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US Republicans call for McKinsey to be banned from federal contracts

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US Republicans call for McKinsey to be banned from federal contracts

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Top Republican lawmakers have called for McKinsey to be banned from securing federal contracts in the US following the revelation that a think-tank led by the consulting firm gave policy recommendations to the Chinese central government.

Marco Rubio, the vice-chair of the Senate intelligence committee, and Michael McCaul, the chair of the House foreign affairs committee, said McKinsey had undermined US security through the think-tank’s role in the development of Beijing’s 13th five-year plan in 2015.

“It’s shocking that a US company allegedly supported the Chinese Communist party’s efforts to develop policies and plans that violate international trade rules and threaten American national security and economic interests,” McCaul told the Financial Times on Friday.

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“Companies supporting our adversaries’ military or human rights abuses shouldn’t receive contracts paid for with the taxpayer money of hardworking Americans.”

McCaul was responding to an FT report that the Chinese government’s central planning agency had commissioned a McKinsey-led think-tank called the Urban China Initiative to produce research for Beijing’s 2016-2020 five-year plan.

That plan committed China to boosting its technological capabilities and contributed to a rise in Sino-US tensions, which has included a more hawkish mood in Washington towards western businesses’ work in China.

Bob Sternfels, McKinsey’s global managing partner, this month told Congress he was unaware of the firm having ever worked for the Chinese central government. McKinsey this week stood by the statement, saying UCI was a separate entity set up in partnership with two universities and McKinsey had not authored the research that UCI did for China’s National Development and Reform Commission.

“McKinsey appears to have lied multiple times about its relationship with the Chinese Communist party,” Rubio told the FT. “We need to learn more about McKinsey’s role in helping develop China’s five-year plans, but at this point it is impossible to justify any McKinsey contracts with the US government.”

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In response to the FT story, Republican Senator Josh Hawley also said McKinsey should no longer be able to obtain federal work.

“McKinsey — and any consulting firm that helps China — should be BANNED from getting US government contracts,” Hawley wrote on X.

A spokesperson for the Democratic staff of the House China committee said the FT report was “deeply concerning” and the panel would be inquiring into the matter. “We remain committed to understanding how the CCP capitalises on American expertise, and how US experts navigate conflicts of interest,” he said.

Responding to the lawmakers’ comments, McKinsey said: “We reject efforts to use a document McKinsey didn’t write and work we didn’t do to call into question our 75-year history of supporting the US government.”

The firm has won $1bn in contracts from the US federal government since 2008, according to the USAspending.gov database, and is also often a subcontractor on projects led by others.

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It has been frozen out of consulting for the Food and Drug Administration, the US medicines regulator, for the past three years after its work for opioid manufacturers attracted conflict of interest accusations, leaving the US defence department as its biggest federal government client. The Pentagon has steered at least $450mn in work to McKinsey since 2008, according to the database, and the figure is likely to underestimate the total because sensitive national security contracts are excluded.

In the most recent fiscal year to September 2023, McKinsey was paid at least $101mn by the federal government, including $63mn from the Pentagon. The firm has annual revenues of about $16bn globally.

The UCI’s work for Beijing in 2015 came in the form of a 310-page book that advised deeper co-operation between the Chinese military and business and policies to push foreign companies out of sensitive industries, among dozens of recommendations.

The book drew on work by McKinsey’s in-house research arm, according to an introduction written by Lola Woetzel, UCI founder and co-chair, who is one of McKinsey’s most senior partners in China.

The rising pressure from lawmakers comes as Congress steps up scrutiny of US companies’ business interests and investments in China. The House China committee in particular has been taking aim at companies and has asked the chief executives of three US semiconductor manufacturers — Intel, Nvidia and Micron — to testify before Congress.

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US companies are concerned the temperature could rise further ahead of the American presidential election in November.

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Donald Trump has no ‘phase two’ plan for Iran war, says US senator

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Donald Trump has no ‘phase two’ plan for Iran war, says US senator

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Man accused of plot to assassinate Trump testifies Iran pressured him, says Biden and Haley were other possible targets

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Man accused of plot to assassinate Trump testifies Iran pressured him, says Biden and Haley were other possible targets

The allegation sounded like the stuff of spy movies: A Pakistani businessman trying to hire hit men, even handing them $5,000 in cash, to kill a U.S. politician on behalf of Iran ‘s powerful paramilitary Revolutionary Guard.

It was true, and potential targets of the 2024 scheme included now-President Donald Trump, then-President Joe Biden and former presidential candidate and ex-U.N. Ambassador Nikki Haley, the man told jurors at his attempted terrorism trial in New York on Wednesday. But he insisted his actions were driven by fear for loved ones in Iran, and he figured he’d be apprehended before anything came of the scheme.

“My family was under threat, and I had to do this,” the defendant, Asif Merchant, testified through an Urdu interpreter. “I was not wanting to do this so willingly.”

Merchant said he had anticipated getting arrested before anyone was killed, intended to cooperate with the U.S. government and had hoped that would help him get a green card.

U.S. authorities were, indeed, on to him – the supposed hit men he paid were actually undercover FBI agents – and he was arrested on July 12, 2024, a day before an unrelated attempt on Trump’s life in Butler, Pennsylvania.  During a search, investigators said they found a handwritten note that contained the codewords for the various aspects of the plot, CBS News previously reported

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Merchant did sit for voluntary FBI interviews, but he ultimately ended up with a trial, not a cooperation deal.

“You traveled to the United States for the purpose of hiring Mafia members to kill a politician, correct?” Assistant U.S. Attorney Nina Gupta asked during her turn questioning Merchant Wednesday in a Brooklyn federal court.

“That’s right,” Merchant replied, his demeanor as matter-of-fact as his testimony was unusual.

The trial is unfolding amid the less than week-old Iran war, which killed Iranian Supreme Leader Ayatollah Ali Khamenei in a strike that Trump summed up as “I got him before he got me.” Jurors are instructed to ignore news pertaining to the case.

The Iranian government has denied plotting to kill Trump or other U.S. officials.

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Merchant, 47, had a roughly 20-year banking career in Pakistan before getting involved in an array of businesses: clothing, car sales, banana exports, insulation imports. He openly has two families, one in Pakistan and the other in Iran – where, he said, he was introduced around the end of 2022 to a Revolutionary Guard intelligence operative. They initially spoke about getting involved in a hawala, an informal money transfer system, Merchant said.

Merchant testified that his periodic visits to the U.S. for his garment business piqued the interest of his Revolutionary Guard contact, who trained him on countersurveillance techniques.

The U.S. deems the Revolutionary Guard a “foreign terrorist organization.” Formally called the Islamic Revolutionary Guard Corps, the force has been prominent in Iran under Khamenei.

Merchant said the handler told him to seek U.S. residents interested in working for Iran. Then came another assignment: Look for a criminal to arrange protests, steal things, do some money laundering, “and maybe have somebody murdered,” Merchant recalled.

“He did not tell me exactly who it is, but he told me – he named three people: Donald Trump, Joe Biden and Nikki Haley,” he added.

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In 2024, multiple sources familiar with the investigation told CBS News Merchant planned to assassinate current and former government officials across the political spectrum.

Merchant allegedly sketched out the plot on a napkin inside his New York hotel room, prosecutors said, and told the individual “that there would be ‘security all around’ the person” they were planning to kill.

“No other option”

After U.S. immigration agents pulled Merchant aside at the Houston airport in April 2024, searched his possessions and asked about his travels to Iran, he concluded that he was under surveillance. But still he researched Trump rally locations, sketched out a plot for a shooting at a political rally, lined up the supposed hit men and scrambled together $5,000 from a cousin to pay them a “token of appreciation.”

This image provided by the Justice Department, contained in the complaint supporting the arrest warrant, shows Asif Merchant. 

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AP


He even reported back to his Revolutionary Guard contact, sending observations – fake, Merchant said – tucked into a book that he shipped to Iran through a series of intermediaries.

Merchant said he “had no other option” than to play along because the handler had indicated that he knew who Merchant’s Iranian relatives were and where they lived.

In a court filing this week, prosecutors noted that Merchant didn’t seek out law enforcement to help with his purported predicament before he was arrested. He testified that he couldn’t turn to authorities because his handler had people watching him.

Prosecutors also said that in his FBI interviews, Merchant “neglected to mention any facts that could have supported” an argument that he acted under duress.

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Merchant told jurors Wednesday that he didn’t think agents would believe his story, because their questions suggested “they think that I’m some type of super-spy.”

“And are you a super-spy?” defense lawyer Avraham Moskowitz asked.

“No,” Merchant said. “Absolutely not.”

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Satellite images show Iran school strike hit more buildings than earlier reported

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Satellite images show Iran school strike hit more buildings than earlier reported

The bombing of an Iranian elementary school that killed some 165 people, many of them schoolgirls, included more targets near the school than has been initially reported, a review of commercial satellite imagery by NPR has found.

The images suggest that the school was hit on Saturday as part of a precision airstrike on a neighboring Iranian military complex — and that it may have been struck as a result of outdated targeting information.

The new images come from the company Planet and are of the city of Minab, located in southeastern Iran. They show that a health clinic and other buildings near the school were also struck. Three independent experts confirmed NPR’s analysis of the additional strike points.

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The strike points “look like pretty clean detonation centroids,” said Corey Scher, a postdoctoral researcher at the Conflict Ecology laboratory at Oregon State University.

“These certainly appear like detonation sites,” agreed Scher’s colleague, Oregon State associate professor Jamon Van Den Hoek.

Jeffrey Lewis, a professor at Middlebury College who specializes in satellite imagery, said the imagery was consistent with a precision airstrike.

The images show “very precise targeting,” Lewis told NPR. “Almost all the buildings [in the compound] are hit.”

A satellite image of an Iranian Revolutionary Guard compound taken on March 4.

A satellite image of an Iranian Revolutionary Guard compound taken on March 4, several days after an airstrike destroyed a school on the edge of the compound. The image reveals that half a dozen other buildings in addition to the school were struck.

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Iranian state media said 165 people died in the bombing, which struck a girls’ school. The school was located within less than 100 yards of the perimeter of an Iranian Revolutionary Guard naval base, according to satellite images and publicly available information. The clinic was also located within the base perimeter, although both facilities had been walled off from the base.

Israel has denied involvement. “We are not aware at the moment of any IDF operation in that area,” Israel Defense Forces spokesperson Nadav Shoshani told NPR on Monday. “I don’t know who’s responsible for the bombing.”

At a press conference Wednesday morning, U.S. Defense Secretary Pete Hegseth said that the U.S. is looking into what happened at the school. “All I know, all I can say, is that we’re investigating that,” Hegseth said. “We, of course, never target civilian targets.”

Given Minab’s location in the southeastern part of Iran, Lewis believes it’s more likely the U.S. would have conducted the strike than Israel. As one gets farther south and east in Iran, “a strike is much more likely to be a U.S. strike than an Israeli strike because of the type of munitions and the geographic location,” he said.

Esmail Baghaei, the spokesman for Iran’s Foreign Ministry, called the strike “deliberate” and said that the U.S. and Israel bombed the school in part to tie up Iranian forces in the region with rescue efforts. “To call the attack on the girls school merely a ‘war crime’ does not capture the sheer evil and depravity of such a crime,” he said.

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But Lewis said it’s more likely that the strike was the result of an error. Satellite images show that the school and clinic buildings were both once part of the base. The school was separated from the base by a wall between 2013 and 2016. The clinic was walled off between 2022 and 2024.

Lewis believes it’s possible American military planners had not updated their target sets.

“There are thousands of targets across Iran, and so there will be teams in the United States and Israel that are responsible for tracking those targets and updating them,” he said. “It’s possible that the target didn’t get updated.”

The Pentagon did not immediately respond to NPR’s request for additional information about the strike.

NPR’s Arezou Rezvani and NPR’s RAD team contributed to this report.

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