McKinsey hires relatives of Saudi officials and royal family members

30 November 2017 Authored by Consultancy-me.com

McKinsey & Company has found Saudi Arabia to be a lucrative territory in recent years, being paid millions of dollars for their role in advising the Kingdom’s government on an ambitious economic transformation. Over the same period, the global consultancy has hired at least eight relatives of high-ranking Saudi officials.

The consulting firm has employed at least two of the children of the Saudi energy minister, Khalid A. Al-Falih – who also serves as head of the state oil company – along with a son of finance minister Mohammed Al-Jadaan, and at least five other relatives of high-ranking Saudis in the past few years. One of these was allegedly the son of Khaled Bin Saleh Al-Mudaifer, CEO of state-owned Saudi Arabian Mining Company, as reported by the Wall Street Journal.

The news outlet had put McKinsey & Company under scrutiny for its overseas hiring practices, reporting that the prestigious American consulting firm had employed relatives of Saudi officials and royal family members while it raised business stakes in the country. While hiring unqualified relatives of foreign officials violates the US Foreign Corrupt Practices Act of 1977 – which prohibits bribery, including non-cash benefits, between US companies and foreign officials, – there have been no concrete legal charges of wrongdoing yet levelled at the firm.

Khalid A. Al-Falih, Mohammed Al-Jadaan and Khaled Bin Saleh Al-Mudaifer

The firm have enjoyed close ties with the Saudi royal family over recent years, as the Kingdom attempts to remodel its economy. While Saudi Arabia had previously enjoyed prosperity backed up by extensive oil reserves for many years, the price of oil has plummeted recently, and the country’s continued reliance on the resource for its longevity is now in question. report from McKinsey & Company set out the ways that diversification of the economy across a range of areas could be considered in order to ramp up growth in the Saudi economy – with a focus on expanding the private sector by opening up the economy and improving work participation, as well as government efficiency.

The firm has since been tasked by the Saudi monarchy with assisting in the implementation of this restructuring of the economy. The Deputy Crown Prince Mohammed bin Salman’s Vision 2030 is aimed at moving the country away from oil, boosting the private sector, and reducing unemployment, which hovers above 30% for youth, and it was drafted with the advice of Western consulting firms including McKinsey. The programme aims to privatise roughly 5% of the state oil company Saudi Aramco, through an initial public offering analysts expect will draw in about $100 billion. It also calls for a massive government re-organisation, known as the National Transformation Program, hosting a number smaller initiatives surrounding themes such as youth empowerment, education, and even entertainment.

Earlier this year, McKinsey significantly bolstered its local team with the acquisition of Saudi Arabian management consultancy Elixir, in a move that added around 140 employees across offices in Jeddah and Riyadh.

Related: Saudi Arabia a lucrative battleground for management consultants (Consultancy.uk).

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