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by swifthesitation 560 days ago
When the settlement cost is just the price of doing business... you know they made many times more than the fine.
2 comments

You think they made more than $123M profit from this??

HN numbers are wild.

That’s not strictly necessary for the claim. You have to factor in the odds of getting caught. If you do this and only get caught 10% of the time, you can make slightly less than 1/10 of the fine per case and still make money.
Fair.

Speeding isn't worth a $100 fine.

But if you only get caught 1/100 times you speed...

I mean, speeding is a pre-crime
The article says they made approximately 85 million from this. Since it happened 10 years ago, they may very well have made money on this deal.
If the DOJ estimate (which is always inflated, let's be real here) is $85M how could they have possibly made more than $123M on it? Unless you're talking about other hypothetical bribes that we don't know about.
Mixture of time value of money and interest/inflation.

You take that 85 Million and invest it (likely into growing a business unit but lets ignore that) and over 10 years it becomes greater than 85 million.

I might be splitting hairs here, but they say $85M in profit, not revenue, so presumably that would be margin on top of whatever they paid people to do nothing, and the fine is a portion of revenue that otherwise wouldn't have gone to them, of which $85M was profit.

Otherwise though, McKinsey was awarded $209M in federal gov contracts in Canada over 12 years, so the numbers themselves don't seem relatively outrageous in terms of what McKinsey makes news for.

$85M in 2014 dollars is $113M in 2024 dollars, and something tells me McKinsey didn't just leave the money sitting in a high yield savings account all this time
It's a fee not a fine