Læsetid: 6 min.

Scandal-ridden GGGI in ’unhealthy relationship’ with McKinsey

Leaked documents show that a McKinsey associate was able to play what experts call ”a problematic double role” in internal GGGI affairs, possibly ensuring that contracts went to McKinsey – in violation of GGGI’s own rules. Today, the former McKinsey associate is a deputy director general of the organization
29. november 2013

NOTE: This is an abridged translation of a Danish newspaper article where some details are left out. The original piece in Danish should be considered the authoritative version

For over a year, successive directors-general and board members have insisted that they are doing their utmost to clean up the act in the scandalridden climate organization Global Green Growth Institute. Still, in some respects the cleanup never really seems to have materialised.

»When you look at the organization’s history in the past, chances of an effective cleanup always were quite small«, says professor in economics Christian Bjørnskov from Aarhus University.

The history that Bjørnskov, who is an expert on development economy, is alluding to is a long and complicated one. It involves the very intimate links between GGGI and the consulting firm McKinsey, in particular in respect to a certain Dr. Mattia Romani, an Italian who back in 2010 was as a senior consultant with McKinsey where he worked on GGGI’s first project. His role in that project evolved into a collaboration critized by many experts today.

Notably, McKinsey is mentioned several times in the critical report by the Korean National Audit Office (BAI) published in November 2012, following its review of GGGI: Outsourced contracts went to McKinsey without any competitive bidding. Sudden cost overruns emerged and were approved in violation of rules, and it turned out that some of the spending could not be accounted for.

Internal documents obtained by In formation, Denmark’s Independent Daily, now shows how Dr. Mattia Romani interfered in GGGI’s evaluation of his actual employer, McKinsey’s work. At the same time, he played an active role in the planning of activities that culminated in new orders for the consulting firm. Nevertheless, as of March 2013, he was appointed deputy director general of GGGI by a committee of ”three to four people,” says GGGI – among those its chairman, the former Danish prime minister Lars Løkke Rasmussen.

In fact, Mattia Romanis association with GGGI dates back to the beginning of its joint venture with his former employer, McKinsey. It has not been possible, however, to ascertain the exact date.

«Romani was seconded to the GGGI in July 2011,« the climate organization states in an email sent as a response to Information’s query .

However, the internal mails that Information has seen document that already late in 2010, Dr. Mattia Romani was involved in GGGI’s affairs.

»It certainly would appear that for a longer period, Romani was wearing two hats”, Bjørnskov observes when presented with the content of the internal GGGI documents obtained by Information: ”This has the smell of a significant conflict of interests: Apparently, GGGI had developed an unhealthy relationship with McKinsey and vice versa«, says the professor.

An example of the intimate relationship between McKinsey and GGGI as personified by Dr. Mattia Romani takes place in December 2010. On the 4th of December Romani, sends a GGGI presentation to the organization's deputy director-general and a number of other recipients with GGGI email-addresses:

»Please take a look at a brief presentation that I would like to use to update the Board on the proposed country projects for 2011«, Mattia Romani writes.

Thus, the McKinsey consultant is involved in helping to plan GGGI’s activities for 2011. In part, in relation to activities that concern the further development of projects in Ethiopia and Indonesia, to which McKinsey already was assigned; in part at an irrigation project in Ethiopia. The latter project was originally instigated by the consulancy firm and GGGI joined it subsequently on McKinsey’s recommendation. In spite of McKinsey’s earlier involvement in GGGI’s projects, the rules require that other companies are also given a chance to bid on new projects as well as partaking in new phases of existing ones.

And this is exactly why a McKinsey associate such as Mr Mattia Romani should not be involved in anything that GGGI planned to do in the future, Bjørnskov stresses:

»This is a most reprehensible procedure. At this point, he would able to direct the process with relative ease and ensure that it pointed to a given conclusion that only McKinsey had the necessary skills,« Bjørnskov says.

Only in the context of another project outsourced by GGGI to McKinsey – the contract is valid from the 16th of February 2011, but wasn’t signed undtil the 28th of April 2011– is Dr. Mattia Romani’s secondmendt to the GGGI formally agreed. According to the contract between McKinsey and GGGI, the agreement contains a ”de facto secondment of Mattia Romani to support GGGI’s country program”. At the end of the same year, Romani is listed on the organization's website as ”head of the London office”.

Already in March 2011, the McKinsey employee is described as responsible for ”coordination of country program analyzes”, however, in an overview paper detailing the structure of GGGI’s organization from a board meeting in GGGI in March 2011. Thus, parts of the McKinsey projects fall under his responsibility. And two minutes from April 2011 also show that even before his formal posting, Mr Mattia Romani already was an embedded participant in the meetings in GGGI’s management committee.

»He's not even listed as a guest. He is a regular particant in these meetings, and this falls clearly outside the framework of how these things are done. In this way, he puts himself in a situation where he is able to control the process«, says Bjørnskov .

Mr Mattia Romani (simply listed in the minutes as ”MRO”) participates in the meetings on the 12th and 20th April 2011 to discuss the upcoming bidding process for the organization's projects with various procurement models in play. According to the minutes from the 12th of April, Romani continued discussions with two other GGGI officials after the meeting:

»JTY (GGGI’s deputy director general, ed.), LMK (who is jointly responsible for GGGI’s country program, ed.) and MRO talked about this and discussed the effects and advantages/ disadvantages of different options«, the summary says.

”This is part of the bidding process and Romani is instrumental in organizing this process while at the same time being employed by another party in the process. This is almost like asking DSB (Danish railway company) to write the rules for biddings on railway operations”, Bjørnskov says.

Mattia Romani severed his last formal ties with McKinsey as of the 1st of March this year , when he was appointed as one of GGGI’s two deputy director-generals. Nevertheless, his appointment still draws criticism from professors in economics.

»Now, this has become an entrenched strategy to have a certain kind of projects associated with a certain kind of consultants. But here, you get the same person positioned as being responsible for future projects. So obviously there is a great danger that you will continue to run in the same groove. The field is not opened up,« professor in financial management at Aalborg University Per Nikolaj Bukh observes. 

Mr. Mattia Romani has not wished to comment and McKinsey didn’t respond to Information’s queries. Nor has GGGI chairman Lars Løkke Rasmussen been willing to make himself available for an interview appointment on the possible conflicts of interest or other issues regarding Dr.  Mattia Romani.

But GGGI’s current Director-General, the Australian Howard Bamsey, has told Information that the the issue of a possible conflict of interest never was raised during the hiring committee's discussions – neither in relation to Mattia Romani or other possible candidates for the post of Deputy Director-General.

Mr Bamsey who sat in the appointment committee together with Mr Rasmussen had according to his own admission no knowledge of about the circumstances described in the documents obtained by Information  and therefore doesn’t wish to comment on whether they will prompt any new steps. 

The Director-General also points out that GGGI relies heavily on being able to use consultants since it is a relatively small organization. He also stresses that McKinsey is only one of several partners and that GGGI continuously decides on conflicts of interest from case to case:

»If problems arise, we will pursue them just as vigourously as any other international organization would. I have full confidence that Mattia (Mr Romani, ed.) will do the right thing in such a situation.«

The director-general’s assurances, however, leave economics professor Bjørnskov unconvinced.

»Nothing concrete in any of these evaluations indicate that they have managed to build their own skills. And in principle, this would imply that that McKinsey and other firms remain firmly in control of GGGI«, he says.

Translated by Niels Ivar Larsen

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