Costly consultancy fees put Macron on backfoot ahead of elections
French President Emmanuel Macron is under fire over his government's use of around one billion euros of public money on management consultants, notably a US corporation which has allegedly avoided pay tax here in France.
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With just 10 days to go before the first round of the presidential elections, Emmanuel Macron's rivals are having a field day with what could be called "the McKinsey affair".
A recent investigation by the Senate concluded this month that public spending on consultants had more than doubled from 2018-2021, reaching a billion euros in 2021.
Attention focused particularly on the US-based giant McKinsey whose hefty fees and tax policies have put it on a par with other US corporates seen as badboys in France, from the BlackRock investment group to Goldman Sachs and Monsanto.
The Senate investigation, piloted by members of the rmainstream right Republicans and Communist party, condemned the "sprawling phenomenon", and also called out McKinsey for failing to pay corporation tax for the last 10 years despite declaring sales of 329 million euros in France.
McKinsey denies the charge.
Nothing murky
"You get the impression that there's something murky, but that's not true," Macron said last weekend, encouraging anyone with evidence of wrong-doing to report it to the authorities.
He argued that public procurement policies had been strictly followed and that France had needed extra help during the Covid-19 pandemic when ministries and civil servants were severely stretched.
That didn't satisfy Macron's rivals, not least because McKinsey was involved in the Covid-19 vaccine rollout, seen as lamentably slow in its early stages.
Some critics hint at possible criminality, others highlight what they see as irresponsible spending and snuggling up to companies known for their high prices.
Consultants' daily fees are around €1,500 and can reach €3,000 – considerably higher than the salaries of France's five million civil servants.
"With me, consulting groups will be gone," hard-left candidate Jean-Luc Mélenchon said on Monday, while far-right leader Marine Le Pen's National Rally party has denounced a "national scandal".
French daily Le Monde reported that McKinsey had been paid close to a million euros for a report on pension reform which amounted to a Powerpoint presentation and a 50-page document.
An investigation by online news outlet Mediapart, meanwhile, revealed that Macron's relations with McKinsey go back a long way. It claims the firm had worked for him for free when he became economy minister in 2014.
Le cabinet de conseil #McKinsey a travaillé gratuitement pour Macron dès son arrivée au ministère de l’économie. Des consultants du cabinet révèlent à @Mediapart la stratégie d’influence qui a alors été déployée autour du futur président de la République.https://t.co/Obql3hzVO4
— Edwy Plenel (@edwyplenel) March 31, 2022
The Bokassa effect
Macron is currently the favourite to win a new term, though his advance on his nearest rival Marine Le Pen is narrowing.
The consultancy fee issue has clearly put him on the defensive, but it's not easy to gauge how much it will impact voters as they head to the ballot box on 10 April for the first round.
The former investment banker, derided as a "president of the rich" by left-wingers throughout his time in office, was questioned over McKinsey on a pre-election walkabout in Dijon on Monday.
"They [the opposition] are trying to make it into the Bokassa diamond scandal for the president. It's not a real issue. Everyone uses consultancies," a close ally of the president told AFP on condition of anonymity.
The scandal undermined the re-election chances of president Valery Giscard d'Estaing following revelations in 1979 that he had accepted precious stones from Central African dictator Jean-Bedel Bokassa.
Election fallout?
But how bad could this be for Macron? At one level, the criticism appears exaggerated.
Many countries use consultancies, and France spends less than some fellow European states such as Germany and Britain.
In 2020-2021, the British government and other bodies handed out contracts to consultants worth £2.5bn, mainly in response to the Covid crisis.
And the habit of turning to private consultancy firms to support the public sector took off in France under Nicolas Sarkozy in 2007, a decade before Macron took office.
While the Senate report focused on McKinsey, the French government also used other non-US consultancies such as France's Capgemini and Britain's EY.
But the combination of Macron's banking background, some deep-seated wariness of US big money and an attachment to public services has put the incumbent on the backfoot for the moment.
Amélie de Montchalin, minister for Public Services and Olivier Dussopt, minister for Public Finances, held a press conference on Wednesday to defend the government against the accusations. They promised that consultancy fees would be cut by 15 percent to 2 percent.
It may help to put out the fire, but questions remain over Macron's personal relations with McKinsey and why a country with five million civil servants felt it needed to turn to outside contractors in the first place.
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