Inside McKinsey

Shortly after Enron Corp. tumbled into bankruptcy last December, McKinsey & Co. Managing Partner Rajat Gupta was worried. It wasn't only because former Enron CEO Jeffrey K. Skilling was once a McKinsey & Co. partner and loyal alum. Or that his firm had advised the giant energy trader for nearly 18 years on basic strategy, even sitting in on boardroom presentations to Enron's directors. Or even that many of the underlying principles of Enron's transformation, including its "asset-light" strategy, its "loose-tight" culture, and the securitization of debt, were eagerly promoted by McKinsey consultants.

Gupta was worried about something much more immediate: Had McKinsey crossed a legal line that would drag it into the unfolding morass? In a stunning exercise for the world's whitest of white-shoe management consultants, Gupta dispatched his chief legal counsel to McKinsey's offices in Houston to review the firm's work at Enron. The mission was to find any evidence linking McKinsey to the massive fraud behind Enron's business model.