By Shweta Desai
PARIS (AA) – French prosecutors on Wednesday launched a probe to examine potential money laundering and tax fraud by private consultancy firms working for Emmanuel Macron’s government, said the Justice Ministry.
The announcement of the investigation follows reports of the McKinsey scandal that has hit the Macron government in the run-up to the presidential election between April 10 and 24.
Taking cognizance of a report by the Senate – the upper house of the French parliament – into the growing influence of private consulting firms on public policies, the National Financial Prosecutor’s Office opened a preliminary investigation last Thursday on the count of aggravated money laundering and tax evasion, a ministry statement said.
The parliament report estimated that the state expenditure on hiring consulting firms had doubled under the Macron government from €379 million ($412.4 million) in 2018 to €894 million ($972.7 million) last year. It also noted that the US firm McKinsey has not paid corporate taxes in the last 10 years.
The firm was hired by the Macron government for nine contracts worth €12.3 million, including management of the COVID-19 health crisis, particularly with the vaccination campaign which started at an excruciatingly slow pace amid opposition by anti-vaxxers.
The firm also was in charge of implementation of the housing allowance reform known as APL and improving school teachers’ jobs. It is now suspected of not having paid taxes in France for 10 years, from 2011 to 2020, taking advantage of a tax optimization system, a news report by BFMTV said.
Le Canard Enchaine, a news weekly, also reported last week that McKinsey evaded taxes by transferring all the profit and earnings of the French subsidiary to the parent company in the US.
McKinsey maintained in a statement that all its entities in France have paid corporate tax for six years and between 2011-2020 it paid nearly 20% of its cumulative turnover amounting to €422 million of taxes and social charges.
Reports of suspicion on tax evasion by McKinsey were quickly picked up by Macron’s opponents who declared it as a “scandal.” Macron has rebuffed any wrongdoings and affirmed if there is any evidence of manipulation, there should be criminal proceedings against it. He also denied his government has hired more consultancy firms than the predecessors.