PARIS (AP) – French President Emmanuel Macron held his first major rally in his re-election race on Saturday and promised the French more “progress” and “solidarity” over the next five years, but his campaign has taken a hit.
It was dubbed the “McKinsey affair,” named after an American consulting firm hired to advise the French government on its COVID-19 vaccination campaign and other policies. A new report from the French Senate questions the government’s use of private consultants and accuses McKinsey of tax evasion. The issue is driving Macron’s rivals and haunting him in campaign freezes ahead of France’s first presidential election on April 10.
Macron, a centrist who has spearheaded diplomatic efforts to end the war in Ukraine, has held a comfortable lead over far-right leader Marine Le Pen and other challengers in polls so far.
“We are here to enable a project of progress, of independence, for the future, for our France,” Macron said in front of around 30,000 spectators in a stadium that normally hosts rugby matches. “I see difficulties in making ends meet, situations of uncertainty…and so much more to stave off extremism.”
Speaking to those who are seeing “their entire salary go to gas, bills and rent” as the war in Ukraine drives up food and energy prices, Macron promised businesses a tax-free bonus of up to €6,000 ($6,627) to employees ) this summer.
He also pledged to raise the minimum pension for those who have worked full-time to €1,100 a month – from around €700 currently. The retirement age must be gradually raised from 62 to 65 to fund the plan, he said.
Supporters saluted him, shouting “Macron, President!” “One, two, five more years!” and renouncing the French tricolor.
But for those trying to unseat Macron, the word “McKinsey” becomes a rallying cry.
Critics describe the 1 billion euros that the French government spent on consulting firms like McKinsey last year as a privatization and Americanization of French politics and call for more transparency.
The French Senate, in which the opposition Conservatives hold a majority, released a report last month examining the government’s use of private consultancies. The report found that government spending on such contracts has doubled over the past three years, despite mixed results, and warned that this could create conflicts of interest. Dozens of private companies are involved in the consultancy, including giants such as Ireland-based multinational Accenture and French group Capgemini.
Most damningly, the report states that since at least 2011, McKinsey has stopped paying corporate income taxes in France, instead using a system of “tax optimization” by its Delaware-based parent company.
McKinsey issued a statement saying it “respects the French tax rules applicable to it” and defended its work in France.
McKinsey notably advised the French government on its COVID-19 vaccination campaign, which started hesitantly but eventually grew into one of the most comprehensive in the world. External advisers have also advised Macron’s government on housing reform, asylum policy and other measures.
The Senate report found that such companies generate lower revenues in France than in the UK or Germany, and found that spending on outside consultants was higher under conservative former President Nicolas Sarkozy than under Macron.
Budget Secretary Olivier Dussopt said state money spent on consultants was about 0.3% of what the government spent on civil servant salaries last year, and that McKinsey earned a tiny fraction of that. He accused campaign competitors of inflating the affair to improve their own ratings.
The affair still hurts Macron.
Macron, a former investment banker who was once accused of being “president of the rich,” saw his ratings surge as his government spent heavily to protect workers and businesses early in the pandemic, promising to do “whatever it takes.” to do to cushion the blow. But his rivals say the McKinsey affair is reviving concerns that Macron and his government are committed to private interests and out of touch with ordinary voters.
Everywhere Macron goes now, he’s being asked about it.
“In the last few days I’ve talked a lot about tax evasion by an American company,” Macron said at the rally on Saturday. “I would like to remind those who are showing outrage that they have used them (consultancy firms) in local government as well.
He also pointed to his government’s struggle to ensure companies pay their fair share of taxes.
“The minimum tax in Europe, we fought for it, we made it,” he said.
France is pushing for swift implementation of the 15% corporate tax minimum in the 27-nation European Union, which more than 130 countries agreed to last October.