Wendell Potter speaks out on McKinsey and their role slashing and burning on behalf of insurance co.

[Hassin Bin Sober]

https://en.wikipedia.org/wiki/Wendell_Potter

Wendell Potter (born July 16, 1951) is an American advocate for health insurance payment reform, New York Times bestselling author and a former health insurance industry executive. A critic of HMOs and of the tactics used by health insurers, Potter is also a leading national advocate for major reforms of the health insurance industry, including Medicare for All[1] and universal health care.
Potter has been called the "Daniel Ellsberg of corporate America"[2] by Michael Moore and "a straight shooter"[3] by Bill Moyers. Potter is the first and only former health insurance executive to have publicly criticized the industry.[4] A supporter of the Affordable Care Act, Potter correctly predicted in 2010 the final version of the law would increase health insurance industry profits, arguing they would find a way to "game the system."[5] He became a vocal advocate for Medicare for All in 2018, saying in September 2019, "it's time to move to a program that makes a lot of sense economically as well as morally."[6]

https://mobile.twitter.com/wendellpotter/status/1204054770388013058

BREAKING: As a former corporate exec who worked with McKinsey, I may be able to shed light on one of
@petebuttigieg
’s unnamed McKinsey clients, and why it’s very significant in this campaign.
(Note: I have not endorsed anyone in this race, nor do I intend to) 1/13

When I was a health insurance exec, my CFO had McKinsey on retainer. Every year or so, especially when one division or another wasn't making enough profit, McKinsey would be brought in to "assess" current operations. (2/13)

Those of us who knew about McKinsey’s involvement at our insurance corporation knew it would lead to “cost cutting.” That’s consultant talk for laying off workers, offshoring, and hiking rates. The McKinsey efforts would have code names because it had to be kept secret. (3/13)

Now what does this have to do with
@petebuttigieg
? In his description of his McKinsey work, he says he worked in Michigan at a “health insurance provider... performing analytical work... identifying savings in administration and overhead costs.” 4/13

To an old health insurance exec, those are code words that translate roughly to cutting costs through layoffs, restructuring, and potentially denying health coverage to those in need. 5/13

Important: You’ll notice
@petebuttigieg
describes his McKinsey insurance client as “a nonprofit” insurer. So that means it was a different kind of company, right? No. “Nonprofit” insurers behave just like “for-profits.” In fact, you might not be able to tell them apart (6/13)

Blue Cross Blue Shield of Michigan is a “non-profit” health insurer, that fits the description of the
@petebuttigieg
client. Its financials in 2007 were not great, which is when execs call in firms like McKinsey to come up with tactics to right the ship. 7/13

Based on this article below, BCBS laid off hundreds of people and increased premiums dramatically not long after. Those premium increases likely led to a lot of people losing their insurance. (8/13)

If indeed the
@petebuttigieg
client was Blue Cross, this report by the Attorney General of Michigan in 2007 has a lot to offer. The title: “Profits over People: The Drive to Privatize and Destroy the Social Mission of Blue Cross and Blue Shield” (9/13)


If it wasn’t Blue Cross, it would have to be another big insurer to be able to afford McKinsey. They don’t come cheap. As I recall, my company paid them a monthly retainer of $50K. And paid more for big special projects with code names. (10/13)

Why is this relevant to 2020? I’ll leave analysis of
@petebuttigieg
’s transparency, or his potential role in rate hikes and layoffs, to political experts. What I can speak to is how this experience might lead him to defend and protect health insurance companies now. (11/13)

Pete is fighting to preserve the role & profits of health insurance companies, spending huge sums on ads slamming plans to rein them in. I'll be watching to see if my former insurance colleagues send him big campaign checks. He’s probably one of their favorite candidates (12/13)

As I know firsthand, insurers intentionally deny coverage to Americans, to hoard their profits. The result is people dying and millions in medical bankruptcy. Pete’s plan protects and preserves this very system. Now we may know why. (13/13)

I don’t know how anyone can advocate for these criminals to have control of or healthcare system. Especially a system that extracts profits from younger healthy people and lays people off on the government when they are old and sick.

A two tiered system is unsustainable.

https://www.crainsdetroit.com/article/20090118/SUB01/901190322/blue-cross-seeks-double-digit-rate-hikes-layoffs


In the wake of last week's announcement of up to 1,000 layoffs, officials at Blue Cross Blue Shield of Michigan also said it will seek double-digit average rate increases on many of the company's individual health insurance policy lines. While Blue Cross did not specify when the rate increases would be filed with the state Office of Financial and Insurance Regulation, it said it will seek average rate increases of 55 percent for individual plans, 42 percent for group conversion plans and 32 percent for Medicare supplemental plans, or Medigap. Those three individual plans represent about 418,000 members. Blue Cross officials said the increases are needed to reduce losses estimated to total $1 billion over the next three years.

[TexasTowelie]

1. I see that you changed your preferred candidate

and amalgamated three different sources in order to criticize one of the candidates. Hmmm.

[George II]

3. Again.

[sheshe2]

6. Good catch! nt

[Hav]

7. Maybe a lost bet?

Because I think the only change is that icon.

[TexasTowelie]

8. I have no clue.

[WhiskeyGrinder]

2. Destroying lives is McKinsey's bread and butter. It's that simple.

[Hassin Bin Sober]

5. They seem nice....

https://en.wikipedia.org/wiki/McKinsey_%26_Company

Scandals and criticism[edit]


McKinsey's fingerprints can be found at the scene of some of the most spectacular corporate and financial debacles of recent decades.
—?Ben Chu, The Independent (2014)[92]


Defenders of McKinsey claim that the firm merely advises, and is not a decision-maker.[93]
Nevertheless, since the end of the 20th century, McKinsey has been either directly involved in, or closely associated with, a number of notable scandals.[92] Reuters describes these incidents as indicating "not bad apples, [but] a culture of corruption".[94]
Role in corporate accounting scandals[edit]
Enron[edit]

Main article: Enron scandal
Enron was the creation of Jeff Skilling, a McKinsey consultant of 21 years, who was jailed after Enron collapsed. McKinsey reportedly "fully endorsed the dubious accounting methods that caused the company to implode in 2001."[92] Enron reportedly used McKinsey on 20 different projects,[95] and McKinsey consultants had "used Enron as their sandbox."[95]
McKinsey denied giving Enron advice on financing issues or having suspicions that Enron was using improper accounting methods.[95]

[edit]
The most recent case of indirect involvement concerns Valeant, a Canadian pharmaceutical company investigated by the SEC in 2015. Valeant has been accused of improper accounting, and that it used predatory price hikes to boost growth.[96] The Financial Times states that 'Valeant's downfall is not exactly McKinsey's fault but its fingerprints are everywhere.'[97] Three out of six senior executives were recent ex-McKinsey employees, as well as the chair of the 'talent and compensation' committee.[97]

Controversial clients and association with authoritarian regimes[edit]
Role in U.S. Immigration and Customs Enforcement (ICE)[edit]
McKinsey stopped working for U.S. Immigration and Customs Enforcement (ICE) after it was disclosed that the firm had done more than $20 million in consulting work for the agency. McKinsey managing partner Kevin Sneader said the contract, not widely known within the company until The New York Times reported it, had "rightly raised" concerns.[98] In 2019, The New York Times and ProPublica reported on newly uncovered documents which showed that McKinsey, as part of its work with ICE, proposed cuts in spending on food and medical care for migrants.[99] McKinsey also advocated for an acceleration of the deportation process, causing concerns among ICE staff that the due process rights of the migrants would be violated.[99] Previously, McKinsey managing partner, Kevin Sneader, had claimed that McKinsey had done no work for ICE in terms of developing and implementing immigration policy; the uncovered documents showed that to be false.[99]

Role in Saudi clampdown on dissidents[edit]
In October 2018, in the wake of the assassination of Jamal Khashoggi, a Saudi dissident and journalist, The New York Times reported that McKinsey had identified the most prominent Saudi dissidents on Twitter and that the Saudi government subsequently repressed the dissidents and their families. One of the dissidents was arrested. Another dissident's family members were arrested, and the cell phone of the dissident was hacked. McKinsey issued a statement, saying "We are horrified by the possibility, however remote, that [the report] could have been misused. We have seen no evidence to suggest that it was misused, but we are urgently investigating how and with whom the document was shared."[100] In December 2018, The New York Times reported that "the kingdom is a such a vital client for the firm — the source of nearly 600 projects from 2011 to 2016 alone — that McKinsey chose to participate in a major Saudi investment conference in October 2018 even after the killing and dismemberment of a Washington Post columnist by
Saudi agents."[101]
On February 12, 2019, the European Parliament Greens/EFA group presented a motion for a resolution on the situation on women’s rights defenders in Saudi Arabia denouncing the involvement of foreign public relations companies in representing Saudi Arabia and handling its public image, particularly McKinsey & Company.[102]

Support of authoritarian regimes[edit]
McKinsey's business and policy support for authoritarian regimes came under scrutiny in December 2018, in the wake of a lavish company retreat in China held adjacent to Chinese government internment camps where thousands of Uyghurs were being detained without cause.[101][103] In the preceding few years, McKinsey's clients included Saudi Arabia's absolute monarchy,[100][104][105] Turkey's autocratic leader Recep Tayyip Erdogan, ousted former President of Ukraine Viktor Yanukovych, and several Chinese and Russian companies under sanctions.[101]
Conflicts of interest and insider trading[edit]
Conflicts of interest between McKinsey and MIO partners[edit]
In February 2019, The New York Times ran a series of articles about McKinsey[106] and the in-house hedge fund it operates – McKinsey Investment Office, or MIO Partners. The articles claimed that there was "potential for undisclosed conflicts of interest between the fund’s investments and the advice the firm sells to clients", since the hedge fund could benefit from the inside knowledge obtained through management consulting services.[107]
The company responded that "MIO and McKinsey employ separate staffs. MIO staff have no nonpublic knowledge of McKinsey clients. For the vast majority of assets under management, decisions about specific investments are made by third-party managers".[107]


Galleon insider trading scandal[edit]
See also: Rajat Gupta and Anil Kumar
Former McKinsey senior executives, Rajat Gupta and Anil Kumar, were among those convicted in a government investigation into insider trading for sharing inside information with Galleon Group hedge fund owner Raj Rajaratnam.[108][109] Though McKinsey was not accused of any wrongdoing, the convictions were embarrassing for the firm, since it prides itself for integrity and client confidentiality.[110][111][112] Following the initial allegations McKinsey no longer maintains a relationship with either senior partner,[113][114] though the manner in which it severed ties attracted controversy.[115]

Senior partner Anil Kumar, described as Gupta's protégé,[116] left the firm after the allegations in 2009 and pleaded guilty in January 2010.[117][118] While he and other partners had been pitching McKinsey's consulting services to the Galleon Group, Kumar and Rajaratnam reached a private consulting agreement, violating McKinsey's policies on confidentiality.[119] Gupta was convicted in June 2012 of four counts of conspiracy and securities fraud, and acquitted on two counts.[120] In October 2011, he was arrested by the FBI on criminal charges of sharing insider information from these confidential board meetings with Rajaratnam.[88][121] At least twice, Gupta used a McKinsey phone to call Rajaratnam and retained other perks — an office, assistant, and $6 million retirement salary that year[122] — as a senior partner emeritus.[114]
After the scandal McKinsey instituted new policies and procedures to discourage future indiscretions from consultants,[123] including investigating other partners' ties to Gupta.[124][125]
Other scandals[edit]

Role in opioid epidemic[edit]
McKinsey advised opioid makers on how to “turbocharge” sales of OxyContin, propose strategies "to counter the emotional messages from mothers with teenagers that overdosed" on OxyContin, and help opioid makers to circumvent regulation.[126]


Ongoing South African corruption scandal[edit]
The Gupta family (no relation to Rajat Gupta) had strategically placed corrupted individuals in various South African government, utilities and infrastructure sectors. It is alleged that McKinsey was complicit in this corruption by using the Guptas to obtain consulting contracts from certain state-owned enterprises, including Eskom and Transnet.[127] Working with Trillian Capital Partners (a consultancy which was owned by a Gupta associate),[128] they provided services to the value of R1 billion ($75 million) annually. Trillian was paid a commission for facilitating the business for McKinsey.[129] McKinsey hired law firm Norton Rose Fulbright to carry out an internal investigation over the allegations.
McKinsey's then Managing Partner, Dominic Barton issued a statement, following an internal investigation, in which the firm "admitted that it found violations of its professional standards but denied any acts of bribery, corruption, and payments to Trillian."[130]
In September 2017, the Democratic Alliance, South Africa's main opposition political party, laid charges (Case Number: CAS 1156/9/2017) of fraud, racketeering and collusion against McKinsey in terms of Section 21 of the Prevention and Combatting of Corrupt Activities Act (Act 12 of 2004). The party alleged that McKinsey ignored red flags from senior South African staff members that deals between Trillian, Eskom and other Gupta-linked companies were not above board. The party said that McKinsey seems to have ignored these warnings as the profits were far too lucrative for McKinsey to pass up.[131] Corruption Watch, a South African non-governmental organisation, also filed a complaint about the controversial contract to the US Department of Justice, alleging that there was a criminal conspiracy between McKinsey, Trillian and Eskom in contravention of US and South African law.[132] It was revealed in January 2018 that criminal complaints were filed against McKinsey & Company by the South African Companies and Intellectual Property Commission. South African prosecutors confirmed that they would enforce the seizing of assets from McKinsey.[133]
South Africa's National Prosecuting Authority concluded in early 2018 that the payments to McKinsey and its local business partner, Trillian, were illegal, involving crimes such as fraud, theft, corruption and money laundering. McKinsey had subsequently been in discussion with Eskom and the National Prosecuting Authority's Asset Forfeiture Unit to agree on a transparent, legally appropriate process for returning the R1-billion (US$74m) it had been paid - it was confirmed on 6 July 2018 that this had been concluded.[134] Eskom confirmed it received R99.5 million in interest from McKinsey on July 23, 2018. The interest payment covers the two years since McKinsey was paid almost R1-billion in 2016.[135]
The repayment of the near R1-billion illegal fee was not universally well received by South Africans. McKinsey continued to receive negative coverage in South Africa's business press with Sikonathi Mantshantsha, deputy editor of South Africa's Financial Mail magazine writing in an open letter to McKinsey that "...I find it rich — too rich, in fact — for McKinsey to lecture anyone about the truth, principles and fairness. Let me tell you that the highest standards of ethics, truth and fairness begin with never taking that which does not belong to you in the first place. The second is to not pretend you are helping a client when you clearly are not. The third point is to acknowledge, however hard that may be, when you have done all and any of the above." This was in response to an unpublished email from McKinsey which Mantshantsha described as making the "baseless and arrogant claim about there being no evidence presented to support the accusations of unethical conduct — possibly also thieving and corruption — that has financially crippled not only SA's electricity provider Eskom, but also the rail and pipeline firm Transnet. And possibly others." Mantshantsha went on to say "as is now common cause, McKinsey has readily admitted that there is no legal basis on which to hold on to the funds."[136]
Information relating to allegedly corrupt practices by McKinsey at Transnet in 2011 and 2012 came to light in late July 2018. The weekly Mail & Guardian newspaper reported that a "...new forensic treasury report shows how controversial former Transnet and Eskom chief financial officer Anoj Singh enjoyed overseas trips at the expense of international consulting firm McKinsey, which scored multi-billion rand contracts at the state owned entities." The "...report reiterates treasury's recommendations that Singh's conduct with regards to McKinsey should be referred to the elite crime-fighting unit, the Hawks, for investigations under the Prevention and Combating of Corrupt Activities Act (Precca). Under Precca, Singh would be investigated for allegations of corruption as the overseas trips alone constitute a form of gratification, which is illegal."[137] The Sunday City Press reported that the forensic report in turn reported that "multinational advisory firm McKinsey paid for Singh to go on lavish international trips to Dubai, Russia, Germany and the UK, after which their contract with Transnet was massively extended."[138] McKinsey issued a statement that the allegations were incorrect. McKinsey stated that "based on an extensive review encompassing interviews, email records and expense documents, our understanding is that McKinsey did not pay for Mr. Singh's airfare and hotel lodgings in connection with the CFO Forum and the meetings that took place around the CFO Forum in London and elsewhere in 2012 and 2013."[139]
In early August 2018 McKinsey admitted to helping Transnet Group Chief Executive Siyabonga Gama prepare a part of his thesis to obtain an MBA degree from TRIUM, a collaborative MBA programme jointly run by the NYU Stern School of Business, the London School of Economics and Political Science and HEC School of Management. Several researchers at McKinsey's Johannesburg office were assigned to help outline and prepare Gama's submission to a joint thesis to which he had to contribute at least two chapters. Despite multiple earlier denials that any corrupt activities had been discovered, a McKinsey's spokesperson said "... we believe this matter passed the threshold of reasonable suspicion that an offence may have occurred under South African law. As such, we reported it last year to relevant authorities under Section 34(1) of Precca.".[140] The TRIUM Global EMBA official twitter account was reported to have tweeted that "We have been made aware of recent allegations about academic integrity involving a TRIUM alumnus. TRIUM and its three Alliance Schools ... take academic integrity issues very seriously."[141]
On 11 October 2019 the United States Treasury department announced that it had imposed wide-ranging financial sanctions on three Gupta brothers, Ajay, Atul and Rajesh (aka Tony) and their business associate Salim Essa under the United States Magnitsky Act. [142]
The Economist reported in November 2019, that McKinsey's scandals, such as the 2016 South Africa scandal and the allegations of conflict of interest tied to its $12.7bn investment affiliate, McKinsey Investment Office (MIO), are relatively recent in terms of its long history.[143] The article said that McKinsey's legal challenges facing McKinsey's new global managing partner, Kevin Sneader, may be related to the company's fast-paced growth with an increase of 2,200 partners compared to 2009. During that same time period, the number of employees increased to 30,000 worldwide from 17,000.[143]

2018 Racketeering Lawsuit
As of May 2018, the restructuring practice of McKinsey is being sued by a competitor claiming the company knowingly mislead courts in order to land clients.[144] The company disclosed an average of only five potential conflicts per case, whereas other professional-services firms divulged, on average, 171 connections. In most cases it disclosed no conflicts at all.[145]
Role in Trinidad and Tobago-Petrotrin[edit]
Reports presented in the Trinidad and Tobago Parliament indicated McKinsey provided consulting recommendations to the amount of 66 million dollars in total. The Petrotrin Refinery is set to close on November 30, 2018. (Reference: TT Parliament Hansard).
McKinsey's Work in Mongolia[edit]
In 2010, Mongolia’s state-owned rail company hired a team assembled by Chuluunkhuu Ganbat, with McKinsey playing the leading role, to conduct an analysis of whether a new railroad plan was feasible. McKinsey’s contract spelled out that McKinsey would be eligible for more lucrative multiyear contracts if the project progressed. The railroad expansion quickly went bad. Construction stalled amid financial problems and political uncertainty. By 2015, Mongolian police were investigating claims of widespread embezzlement and fraud. McKinsey was drawn into the investigation, with authorities ordering the firm to hand over records related to the project.[146]
Involvement in New Yangon City Development[edit]
In 2018, McKinsey developed the Socio-Economic Masterplan for New Yangon City Development,[147] a controversial project in Myanmar. The project has been particularly criticized for the lack of transparent tendering.[148] The CEO of New Yangon City Development is Serge Pun, whom US officials recommended for sanctions in 2008.[149]
Environmental consulting[edit]
Marginal abatement cost curves attempt to compare the financial costs of different options for reducing pollution in a region and are used in emissions trading, policy discussions and incentive programs.[150] McKinsey & Company released its first marginal abatement cost (MAC) curve for greenhouse gas emissions in February 2007, which was updated to version two in January 2009.[151][152] McKinsey & Company's MAC curve has become the most widely used[153] and is the basis for McKinsey's consulting on climate change and sustainability.[154]
McKinsey's curve predicts negative cost abatement strategies, which has been controversial among economists.[155] The International Association for Energy Economics said in The Energy Journal that McKinsey's cost-curve was popular among policymakers, because it suggests they can take "bold action towards improving energy efficiency without imposing costs on society."[156]
In a 2010 report, the Rainforest Foundation UK said McKinsey's cost curve methodology was misleading for policy decisions regarding the Reduced Emissions from Deforestation and Forest Degradation (REDD) program. The report argued that McKinsey's calculations exclude certain implementation and governance costs, which makes it favor industrial uses of forests while discouraging subsistence projects.[157] Greenpeace said the curve has allowed Indonesia and Guyana to win financial incentives from the United Nations by creating inflated estimates of current deforestation so they could demonstrate reductions in comparison.[158][159][160] McKinsey said they had made it clear in the cost-curve publications that cost curves do not translate "mechanically" into policy implications and that policymakers should consider "many other factors" before introducing new laws.[158][159]
Eleborations for Polish railways[edit]
According to the Rynek-kolejowy.pl portal, an investigation was initiated after the NIK audit, which checked the "Operation of the PKP capital group". In 2014, as a result of an inspection at PKP SA, the Supreme Audit Office submitted a notification to the District Prosecutor's Office in Warsaw of suspected crime.
Specifically, it is about studies ordered by PKP SA, which were made by McKinsey & Company Poland, including under the title 'Substantive contribution to the long-term contract for infrastructure maintenance', which was to cost EUR 175 thousand. The material was not to meet the requirements of the PKP PLK order and be of no use to the company. PKP SA claims otherwise. Other studies under the microscope of the prosecutor's office
- The recommendations contained in this analysis are used in the maintenance contract already in force and have been used to prepare the new contract for the maintenance of the so-called long-term contract. The contract that will be concluded for the years 2016–2023 will benefit the company itself and the entire rail market, including primarily carriers - the press office of PKP SA refutes the allegations. Advisors from McKinsey & Company Poland also created for PKP SA other analyzes, including "Optimization of customer contact points with the PKP Group" in 2012 and also one in which it recommended the infrastructure manager of PKP PLK to controversial shutdown of 3 out of 19 thousand kilometers of tracks being under the management of the company. - The project regarding "Optimization of customer contact points with the PKP Group" was one of the key changes started in 2012 in the PKP Group. He identified key areas requiring remedial actions in terms of customer service (in previous years, only ad hoc activities related to specific situations were undertaken in this respect; there was also a lack of coordination between the individual companies of the PKP Group). The next analysis was used to prepare and implement the decision to temporarily decommission railway lines. PKP Polskie Linie Kolejowe undertook it after thorough analyzes using indicators proposed by the advisor, including expected revenues and costs of running and maintaining tracks in the coming years. Socio-economic factors, accessibility and cost of alternative means of transport, seasonal factors resulting from increased tourist traffic and local investment plans as well as a number of others were taken into account. The implemented program has resulted in savings of over a dozen million zlotys - says PKP SA.
The investigation "is not directed at any person" As a result of a notification to the Supreme Audit Office, the Warsaw-Praga District Prosecutor's Office initiated an investigation. After explanations were provided by PKP PLK, in February 2015 the prosecutor issued a decision to discontinue the proceedings. However, in March 2015 the District Prosecutor's Office Warsaw-Prague has officially initiated an investigation into the material damage caused to a large extent in the property of PKP SA.
At the time when the analysis "Substantive contribution to the long-term contract for infrastructure maintenance" took place, PKP SA was headed by the current Minister of MIR Maria Wasiak. - The proceedings are not targeted at any person at this stage. Currently, interrogations of witnesses, employees of PKP SA and PKP PLK are underway. The prosecutor did not agree to the name, which witnesses were heard - said Renata Mazur from the District Prosecutor's Office Warsaw-Praga for Kulisy24.
PKP SA defends good name. The company informs that the ordered analysis was carried out in accordance with the provisions of the contract, was and is used in current operations, "which confirms the facts and unambiguous results of the internal audit". - In connection with the publication in one of the portals regarding irregularities in PKP SA, the PKP Group has taken civil law measures to protect the good name of the company - it was written in a press release from PKP SA.[161][162][163]

2008 financial crisis[edit]
Main article: Financial crisis of 2007–2008
McKinsey is said to have played a significant role in the 2008 financial crisis by promoting the securitization of mortgage assets and encouraged the banks to fund their balance sheets with debt, driving up risk, which 'poisoned the global financial system and precipitated the 2008 credit meltdown'.[92] Furthermore, McKinsey advised Allstate Insurance to purposefully give low offers to claimants. The Huffington Post revealed that the strategy was to make claims "so expensive and so time-consuming that lawyers would start refusing to help clients."[164] Next to this, 2016 McKinsey partner Navdeep Arora was convicted for illegally depleting State Farm of over $500,000 over a period of 8 years, in collaboration with a State Farm employee.[165]

[redqueen]

4. Threadreadwrapp version - maybe a little easier to read.

https://threadreaderapp.com/thread/1204054770388013058.html