meetings while the partners
conferred with company lawyers over confidential matters. Competitors
privately gloat that the title of Foster's most recent book, *Creative
Destruction*, aptly captures what went wrong at Enron. Embarrassingly, the
book, published in April, 2001, is filled with glowing references to Enron.
"Dick Foster was very happy to see practice that enforced his theories of
creative destruction at Enron," says a partner at another consulting firm.
"McKinsey seems to have partners who develop academic theories and then run
clinical trials on their clients." Foster declined to comment.

Some insiders offer a less benign interpretation of what went wrong at Enron.
They don't claim McKinsey did anything illegal but do suggest it might have
turned a blind eye to signs of trouble to preserve a lucrative relationship.
"The problem for McKinsey with Enron isn't Andersen-type issues," says the
former McKinsey consultant who worked at Enron. "Rather, it's `Could they have
seen the organization malfunctioning and spoken up?' The answer is yes. When
you have a mega-client, `This is what the client should hear' is twisted into,
`This is what is going to let us stay at the boardroom level."'

Gupta won't be drawn into a detailed conversation on Enron. "Our view is not
so much to have a public point of view here," he says. "I won't specifically
talk about our work at Enron. We're constantly assessing whether we served
everybody in the right way. I think we have."

Perhaps so. But many of the intellectual underpinnings of Enron's
transformation from pipeline company to trading colossus can be traced
directly to McKinsey thinking. Senior partner Lowell Bryan, one of the most
influential of the firm's big thinkers today, has written extensively on
securitized credit--the process of converting loans or receivables into
securities. As far back as 1987, just after McKinsey began consulting for
Enron, Bryan was writing that "securitization's potentialis great because it
removes capital and balance sheets as constraints on growth." It was Bryan,
too, who has written and spoken extensively on how capital-intensive companies
such as Enron can generate greater value by finding ways to run low-asset
businesses--what Skilling referred to as his "asset-light" strategy. Bryan was
brought into Enron to convey these ideas to the company's top 100 executives.
But he insists his ideas are not to blame. "I never said anything about fraud,
accounting, or any of those issues."

If McKinsey has been humbled by the Enron experience, it certainly doesn't
show it. When New York headquarters asked all consultants who favorably
mentioned Enron in articles whether they wanted their citations taken off
McKinsey's Web site, not a single consultant said yes. So all of the nearly 30
separate references to Enron in McKinsey-authored articles remain on the site.

As things began to unravel at Enron, some other important clients were also
going off the rails. At Kmart, McKinsey produced work supporting the
retailer's decision to sell more groceries in a bid to get shoppers to visit
stores. It also was instrumental in creating BlueLight.com, which was intended
to be spun off in an initial public offering but never made it to market.

McKinsey began consulting for the retailer in 1994. In the ensuing years,
Kmart's competitive position steadily eroded. "That is a long enough time for
a firm to know if its advice has impact," says an ex-McKinsey consultant. "But
senior partners need to show revenue growth, so they are willing to continue
to work with clients even if they feel there is no light at the end of the
tunnel." McKinsey ended its relationship in 2000 after disagreeing with new
CEO Charles Conaway, who pursued a disastrous price war against Wal-Mart.
Still, McKinsey's involvement through the mid- to late 1990s, when Kmart
swiftly and steadily lost ground to Wal-Mart, did not serve either client or
consultant well.

At Swissair Group, McKinsey advised a major shift in strategy that led the
once highly regarded airline to spend nearly $2 billion buying stakes in many
small and troubled European airlines. The idea was for Swissair to expand into
aviation services, providing everything from maintenance to food for other
airlines as a way to increase revenues and profits. The strategy backfired,
causing massive losses and a bankruptcy filing last October. McKinsey
maintains it can't be held responsible for the outcome because it wasn't
involved in the implementation of the strategy. At Global Crossing Ltd.,
McKinsey says its work was limited to only three projects, two of which
involved information-technology outsourcing, so it cannot be blamed for the
telecom provider's implosion.

The Internet boom posed an especially difficult challenge for McKinsey. The
blanket assumption was that the rules of the game were changing, and many
McKinseyites saw their former MBA classmates emerge overnight as
multimillion-dollar entrepreneurial celebrities. Inside the firm, Gupta was
faced with all kinds of new pressures: whether McKinsey should start a
venture-capital fund, or go public itself, or start its own dot-com ventures
as offshoots of the firm's consulting business; whether to accept equity
instead of cash for an assignment with a startup. The partnership declined to
sell shares, as Goldman Sachs had done, but in other important ways it veered
from the course it had long followed.

One of the most noticeable changes was a drift away from its longstanding
policy of not linking its fees to client performance. Bower believed
alternative fee arrangements could tempt consultants to focus on the wrong
things. During the past 18 months, McKinsey has been structuring dozens of
deals with blue-chip companies that call for the payment of an
assignment-ending bonus if a client is satisfied with the results. In the past
three years, it also began accepting payment in stock from approximately 150
upstart companies, though Mc-Kinsey points out that this is a small percentage
of its 12,000 engagements in that time. Gupta says the change allowed the firm
to serve smaller, innovative companies that didn't have the cash to pay
McKinsey's standard fees of $275,000 to $350,000 a month. The equity was then
sunk into a blind trust and liquidated as soon as possible into a profit pool
for its partners. In another case, that of Spain's Telefonica, it added a
clause in its contract giving it a cash kicker based on the rising stock price
of an Internet offshoot McKinsey was advising. The firm collected a $6.8
million bonus.

Yet even these concessions to the bonanza mentality during the boom's height
didn't prevent defections. Many McKinsey consultants left for dot-com startups
with names like Pet Quarters, Cyber Dialogue, Virtual Communities, and
CarsDirect.com, many of which are now relegated to the junk heap of irrational
exuberance. Across the firm, attrition rose only slightly during the boom, to
over 22% a year in 1999 and 2000 from more typical levels of 18%. But some of
the best people left, and some offices were hit hard by the exodus. In San
Francisco, where McKinsey employs 150 professionals, a full third of the staff
departed for other opportunities in 1999. "There was a whole group of people
in the bubble who lost their way," says Larry Mendonca, the McKinsey partner
who manages the San Francisco office. "They were trying to get their share of
the bubble."

McKinsey got its share, of course. In its quest for revenue growth, it
pursued a whole new class of clientele. Demand for consulting soared from both
startups and large corporate clients, many of which had grown fearful that
they were falling behind the Internet curve. During the peak two years of the
dot-com boom, McKinsey alone did more than 1,000 e-commerce assignments, even
as partners internally debated the true impact of the Net on clients. "I was
in the room saying, `You're smoking dope here on this dot-com stuff,"' recalls
Roger Kline, a longtime McKinsey partner who oversees the financial-services
practice.

But the firm even set up "accelerators," or facilities, to help entrepreneurs
launch new dot-coms with direct McKinsey help. "Maybe we should have been a
little more circumspect than we were," concedes Gupta. "But I don't think we
made any big errors or excesses."

Not surprisingly, some of McKinsey's dot-com clients fared little better than
Pets.com Inc. EB2B Commerce Inc. (EBTB ), which engaged McKinsey in early 2000
to help it develop a strategy after a merger, was recently warned by Nasdaq
that its stock could be delisted. The company's shares have plummeted to 15
cents from $190 when McKinsey started working with it. Another high-tech
client, Applied Digital Solutions Inc. (ADSXE ), which McKinsey helped in
exchange for equity, is in the midst of a meltdown, with first-quarter losses
of $17 million. Applied Digital's auditors resigned the account in May after
an accounting dispute with the company, which describes itself as a developer
of "life-enhancing personal safeguard technologies." Shares of Applied Digital
now trade for 57 cents.

To be sure, McKinsey's core blue-chip clients, which range from General
Motors Corp. (GM ) to Johnson & Johnson (JNJ ), remain the firm's true bread
and butter--partly because only those big companies can afford its fees.
"McKinsey is expensive," says Ralph Larsen, former CEO of J&J. "But what they
provide is a fresh look at our thinking and a certain detachment. We use them
carefully for selected projects, things of great significance, and they have
been valuable to us."

In managing the firm through the boom and the bust, Gupta now finds himself
caught in a classic supply-demand squeeze, the sort of management dilemma for
which a client would turn to McKinsey for advice: He hired too many people
just as demand began to plummet. In an average year, McKinsey will offer
consulting jobs to 3,100 MBAs and professionals in the expectation of getting
roughly 2,000 acceptances. In 2000, however, more than 2,700 people accepted
offers to join the firm. They apparently knew what McKinsey didn't yet get:
The boom was over. By the following year, with the bubble clearly burst, the
firm's attrition rate fell to only 5%. Suddenly, just as demand for business
started falling off, McKinsey had too many consultants on the payroll, with
fewer leaving for other opportunities. "We honored every offer and didn't push
people out," says Gupta, "and we had no professional layoffs other than our
traditional up-or-out stuff."

As McKinsey begins its months-long process early next year to elect a new
managing partner, the firm will likely toast Gupta as the man who led the firm
to new growth records in new markets around the world. "In every generation,
there are issues that come up that define the firm," he says. "We've had our
share in the last decade. But I feel very proud of where we've come out." The
question for his successor is whether he expanded the firm at the cost of the
culture and values that made McKinsey tower above its peers.

By John A. Byrne
With Joann Muller in Detroit and Wendy Zellner in Dallas

Michael

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This is called "hiding something in plain view," in this case, bribes and payoffs.

I think a very good case could be made that the Germans have funneled money to the Clintons through the publisher (German controlled) who are being rewarded for looking the other way as Germany and France broke the sanctions.