French prosecutors to probe McKinsey consultancy over alleged tax fraud

French financial prosecutors have opened a preliminary investigation into suspected tax fraud by the American management consulting firm McKinsey. 

The Paris Judicial Tribunal, where national financial prosecutors have opened an investigation into allegations of tax fraud against the US company McKinsey. AFP - EMMANUEL DUNAND

France's national financial prosecutor’s office said Wednesday the investigation was launched last week for alleged “money-laundering aggravated by tax fraud”. 

French President Emmanuel Macron said he was “shocked” by the suspicions of tax evasion on the part of consulting firms.

In an interview broadcast on TF1 Wednesday evening, Macron added: “The response will be European, since we have passed a reform which will allow ... a minimum tax on these companies which do not pay it in the countries where they nevertheless make profits.”

🗣 Emmanuel #Macron sur l’affaire #McKinsey, hier soir sur TF1 : « C'est une très bonne chose que le juge se saisisse [de cette] affaire. Je mène depuis 5 ans un combat contre les entreprises qui ne payent pas les impôts en #France ». #Présidentielle2022 pic.twitter.com/LlOgsYlMkA

— Élections 2022 🗳 (@2022Elections) April 7, 2022

McKinsey affair snaps at Macron's heels

The move follows a report by the French Senate last month that said McKinsey had not paid corporate profit taxes in the country since at least 2011.

The report also questioned the government’s use of private consultants. 

The so-called “McKinsey Affair” has prompted criticism from President Emmanuel Macron's rivals and is dogging him at campaign stops ahead of the first round of voting in France's presidential election vote on Sunday. 

The report from the Senate – where opposition conservatives hold a majority – found that state spending on consulting contracts had doubled over the past three years despite mixed results and the potential for conflict of interest. 

• Costly consultancy fees put Macron on backfoot ahead of elections
• US bank agrees 25 million euro deal to settle French tax fraud investigation

Tax optimisation through Delaware

Dozens of private companies have also been named for providing consultancy work, including giants such as Ireland-based multinational Accenture, and French group Capgemini.

The report alleges that McKinsey used a system of “tax optimisation” through its Delaware-based parent company. 

The tiny state of Delaware is renowned for being an on-shore tax haven in the US.

The American company was notably hired to advise the French government on its Covid-19 vaccination campaign, which many observers say was flawed.  

McKinsey defended its work in France in a statement that said it had respected French tax rules that apply to it.