U.S. Attorney Christopher R. Kavanaugh | U.S. Department of Justice
McKinsey & Company Inc., a management consulting firm based in New York, has agreed to pay $650 million to settle criminal and civil investigations related to its consulting work with Purdue Pharma L.P. The settlement addresses McKinsey's advice on the sales and marketing of OxyContin, including efforts to boost sales.
This resolution marks the first instance of a management consulting firm being held criminally accountable for advice leading to a client's criminal actions. It is also the largest civil recovery for such conduct.
A former McKinsey senior partner, Martin E. Elling, has been charged with obstruction of justice in federal court in Virginia. Elling is accused of destroying records to impede an investigation by the Justice Department. He has agreed to plead guilty.
McKinsey entered into a five-year deferred prosecution agreement (DPA) related to charges against its U.S. subsidiary. The company will pay penalties totaling over $231 million and other amounts as part of the settlement. McKinsey also reached a civil settlement under the False Claims Act for allegedly causing false claims related to OxyContin prescriptions.
The agreement includes measures for McKinsey to implement compliance programs and document retention procedures. The firm will not engage in work related to controlled substances during the DPA term.
U.S. Attorney Christopher R. Kavanaugh stated, "For the first time in history, the Justice Department is holding a management consulting firm and one of its senior executives criminally responsible."
Principal Deputy Assistant Attorney General Brian M. Boynton emphasized that "consulting companies cannot advise their clients to break the law."
The case involved cooperation from various government agencies, including the FBI and FDA Office of Criminal Investigations.
Elling faces up to 20 years in prison if convicted on obstruction charges. A federal judge will determine his sentence following consideration of relevant guidelines.
The civil resolution also addresses allegations that McKinsey misled federal healthcare programs and failed to disclose conflicts of interest while working with both Purdue Pharma and FDA projects.
