McKinsey & Co. is in the spotlight as the consulting giant faces a deadline to disclose potential conflicts of interest in advising Puerto Rico’s $120 billion restructuring, Bloomberg Law reported. A new law signed by President Biden on Jan. 20 — the Puerto Rico Recovery Accuracy in Disclosures Act (PRRADA) — requires certain key professionals who worked on the island’s bankruptcy-like case to disclose if they have any previously hidden investments or business connections that could be considered a conflict of interest. The May 16 deadline was set by a federal judge who also recently batted down efforts to limit the scope of disclosure requirements. McKinsey, a market leader in bankruptcy consulting, in particular faces scrutiny as one of the case’s top billers with over $100 million in fees. Revelations that a McKinsey subsidiary held millions in Puerto Rico bonds provided the impetus to Congress’ push to enact PRRADA — a process in which McKinsey also engaged as a lobbyist to shape certain technicalities in the legislation. The events highlight McKinsey’s penchant for confidentiality and multiyear fight against accusations that it intentionally conceals conflicts of interest from federal overseers. Congress and the people of Puerto Rico now wait to see whether the law actually reveals any troubling relationships among the island’s restructuring advisers and some of Wall Street’s biggest names.
