Risk & Compliance

Shanghai Police Catch 22 in Bribe Probe

Individuals from companies including McKinsey, McDonald's, Whirlpool, and ABB have reportedly been detained.
Stephen Taub and Helen ShawJanuary 19, 2007

The English-language Shanghai Daily reported Friday that police have detained 22 people from seven companies, including McKinsey, McDonald’s, Whirlpool, and ABB, in connection with a bribery investigation in that Chinese city.

Bribes totaling about 4 million yuan (slightly more than $500,000) were given to directors, senior employees, and other individuals by four companies that operate local computer networks and that sought equipment orders, reported the Associated Press.

No formal charges have been filed, the AP noted.

In May 2006, reported the Shanghai Daily, authorities received an anonymous call claiming that the general manager of a local computer company had bribed a computer-department employee in McKinsey’s Shanghai office in return for a contract to install a computer network.

Two employees of the computer company later confessed that they had given about $50,000 to two employees of McKinsey at the end of 2005, according to the newspaper. After further investigation, wrote the paper, police determined that between 2003 and 2006, the two McKinsey employees received a total of about $250,000 in bribes from four companies. Those revelations led police to senior employees, department managers, information technology directors, and engineers at other companies, the newspaper also reported.

Speaking with CFO.com, a McKinsey spokesman confirmed that two IT workers in the firm’s Shanghai office are involved, but stressed that “McKinsey itself has not in any way been accused of any bribery or corruption” and that the firm “in no way tolerates employees accepting bribes.” McKinsey continues to cooperate fully with local authorities, he added.

A statement from the office of McDonald’s China asserted that “this incident occurred several months ago” and that the McDonald’s employee in question was “immediately terminated.”

Calls to the headquarters of Whirlpool and the U.S. headquarters of ABB were not immediately returned for comment.