McKinsey’s Fingerprints Are All Over Valeant

Valeant’s downfall is not exactly McKinsey’s fault but its fingerprints are everywhere. Half of its six-person senior executive team formerly worked at McKinsey, including Michael Pearson, its chief executive, and Robert Rosiello, its finance director. So did Ronald Farmer, the director who chairs its “talent and compensation” committee, which temporarily transformed Mr Pearson into a billionaire. It is as if the McKinsey alumni network now meets in Canada, the country to which Mr Pearson moved Valeant for tax reasons following a 2010 merger. He had been hired as its chief executive in 2008, when the board liked his strategic advice so much that it asked him to take charge of implementing it. Mr Pearson, who worked for Mc-Kinsey for 23 years, rising to head its global pharmaceuticals practice and sit on its 30-member shareholder council (the equivalent of its board of directors), was not the quintessential suave and intellectual McKinsey partner. He was loud and profane and was seen, in the words of one former colleague, as “sharp edged and sharp elbowed”. Nor is McKinsey as intertwined with Valeant’s strategy as it was with that of Enron, the energy trading company that failed in 2001, leading to the jailing of Jeff Skilling, the former McKinsey director who was its president. Although Mr Pearson rose along with Mr Skilling in McKinsey’s years of rapid global expansion under Rajat Gupta , its disgraced (and jailed) former leader, they are different individuals. There is, however, a McKinsey element to Valeant’s fate. (FT)