the reasons which led the National Financial Prosecutor’s Office to initiate a preliminary investigation

After weeks of political controversy, the dispute over consulting firms is taking a legal turn. The National Financial Prosecutor’s Office (PNF) announced on Wednesday, April 6, that it had opened a preliminary investigation into gross money laundering of tax evasion against the consulting firm McKinsey.

Launched on March 31, this preliminary investigation aims to shed light on the legality of tax status for McKinsey’s French operating subsidiaries. On the sidelines of its work on the state’s use of consulting firms, a Senate inquiry committee had in fact discovered that the US firm had not paid corporation tax between 2011 and 2020, while in France it achieves an annual turnover of several hundred million euros (329 million in 2020). A miracle made possible by a tax optimization mechanism called “transfer price”, classic for multinational companies.

If the legal or fraudulent nature of this practice is always difficult to establish, the disclosure of this information in the Senate report on March 17 immediately sparked a lively controversy due to the numerous contracts the government has entrusted to McKinsey over the past five-year period.

Read: Article reserved for our subscribers The consulting firm McKinsey accused of tax evasion in France

“We opened this inquiry within days of the publication of the Senate report,” declare to World the Financial Prosecutor, Jean-François Bohnert. The PNF investigation was triggered after an internal assessment of the case, which consisted of performing initial cross-checks and verifications of the nature of the revelations in the Senate report. It was handed over to the Financial Judicial Investigation Service (SEJF), the tax police set up in 2019 in Bercy. “The opening of this inquiry confirms the rigor and seriousness of the work of the Commission of Inquiry, which had discovered McKinsey’s tax practices by conducting on-site documentary and verification at Bercy”, welcomed the two senators responsible for the Commission of Inquiry, Arnaud Bazin (Les Républicains) and Eliane Assassi (Communist Party).

Critics against Bercy

In fact, it was by recovering documents regarding the tax situation of McKinsey’s French units in Bercy in December 2021 that senators were able to establish that the U.S. company had not paid corporation tax for at least a decade. The world had revealed a few months earlier that the French branch of McKinsey operated from a structure based in the state of Delaware (USA), the main US tax haven for companies, characterized by zero taxation and great financial opacity, without being able to detail at the time the tax consequences of this scheme.

Pointed out for its passivity in the matter, the tax administration assured that it had launched a tax audit of the firm in November 2021, when the work of the senators began. A source in the board also told World that the tax authorities had even begun to take an interest in McKinsey before the Covid-19 pandemic, without, however, sending a request for a document or officially notifying a control to the multinational.

It assured the Minister of Economy and Finance Bruno Le Maire on 30 March “McKinsey will pay all the taxes it owes France ruby ​​on the nail”, and that the government had no “no lessons to learn in the fight against tax optimization”. According to our information, the tax authorities have not at present taken any offense involving McKinsey to court and they are conducting their investigations in parallel with the SEJF.

Also read: McKinsey and Macron: the truth and the false about the controversy

For his part, President Emmanuel Macron said to himself “shocked” of McKinsey’s tax practices, while suggesting that they were not illegal. “Nobody taxes companies like this, because it’s not the rules,” he declared on March 23 on the M6 ​​and stressed that this was part of“an international battle” which he himself carried out in Europe, to force companies to pay “minimum charge”. A reference to the international tax project for the largest companies, designed as a weapon against tax havens and dumping strategies.

McKinsey argued on the other hand “respect French tax rules”, without disputing Senate information. To defend itself, the US company said it was paying “EUR 422 million in taxes and social security contributions”, by perpetuating the confusion between corporation tax and social security contributions paid on the remuneration of its employees. In a statement released Wednesday, McKinsey said that “if he [était] encouraged”, he [tiendrait] available to the competent authorities and authorities ”. “When the company has been the subject of requests for information from public authorities, it has of course always responded and cooperated fully, also in tax technical matters. This has been the case during previous tax audits of the various McKinsey entities in France. “ added the company.

More than one billion euros in 2021

This “McKinsey affair”, which was widely exploited by opponents of Emmanuel Macron, has in a few weeks forced itself as a serious move on the candidate’s express campaign for the presidential election. The head of state has maintained close ties with several leaders of the firm, some of whom participated in his campaign in personal capacity in 2017. Among them, the head of the firm’s public service department, Karim Tadjeddine, has been in turmoil since his hearing before the Senate committee on January 18. : he had confirmed under oath that McKinsey was in fact subject to corporation tax – prompting the Senate to sue on March 25 on suspicion of perjury.

Read the survey: McKinsey: The government is defending itself against new attacks from Emmanuel Macron’s rivals

In addition to the tax aspect, the controversy triggered by the Senate report, the extent of the state’s use of consulting firms, estimated at more than a billion euros for the year 2021 alone, relates to a net increase over Macron’s five-year period. One “widespread phenomenon” which, according to senators, risks private consultants gradually taking precedence over officials in the administration.

If McKinsey accounts for less than 2% of total public expenditure on consultancy services, ” the company “, as it is nicknamed, intervened in support of the government in several important projects over the five-year period, such as leading the vaccination campaign against Covid-19, preparing the pension reform or organizing Tech for Good meetings, which saw the digital bosses parade on the Elysée. According to the study of World, McKinsey has been commissioned for at least 43 services between 2018 and 2021. At present, no legal investigation has been initiated to investigate how this company or others have been able to influence public decisions in recent years.

In response to the dispute, the Minister of Transformation and Public Service, Amélie de Montchalin, assured on March 30 thatNo consultancy has decided on any reform, and [que] the decision is always up to the state.. “We did not abdicate our responsibility”, she said. Practice, she says, is “widespread”, “usual” and “useful” in “most cases”. The government has pledged to reduce consulting spending by 15% by 2022 and to publish the full list of government services each year.

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Invisible but ubiquitous, what is the real impact of private consultants in the conduct of government affairs? This is the burning issue that was raised at the heart of the presidential campaign by the Senate Committee on the Impact of Consultancy Firms on Public Policy, which delivered its March 17 report. In parallel, The world conducted its own investigation, based on testimony, open sources and requests for access to documents, to try to measure the impact of these firms on Emmanuel Macron’s five-year term.

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