Portuguese police raid BCG office amid client corruption case
Professional services firm Boston Consulting Group (BCG) were the recent targets of a raid by Portuguese police after a local client became the subject of a corruption inquiry. After long-term BCG client Energias de Portugal’s CEO was named as a suspect in an ongoing bribery investigation, law enforcement agents searched the consultancy’s Lisbon office in June.
Energias de Portugal (EDP) CEO Antonio Mexia has been named as a suspect in a corruption investigation by Portugal's public prosecutor, following a police search of the offices of EDP, grid operator REN, along with the local division of BCG.
The prosecutor’s office later announced in a statement that Mexia, who has run Portugal's biggest company since 2006, was a suspect in a corruption inquiry, along with Joao Manso Neto, who heads EDP's renewables division. The case is linked to an alleged compensatory bung, worth over €100 million, paid by the government after former energy monopoly holders EDP were ordered to give up parts of their long-term power-purchase contracts in line with competition laws, amid the liberalisation of Portugal’s power sector, beginning in 2004.
Two directors at REN, Joao Conceicao and Pedro Furtado, were also named as suspects by the prosecutor's office. EDP shares meanwhile fell 1.34% in the immediate aftermath, with damage also done to REN’s reputation, with their shares slipping 0.5%, amid a broadly unchanged market in Lisbon more generally.
In a statement following the announcement, EDP said that investigators who searched its offices were given "unrestricted access to all information and all collaboration was given with a view to clarifying the facts," before confirming those named as suspects were indeed the EDP representatives who had signed the power-purchase contracts 13 years ago.
In a second statement released the next evening, the prosecutor's office said that it had collected a large amount of documentation from the three offices, concluding, "The investigation continues into what could be facts that are suspected of representing the crimes of active and passive corruption.”
Global management consulting firm BCG, who did not have any charges levied at themselves, were searched because of their capacity as an advisory partner of EDP, and not because of any implied wrong-doing on their own part. In a brief release after the search, the firm stated, “"The Boston Consulting Group confirms that the Judicial Police was present at its Lisbon office and has made available all the necessary elements to the ongoing investigation and will continue to collaborate with the authorities while always ensuring the confidentiality of its clients.”
The firm, who have more than 80 offices in 45 countries, are the second professional services company to have been the target of such a search in recent months, with American political consultancy Strategic Campaign Group (SCG) seeing offices raided by the FBI earlier in 2017. Agents seized information at the firm, as SCG collaborated with officials following legal action from former clients regarding its association with scam fundraising groups.
