A state that is “more modern, closer to the people and more digital” – that’s what Interior Minister Nancy Faeser (SPD) promised two years ago. According to critics, she has not made much progress in this regard. But now internal documents available to WELT AM SONNTAG show how large private consulting firms were able to cash in on the modernization efforts under Faeser as well as under her predecessor Horst Seehofer (CSU).
It is about contracts worth millions for companies such as the Berlin consulting firm Init AG or the US consulting giant McKinsey. And it is about allegations of corruption surrounding a former McKinsey man who the ministry actually wanted to part ways with, but who then returned after a strange detour.
Like many other external experts, he helped with a prestige project of the federal government: the Online Access Act (OZG). It was supposed to enable citizens nationwide to apply for official decisions digitally by the end of 2022 – from building permit applications to re-registration.
But according to the Federal Audit Office, this was only achieved within the deadline with 19 percent of “the administrative services that could be digitized”. As WELT made public in October 2023, the Court of Auditors accused the Ministry of the Interior of a partly haphazard approach to the digitization offensive. The federal tax money was in danger of “fizzled out” here.
WELT AM SONNTAG now has further documents that reinforce doubts about the ministry’s digitization strategy. These include a 94-page internal report that the state-owned consulting firm PD delivered on behalf of the Interior Ministry at the beginning of 2021 – in the wake of a consulting scandal in the Ministry of Defense. The authors had randomly examined major orders for McKinsey and its subsidiary Orphoz as well as for Init.
In some cases, the auditors found, the consultants had left behind presentations “with more than five hundred slides.” The report spoke of “avalanches of slides” whose immediate usefulness seemed questionable. The ministry sometimes simply lacked the staff and “some of the skills” to properly evaluate the results of the consultation.
To improve the presentations, McKinsey in particular employed entire teams of graphic designers, some of them from a subsidiary in Poland. In one project, McKinsey delivered almost 1,000 PowerPoint slides. In another assignment, “11 percent of all expenditure” was booked for “graphics-related services” – “for example, revisions of PowerPoints.”
At the same time, the authors of the PD report repeatedly found the budget estimated by McKinsey to be “high”. In several cases, the ministry suspended the actually required “time recording” for the work of the consultants, contrary to a binding framework agreement. The auditors criticized the “lack of transparency” and complained that the “benefits” for the federal government were “not apparent” in agreements that deviated from the framework agreement. In other words: There was a risk that the ministry would pay too much.
Apparently, the authority took action at the time and canceled some partial services – albeit officially due to external circumstances that were not McKinsey’s responsibility. Since then, the consulting giant has not applied for any further OZG contracts in the Interior Ministry. State Secretary Markus Richter subsequently urged that one McKinsey man in particular not be commissioned any further. The consulting firm also parted ways with the previous senior partner at the time. After he went to the Düsseldorf Labor Court, a settlement was reached there in September 2021.
Then – now under Minister Faeser – the sacked man got his way again in the Interior Ministry through the back door. The former McKinsey man simply founded a new consulting firm with two colleagues in April 2022. As early as the beginning of June 2022 – even before the new company was finally registered in the commercial register – it was reported to the Interior Ministry by Berlin-based Init AG as a new subcontractor. This is evident from an internal list of the Interior Ministry that WELT AM SONNTAG has obtained. As a result, over 1.5 million euros flowed from Faeser’s house to the company of the former McKinsey man and his two colleagues – all via Init.
This company, which was only founded in 2004, has enjoyed rapid growth in recent years, not least thanks to government contracts. From 2019 to 2022, Init’s turnover tripled to over 182 million. During and after the Corona crisis, the company repeatedly received million-euro contracts from the Federal Ministry of Economics, which was initially run by the CDU and then the Greens, for the payment of bridging funds for the economy. But Init also worked for the Ministry of Family Affairs, which was run by the SPD at the time – and for the Ministry of the Interior.
Statements from the Ministry of Finance show how well Init earns from digitization contracts from the public sector. For Init, the total amount raised for OZG work and similar services rose from 98.6 million euros in December 2022 to 136.7 million in June 2023. For the McKinsey subsidiary Orphoz, on the other hand, the Ministry of Finance recently reported only total payments of 52.7 million – even one million less than at the end of 2022.
The question now arises as to what happened between the Berlin company and the Interior Ministry when the former McKinsey man, who had actually fallen out of favor, was allowed to return as a subcontractor in 2022. At the end of April, the “Spiegel” reported that someone in Faeser’s agency had expressly asked the people at Init to re-accommodate the sacked man.
Ernst Bürger, the head of department responsible for the OZG digitization project in the ministry, apparently maintained regular contact with the controversial consultant – but according to Bürger, these were all official matters. Bürger also maintained a relationship with Init. In November 2023, on the short message service X (formerly Twitter), he celebrated a joint appearance by a ministerial employee and an Init man on the subject of OZG – even though its poor implementation had just been slapped down by the Court of Auditors at the time.
Together with the head of department, Minister Faeser and State Secretary Richter personally visited the Init offices in the Berlin district of Friedrichshain-Kreuzberg in April 2022. The occasion was a digitization laboratory designed to help refugees from Ukraine.
According to a list, Init board member Gregor Költzsch, who is responsible for customer business, also had regular appointments at the Ministry of the Interior. He himself sat for a time in the Berlin House of Representatives for the SPD.
In the wake of the consultant scandal in the Ministry of Defense, the then governing parties CDU/CSU and SPD had actually called on the federal government in November 2020 to “take measures to substantially reduce the use of external consultants and external support staff.”
At least so far, this does not seem to have slowed down Init AG’s sales success too much. In May 2023, the procurement office of the Ministry of the Interior increased a framework agreement with the Berlin company for “conception and design” for the Online Access Act, which had already been endowed with 55 million euros, to a dizzying 82.5 million euros – because there was “unforeseen need”. According to the official contract notice, the sum corresponded to 82,911 person-days – because an average of just under 1,000 euros is apparently billed per consultant day. In other words: over a period of two years, the contract could employ around 180 people full-time.
And: This framework agreement only concerned “conception and design” for the Online Access Act. For the “implementation” of the OZG, the BMI Procurement Office simultaneously increased the volume of another framework agreement with Init to a total of 44,949 person days – or 43.5 million euros.
The German government named only Init as the recipient for both contracts in the EU Official Journal. However, a company spokesperson assured that “a consortium of several companies would provide services over a period of several years.” The number of person-days was based on a “needs analysis by the client.”
Either way, the sums involved are considerable. The audit report from PD at the beginning of 2021 had already expressed some audible criticism of contracts for Init. In an OZG project that ran until December 2020, the auditors found the result documents to be “sometimes very abstractly named and, in our opinion, too vague.” In another digitization project in 2020, they also saw deficiencies: “The performance records are too superficial,” they wrote. “The traceability of the specific activity or service” is therefore “not possible.”
The Init spokesman assured that the agreed services were “provided properly with all agreed evidence and, to our knowledge, to the satisfaction of the customer.” The former McKinsey man’s company was commissioned “in accordance with the usual and formally regulated procedures.” Init did not answer the question about a corresponding request from the ministry. There is no evidence that the Berlin company knew the consultant’s background.
The consultant, who was subcontracted by Init, himself sent a lawyer saying that he did not wish to comment. McKinsey referred to “confidentiality obligations” that did not allow the company to answer detailed questions.
One thing is certain: Interior Minister Faeser is having her internal audit department continue to investigate the allegations surrounding the miraculous career of the former McKinsey consultant. “The audit is not yet complete,” said a spokeswoman. Since the PD auditors criticized the Init orders, the “level of detail of the performance records has been adjusted” and measures have been taken to improve “consultancy management.” And the many PowerPoint slides? They served to “improve information provision and accelerate knowledge transfer,” argued the spokeswoman.
“We may only know the tip of the iceberg so far,” worries CDU Bundestag member and budget expert Yannick Bury. “The responsibility lies with Minister Faeser,” he believes.
How reticent her ministry is in dealing publicly with the existence of the armies of consultants was already evident in March 2023. CDU MP Nadine Schön had asked the federal government about the amount of the consulting costs on the subject of the Online Access Act – and received the astonishing answer from Faeser’s Parliamentary State Secretary Johann Saathoff (SPD) that “no contracts with external consultants had been concluded” for the implementation of the OZG. The reason: From the federal government’s point of view, the multimillion-dollar contracts with companies such as McKinsey and Init are not consulting – although even the PD auditors commissioned by the Ministry of the Interior explicitly spoke of “consulting services” in their report.
The costs for consulting services have “increased so much in recent years that the government is trying to conceal the extent of the costs from parliament,” complains Left Party MP Victor Perli. A lack of control here poses “the risk of corruption and favoritism.” Faeser must now “fully clarify the current allegations and draw conclusions,” demands Perli.
It is possible that the best days for the consultants are now over due to tighter budgets at the federal government. Init is now talking about a “difficult economic situation” for the entire IT industry, which is also affecting its own company. Internally, there is already talk of possible short-time work.
But according to the intranet, the company is undauntedly inviting its employees to a summer party on June 28th at a “beach club” in Berlin-Mitte. It will offer an “exciting program, sunny highlights and delicious specialties.”
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