GHALEB CACHALIA: The dark side of management consulting

In a former life I was a management consultant. I started my own firm and, through successive international partnerships, ended up a partner in The Monitor Group, a global management consultancy founded out of Harvard University by professors Michael Porter and Mark Fuller. It was one of the more ethical consulting organisations, which is probably the reason it went bust. 

I was exposed to a world where management consultants operated as “masters of the universe” — fashioning the way businesses operate and steering government action. They operate in the front line and behind the scenes. And the revenue they reap is often eye-watering. Much of this revenue is invested in mechanisms to influence the way clients behave — the visible aspect of operations; evident in quasi-academic think-tanks and the like.   

Unlike lawyers or accountants, management consulting typically has no mandatory licensing, ethics boards or enforceable code of conduct. Firms self-regulate via internal codes, but there’s no universal oversight and they are often criticised for parachuting into organisations with flashy jargon and a cookie-cutter mindset. 

They often lock governments into dependency — offering cheap initial phases but eroding in-house capabilities and driving future contracts. A colleague who tried to break this cycle by helping foster much-needed in-house consulting capabilities for large firms found himself up against generously resourced consulting firms engaging in “thought leadership” — steering clients along the lines they had created in their consulting think-tanks, providing an external stamp of “excellence” and a market for themselves.   

While there’s a market for external advice, there’s also a darker side. Remember Enron, “the firm McKinsey created”? In December 2024 McKinsey agreed to pay $650m to settle for criminal and civil charges related to promoting Purdue Pharma’s OxyContin, marking the first criminal prosecution of a consulting firm.

In the SA state capture saga McKinsey’s involvement led to refunding R902m to the state, linked to the Gupta-era corruption scandal. McKinsey is now under scrutiny for advising governments (on immigration, carceral systems and others).

Bain & Co advised the SA Revenue Service on then president Jacob Zuma’s sanctioned restructuring, which contributed to weakening tax collection and enabling state capture. Bain was banned from UK government contracts for three years due to its “grave professional misconduct” in SA. 

KPMG and Huron Consulting were fined £14.4m by the UK’s Financial Reporting Council for misconduct in the Carillion audit, with staff bans and false documentation. They were forced to restate financials and paid $38m in settlements in 2009-12 for accounting misstatements. 

In Australia, after the PwC tax leak scandal an Australian Senate report recommended regulating the big four consultancies like corporations, central registries for conflicts of interest, conduct codes and parliamentary oversight. 

Most recently, Boston Consulting Group (BCG), a leading global management consulting firm, has come under scrutiny for its involvement in the Gaza Humanitarian Foundation, which oversees aid distribution in the Gaza Strip.

While BCG had claimed its work was being performed pro bono, insiders reportedly alerted The Washington Post to monthly invoices in excess of $1m. The head of the UN Palestinian relief agency has described the distribution centres as “death traps”. 

Then there was the involvement of former British prime minister Tony Blair’s think-tank in developing a post-war Gaza plan that included the creation of a “Trump Riviera” and a manufacturing zone named after Elon Musk. BCG is said to have developed the models. 

In SA and elsewhere many individuals formerly employed by large consultancies who are tainted by scandals are often “let go” with large payouts. They then start their own consultancies and so the cycle continues — never mind the flouting of employment, tax and visa regulations. 

I know — I’ve seen it first-hand. 

• Cachalia is a former DA MP and public enterprises spokesperson.