Talk is cheap on values

Global banks such as Goldman Sachs and consultancies like McKinsey promise to do good and do well. Are they serious?

Former Malaysian prime minister Najib Razak outside the courthouse in Kuala Lumpur on December 12 after being charged in the 1MDB case. Picture: AFP

Right now, right here, as we reel from the shock of the royal commission, banking doesn’t seem the obvious choice for an altruist who has just graduated and is seeking to help save the world.

But an earnest young Australian graduate might well still entertain the prospect of working for an international investment bank or consultancy. They hold out the alluring prospect of doing good at the same time as doing well — and globally, which seems more exciting.

Goldman Sachs, for instance, the bluest of blue chip global outfits, assures: “We are dedicated to complying fully with the letter and spirit of the laws, rules and ethical principles that govern us. Our continued success depends upon unswerving adherence to this standard.”

It vows: “At the crux of our efforts is a focus on cultivating and sustaining a diverse work environment and workforce … We expect our people to maintain high ethical standards in everything they do, both in their work for the firm and in their personal lives.”

In short, Goldmans assures: “We would, if it came to a choice, rather be best than biggest.”

The former chief executive and retiring chairman, Lloyd Blankfein, a regular of course at Davos, the capital of corporate do-gooding, tweeted almost a year ago after attending a summit of global CEOs hosted by French President Emmanuel Macron in the Palace of Versailles: “Feels like a new day has dawned in France.”

On which sunset has fallen rather swiftly, it would seem.

The Economist ran a story last year on “marginal utilitarianism”, headlined “To help save the world, become a banker, not a doctor.”

Interesting in this context to note that this week Malaysia’s Attorney-General has filed criminal charges against Goldman Sachs over its alleged role in the financial scandal concerning the state investment fund 1MDB, for which the bank had arranged $US6.5 billion ($9bn) in bonds, gaining in return $834m.

The government led by Najib Razak lost power at an election seven months ago despite a gerrymander massively in favour of Najib’s UMNO party — in part because of the extent of the 1MDB scandal. The sprightly new Prime Minister, Mahathir Mohamad, aged 93, immediately set about chasing the 1MDB money trail, with its chief fixer Jho Low believed to be hiding out in China.

Goldman Sachs has strenuously denied any wrongdoing.

The scandal was initially uncovered by British journalist Clare Rewcastle-Brown via her Sarawak Report blog, referring to the region in Malaysia where she grew up. She called 1MDB “the world’s largest theft” — in a story involving Hollywood celebrities, superyachts and Monet paintings.

Anwar Ibrahim, recently re-elected to parliament and heir apparent to Mahathir, said of the affair at a Bloomberg conference in Singapore: “It’s a failure of governance. You allow corrupt leaders to … squander as much as possible. Elites were muted and complicit to the crime … international financial institutions, of course.”

He said Malaysia had been let down by the international financial institutions it had depended on, and by Western countries’ leaders who had tolerated the related excesses.

Rewcastle-Brown told the Foreign Correspondents Club in Hong Kong when I was there recently that “prestigious” international public relations firms had earned massive amounts from the Najib government for helping to “smother” the 1MDB story, including by “setting up fake social media accounts” from which to spread invented gossip about her and others uncovering the scandal. “The extent of the foreign assistance to collaborate in support of (Malaysia’s) kleptocracy” was an important element of the story, she said, “involving members of the professional classes and international corporations from all over the world” — to plunder a development fund intended to help the poorest Malaysians.

This involved funding the $140m film Wolf of Wall Street, about theft and excess — which Rewcastle-Brown described as “a Freudian choice”.

The key joint venture partner of 1MDB is Petro Saudi, a Saudi Arabian shell company.

But unlike many Western jurisdictions, Singapore and Hong Kong, she said, had responded appropriately to help in tracking down the 1MDB wrongdoing.

That young Aussie graduate might also look to one of the global consulting outfits with which to do good while doing well.

McKinsey, for instance, assures: “We are a values-driven organisation … Our values have been updated in small ways to reflect the changing times. They inform both our long-term strategy as a firm and the way we serve our clients on a daily basis. We put aside one day a year to reflect as a group on what our values mean to both our work and our lives.”

The firm pledges, “to be non-hierarchical and inclusive, to sustain a caring meritocracy, to uphold the obligation to dissent. For a long time we have worked with governments and non-profits around the world that have direct social missions … Our firm’s social impact matters to us.”

This week, kicking off an extensive investigation, The New York Times broke the news that McKinsey had chosen to hold its annual retreat for its hundreds of staff members in China in the northwestern region of Xinjiang, where almost a million Uighurs — Turkic people, mostly Muslim, who are the original inhabitants — have been forced into “re-education” camps. The McKinsey staff posted Instagram and WeChat images of their own luxury encampment with camel rides and vast bonfires, in sand dunes near Kashgar, its tents connected by red carpets — just a few kilometres from one such Chinese indoctrination camp.

The company has been working for the Saudi royal family, for the Turkish autocrat Recep Tayyip Erdogan, and for Kremlin-linked companies in Russia.

In China, it has worked with 22 of the 100 biggest state-owned corporations, one of which, China Communications Construction Company, helped to build China’s artificial military-controlled islands in the South China Sea.

McKinsey has responded that, “like many other major corporations including our competitors, we seek to navigate a changing geopolitical environment, but we do not support or engage in political activities”.

Change for the better, it appears to believe, best comes from within systems. Some systems, however, might appear impervious to change even from McKinsey. China Communications Construction, for instance, built a port for Sri Lanka — through the Belt & Road strategy — at such a cost that the government there has handed the port over to China.

But Mahathir suspended CCC’s deal for an East Coast Rail Link, dubbing Belt & Road an “unequal treaty”, using the language of Chinese resistance to the terms forced on Beijing by Britain after losing the first Opium War.

Dominic Barton, McKinsey’s then managing partner, wrote with colleagues that “the world is waiting for the One Belt, One Road grand blueprint to move from dream to reality”.

Brilliant global companies can be expected to tender for work everywhere. But the global public is becoming increasingly interested in the way the work is won and conducted, and to what effect.

Today’s reality is that doing discreet deals that progress the power of unaccountable regimes, while fitting the old masters-of-the-universe template, does not always sit comfortably with the progressive image that many firms seek to project.

The New York Times cites a former Western diplomat as describing the global experts departing the lobby of the Ritz-Carlton hotel in Riyadh on a weekday morning “like bats leaving a cave”.