Boston Consulting Group Grapples with Fallout Over Gaza Project
Boston Consulting Group (BCG) is facing a significant crisis stemming from its involvement in a humanitarian project in Gaza, leading to leadership changes and raising serious questions about the firm’s ethical oversight. The controversy revolves around an Israeli-backed aid-distribution initiative that has drawn widespread criticism, particularly after reports of numerous Palestinian deaths near aid sites due to troop actions.
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The situation has escalated into what some describe as the most significant crisis in BCG’s nearly six-decade history, with long-term clients expressing their discontent and employees, both past and present, questioning the firm’s decision to engage in the Gaza project.
The Project’s Origins and Evolution
The project initially began as a pro-bono effort aimed at addressing food-supply challenges in Gaza. However, BCG claims that two partners later initiated an unauthorized, paid phase of the project, acting against the firm’s explicit instructions. This unauthorized work reportedly included developing a postwar financial model focused on the voluntary relocation of Palestinians.
Leadership Shakeup and Partner Dismissals
As a result of the controversy, BCG has announced several leadership changes. Adam Farber, the firm’s chief risk officer, and Rich Hutchinson, the head of its social-impact practice, are stepping down from their leadership roles, although they will remain as senior partners. Sources indicate that both Farber and Hutchinson were aware of the project’s early stages but were not fully informed of all the details.
These changes followed the earlier dismissal of two other partners, Matt Schlueter and Ryan Ordway, who BCG suggests acted independently and without authorization in the months following the project’s launch. Both Schlueter and Ordway previously worked within BCG’s public sector defense and security practice.
In a statement, BCG asserted that a partner misrepresented pro bono work in late 2024. Months later, this partner allegedly initiated a paid phase of the work without proper authorization. Furthermore, the firm alleges that this partner, along with another, engaged in off-the-books modeling of Gaza reconstruction scenarios, directly violating BCG’s instructions. BCG maintains that it ceased the unauthorized work immediately upon discovery and received no compensation for it.
The firm insists that an independent investigation confirmed that the events were the result of individual misconduct coupled with lapses in oversight and judgment. BCG has stated that it has taken swift action to prevent similar incidents from occurring in the future.
Internal Oversight and Risk Assessment
As chief risk officer, Adam Farber was involved in evaluating the pro-bono project during its initial stages. At the time, BCG anticipated supporting a broad, internationally recognized coalition. The initial pro-bono work fell under the purview of the social-impact practice, led by Hutchinson, who allocated resources within the firm to the project. Both Farber and Hutchinson will now transition to full-time client work.
The Gaza Humanitarian Foundation and International Criticism
BCG’s involvement in Gaza began in October when the firm agreed to assist in developing a feasibility study for a new aid organization. The firm was contracted by Orbis Operations, a Washington-based security firm owned by McNally Capital, a private-equity firm. Orbis Operations is comprised of former Central Intelligence Agency agents and other counterterrorism officials.
These efforts ultimately led to the creation of the Gaza Humanitarian Foundation, which has been heavily criticized by international aid organizations, the European Union, and governments of over 20 countries. Critics argue that the foundation’s actions have endangered civilians and forced Palestinians to navigate combat zones in order to access aid. The Israeli military has stated that its forces fired toward crowds due to perceived threats to soldiers and has since pledged to reorganize its operations around aid-distribution sites.
In March, BCG’s work evolved into a paid engagement, working on behalf of McNally Capital to support Safe Reach Solutions, a private logistics and operations provider. The Gaza Humanitarian Foundation utilized Safe Reach to secure sites for aid distribution.
BCG maintains that the two partners involved expanded their work beyond the scope of what the firm had approved. This included developing a postwar financial model to assess the costs associated with relocating Palestinians from Gaza. McNally Capital reportedly had no involvement in this postwar planning work.
Reputational Damage and Scrutiny
The involvement of BCG employees in a plan to relocate Gazans has generated significant controversy both within and outside the firm. Save the Children, a nonprofit organization with longstanding ties to BCG, suspended its pro-bono partnership with the firm in response to the situation.
BCG’s leadership has acknowledged the damage to the firm’s reputation. In a letter to BCG alumni, CEO Christoph Schweizer stated that even though the project was not a formal BCG initiative, the firm’s association with it is real, deeply troubling, and damaging to its reputation.
Some former partners have also criticized BCG’s internal risk processes, noting that the chief risk officer was still expected to dedicate a significant amount of time to revenue-generating client work. BCG is currently conducting an intensive review of its internal processes and controls. In the interim, a group of three senior leaders will oversee the firm’s risk and compliance efforts.
Former BCG employees have expressed surprise that the firm would be involved in the Gaza conflict at all, given the emphasis on risk management and the stated commitment to only undertaking ethical work.
Growing Market in the Middle East
The Middle East represents a small but growing market for consulting firms like BCG. In 2024, the region’s consulting market generated approximately $8.72 billion in revenue, representing 3.4% of the global market. This figure represents an 11% increase from $7.87 billion the previous year.
Consulting firms sometimes partner with humanitarian agencies in the Middle East to deliver pro bono projects, often to build relationships with key decision-makers and showcase their expertise. Pro-bono work is common at all levels of large consultancies, serving as a training and mentoring tool for new staff.
UK Parliamentary Inquiry
BCG now faces further scrutiny as a U.K. parliamentary committee has sent a letter to BCG’s CEO, demanding more detailed information about the firm’s involvement with the Gaza Humanitarian Foundation. The letter requests a timeline of BCG’s involvement and details regarding the scope of the ousted partners’ work on modeling the costs of relocating Palestinians from Gaza, specifically asking who commissioned or requested this work. The committee has requested a response by July 22.