• Sat. Dec 10th, 2022

Rubio has used open letters to query the relationship between Beijing and McKinsey, where Dominic Barton was global managing partner for nine years

Dec 11, 2020

U.S. Senator Marco Rubio walks through the Senate subway following a vote in the Senate at the U.S. Capitol on Nov. 12, 2020 in Washington, DC.
Samuel Corum/Getty Images
Senator Marco Rubio, chair of the U.S. Senate Intelligence Committee, is drawing attention to an earlier chapter in the life of Dominic Barton, now Canadas ambassador to China, as the U.S. politician presses giant global consulting firm McKinsey and Co. on its business ties to the ruling Chinese Communist Party and state-owned enterprises.
Senator Rubio has used open letters to query New York-based McKinsey and Co. on its financial relationship with Beijing and to ask whether company executives acted against U.S. economic and national security interests as an adviser to Chinese companies. According to The New York Times, McKinseys clientele in China included as many as 22 of the countrys 100 largest state-owned enterprises.
Mr. Barton, now Canadas envoy to Beijing, was head of McKinsey for nine years as global managing partner. He stepped down as a global managing partner emeritus in September, 2019, when Prime Minister Justin Trudeau named him ambassador.
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Upon his appointment, Mr. Barton resigned as chair of Teck Resources Ltd., a Vancouver-based metals and mining giant partly owned by China Investment Corp., a state company. A member of Tecks board of directors once was a member of Chinas National Peoples Congress.
Unfortunately, Canada is no stranger to the complex influence game McKinsey plays with China, Mr. Rubio said in a statement to The Globe and Mail. Before becoming Canadas ambassador to China, Dominic Barton went from serving on the advisory board of the China Development Bank to running McKinseys global operations.
Canadas official Opposition has also raised questions in Parliament about McKinseys connections to Chinese state-owned enterprises and dealings with Chinese Communist Party (CCP) officials.
Canada-China relations are at their lowest point in half a century. China has kept two Canadians Michael Kovrig and Michael Spavor locked up in apparent retaliation for Ottawas 2018 arrest of a Chinese tech executive on a U.S. extradition request. It is blocking major Canadian shippers of canola seed, and earlier this year, Chinas envoy to Canada warned Ottawa that granting asylum to Hong Kong dissidents could jeopardize the health and safety of 300,000 Canadians in the Asian city.
Mr. Rubio said in the statement that the United States and Western allies such as Canada need to be wary of doing business with McKinsey because of its dealings in China and the relationship between the companys executives and Communist Party leaders.
Given McKinseys extensive influence in government and business, America and its allies must have confidence that McKinsey is not either wittingly or unwittingly aiding [the] CCPs attempt to supplant the United States and reshape the international order in accordance with its worldview, he said. McKinseys inability to provide clear, direct answers only exacerbates those concerns and raises serious questions as to whether the U.S. government including our intelligence community should continue to use McKinseys services.
Mr. Rubio has asked McKinsey for months to reveal all its relationships with the CCP and whether McKinsey made sure its Chinese clients were not controlled by the military or involved in human rights abuses. He said the firm has answered one of his letters, saying that to our knowledge neither the Chinese government nor the Chinese Communist Party has ever been a client of McKinsey.
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The consulting firm, however, acknowledged in another response to the senator that it has worked for state-owned enterprises in China, clients that Mr. Rubio said cannot be considered separate from the Chinese government or the Communist Party, which has ruled the country for 70 years.
McKinsey has declined to identify which state-owned enterprises it has worked for, citing professional obligations to maintain confidentiality.
McKinsey continues to be less than forthcoming when it comes to their relationship with the Chinese Communist Party. It raises serious questions both in terms of our national security but also our economic security given Beijings ability to recruit, manipulate, and exploit individuals in foreign nations, Mr. Rubio told The Globe.
Conservative MP Garnett Genuis, vice-chair of the House of Commons Special Committee on Canada-China Relations, who has pressed Mr. Barton to disclose the extent of his work for Chinese state-owned enterprises, said he also is concerned that McKinsey has not released enough information about its work in China.
It is an important matter of disclosure which Chinese state-owned companies our ambassador was in some kind of a business relationship with, Mr. Genuis said.
The Conservative MP asked Mr. Barton in February to provide a Parliamentary committee with a list of Chinese state-owned companies he worked for at McKinsey.
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Mr. Barton replied that McKinseys pretty careful about client confidentialities, but said he was open to that if there were some mechanism so that it isnt in the public domain but that some people could look at it.
He also defended his work for China, saying McKinsey is known for telling truth to power and calling it out as it is.
The McKinsey client list has not yet been disclosed to the committee.
The Chinese government supervises many of the companies it owns, and the party appoints their leaders. Many Western industries say these entities do not have to focus on profit and can undercut competition and distort the market.
Mr. Genuis had also asked Mr. Barton to confirm whether McKinsey worked for China Communications Construction Co. (CCCC), which played a key role in building artificial islands in the South China Sea, the purpose of which was to bolster Chinas territorial claims in the one of the worlds busiest shipping lanes. The Chinese firm was under sanctions by the World Bank until 2017 for corruption and bid-rigging in the Philippines. In 2018, the Canadian government rejected a bid by CCCC to buy one of Canadas largest construction companies, citing national security.
Mr. Barton was asked again about this client list on Dec. 8 during a second appearance before the House of Commons special committee on Canada-China relations. He told MPs he is comfortable with the names of his former Chinese state clients being disclosed. He said its up to McKinsey to handle that, and he urged the committee to talk to the company.
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The Globe and Mail asked McKinsey for comment on this list on Wednesday and whether the company would provide it to MPs. McKinsey declined to comment and referred questions back to Mr. Barton.
The Globe then contacted Mr. Barton directly to ask when MPs would receive the list of clients. He did not immediately respond.
In 2018, McKinsey held a retreat in the city of Kashgar, which is near Uyghur internment camps. Several news organizations have reported that McKinsey played an important role in advancing Beijings Belt and Road Initiative, a global infrastructure project that has attracted criticism from the U.S. government, including concerns it is being used for debt-trap diplomacy in developing nations.
As head of McKinsey, Mr. Barton focused on building the companys China business during Beijings rise as a global superpower. By 2016, McKinseys China practice encompassed offices in six cities.
One of its clients was Sinochem, a state-owned conglomerate that produces industrial components, works closely with the Peoples Liberation Army and is a leading provider of Chinese aid to rogue states such as North Korea and Iran.
In 2015, Mr. Barton co-wrote a piece for the Centre for International Relations and Sustainable Development urging Canada to support Chinas economic and geopolitical ambitions. The world is re-balancing towards Asia, and China in particular; Canada must re-balance with it, he wrote.
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After he became ambassador to China, Mr. Barton was obligated to set up an ethical shield and put his investments in a blind trust to avoid conflicts of interest while serving in Beijing.
Mr. Bartons chief of staff in Beijing and the deputy minister of foreign affairs administer the conflict of interest screen.
As recently as September, Mr. Barton was still calling for greater ties with China.
The weight of the world is shifting and has shifted toward Asia, so we need to do more in China, he told a Canada-China economic policy forum organized by the University of Albertas China Institute.
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