Last week, global management consultants McKinsey agreed to pay $573m to settle a slew of legal claims across the United States. The firm best known in SA for facilitating Gupta plunder at Eskom and Transnet, was accused in the US of being part of “a machine that destroyed lives” by developing strategies to turbocharge sales of the addictive painkiller Oxycontin.
Also read: Alec Hogg: Magnus Heystek nails Old Mutual
A few years ago, another once-venerable US brand was irreparably damaged when major US bank Wells Fargo admitted its staff created literally millions of savings and cheque accounts on behalf of clients never nothing of it. This grandscale fraud led to the firing of 5 300 staff and cost the bank almost $3bn in settlements. It also lost Wells a long-time shareholder in Warren Buffett.
Responding to Friday’s newsletter, a Community member said after he’d instructed Old Mutual to sell his investments, by using OM’s own platform he discovered the price they settled was lowest of the entire week – reducing payout by over R100 000. After presenting this evidence, he says OM ‘fessed up, paid the difference but then closed the platform down to end their transparency.
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In all three of these instances – and many more like them – the people involved would likely claim to be moral, upstanding citizens. Their behaviour, however, was shaped by profit-generating ideas created at the top of the organisation. Such perverse incentives are the secret sauce that make employees evil.
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- FB: Malema visits Zuma; SA-variety Covid global economic threat
- Catholic Church puts assets out of reach of sex abuse claimants
- Short-seller Carson Block – other side of the GameStop frenzy
- Magnus Heystek: Why SA asset manager performance so dismal
- Taking Stock of past JSE week: Curro, Sasol, Sibanye, Distell
- Inside Covid-19: Why it may take 7 years for normality to return
