French prosecutors to probe McKinsey over alleged tax fraud

PARIS (AP) — French financial prosecutors have opened a preliminary investigation into suspected tax fraud by American management consulting firm McKinsey & Company.

The 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. “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,” he said, speaking on TF1 evening news Wednesday.

A report by the French Senate issued last month 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 of the Senate, where opposition conservatives hold a majority, found that state spending on consulting contracts doubled in the past three years despite mixed results and the potential for conflicts of interest.

Dozens of private companies have provided consulting, including giants like Ireland-based multinational Accenture and French group Capgemini.

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

McKinsey issued a statement saying it “respects French tax rules that apply to it” and defending its work in France.

The American company was notably hired to advise the French government on its COVID-19 vaccination campaign and other policies.

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