Head of McKinsey is voted out as firm faces reckoning on Opioid crisis

Days into his new job in July 2018, Sneader flew to South Africa to apologize for the firm’s work with a state-owned power provider. McKinsey’s lucrative contract, found to be in violation of South African contracting law, involved the use of a local intermediary tied to a corruption scandal that brought down the country’s president. McKinsey has returned tens of millions of dollars in fees it earned in South Africa.

“We came across as arrogant or unaccountable,” Sneader said at the time. “To be brutally honest, we were too distant to understand the growing anger in South Africa.”

That month, he had to defend McKinsey after a New York Times report revealed that it was working with the U.S. Immigration and Customs Enforcement agency — even in the midst of widespread fury over the Trump administration’s separation of migrant children from their parents.

At the same time, the fuse was lit for what became the biggest scandal of McKinsey’s 95-year history: its extensive work with Purdue Pharma to “turbocharge” sales of OxyContin in the middle of a national opioid epidemic that has contributed to the deaths of more than 450,000 people over the past two decades.

On July 4 of that year, two McKinsey senior partners on the Purdue account exchanged emails discussing possibly “eliminating all our documents and emails” to head off repercussions the firm might face. That exchange was a key part of the settlement states made with McKinsey this month. McKinsey did not admit wrongdoing in the settlement, but both senior partners — who would have been voting in the election of Sneader’s successor — were fired. “We deeply regret that we did not adequately acknowledge the tragic consequences of the epidemic unfolding in our communities,” Sneader said this month. “With this agreement, we hope to be part of the solution to the opioid crisis in the U.S.”

During his watch, Sneader oversaw the introduction of measures aimed at preventing controversial projects, including new procedures on reviewing prospective clients. But he could also be a staunch defender of McKinsey in the wake of scandal, including its extensive work in Saudi Arabia, which came under intense scrutiny in late 2018 after The Times disclosed that a McKinsey employee, in a written report, had identified influential critics of the Saudi government and that several of those critics or their family members were later arrested.

Sternfels — who, like Barton, was a Rhodes scholar — runs many of the firm’s technology-focused initiatives and is also the senior partner overseeing McKinsey’s bankruptcy restructuring practice. That work has been the focus of lawsuits in recent years. In 2019, the firm agreed to pay $15 million in a settlement with the Justice Department to resolve allegations that it failed to properly disclose potential conflicts of interest stemming from its bankruptcy work.

Smit is a co-chairman of the McKinsey Global Institute, the firm’s in-house think tank.

A spokesman for McKinsey wouldn’t comment on the specifics of the election, saying in a statement: “The election, which is conducted by an independent third-party firm, is now underway and we will announce the result after the election concludes.”