Boston Consulting Group (BCG) has faced criticism this week following reports that it modelled the “voluntary relocation” of 500,000 Gazans. Employees expressed outrage over the prominent management consulting firm directly supporting what some would term “ethnic cleansing”. Beyond the political and moral questions this raises, the story highlights the deep conflicts within the government-related practices of many contemporary consulting firms.

I began my career at BCG’s Washington, D.C. office, and am familiar with the key players and business dynamics behind this story. Two partners in D.C. led the project, selling $4 million in contracts over seven months for the Israel- and US-backed Gaza Humanitarian Foundation.

It’s worth noting here that the office hosts a wholly-owned subsidiary, BCG Federal Corporation (BCG FED), focused on US defence, homeland security, and intelligence. While there are strict compliance measures within the BCG FED ecosystem, including “ring-fencing” federal consultants, siloing their work from the rest of BCG, the reality is more complex. Most of BCG’s government work is executed outside this subsidiary environment, in what is called the Public Sector Practice Area (PSPA). Here, consultants operate with fewer restrictions.

While citizens of foreign governments, such as China, would not be able to work in BCG FED, they could work in PSPA, potentially accessing government and other sensitive information. In my time at BCG, I came into direct contact with such cases in PSPA.

Even if these policies are tightened on paper, enforcing compliance across a firm of 33,000 professionals is naturally difficult. As the reporting on the Gaza work makes clear, BCG partners bypassed internal guardrails for months, underscoring just how porous internal controls can be at scale.

This story is a part of a decades-long problem of broken trust in the global management consulting industry. These firms have a track record of “playing both sides of the fence”, selling contracts to both the Department of Defense and prominent defence contractors, as well as both the US and foreign governments. In many cases, these firms signal their expertise with a client on one side as a platform to sell to a client on the other side.

The Gaza story seems to have animated a wider range of critics than usual, prompting a public statement from BCG clarifying that the partners involved carried out “unauthorized work” and were fired. Yet wider reform is unlikely, because these problems are more structural. Government officials, business owners, and non-profit leaders outsource decision-making to consultant non-owner optimisers, who solve for their own bottom line rather than client benefit or the common good. The consultants working under these partners tend to function as compliant drones. This is just the reality of operating in a modern managerial system.

These recurring scandals reveal the true nature of consulting firms in the modern day, which tech founder Peter Thiel accuses of lacking “a distinct mission of [their] own” and instead coldly implementing managerial solutions — see the example of “turbocharging opioid sales” — on behalf of clients.

At the same time, the Trump administration is pressuring BCG on separate grounds. Two weeks ago, the General Services Administration (GSA) included the firm on a list of companies asked to show real value delivered for their federal contracts. This is just the latest in a series of waves of federal scrutiny aimed at the consulting industry. Combined with media attention over the Gaza scandal, it will likely hurt BCG’s ability to recruit and retain young talent, and may sour certain client relationships. In an age of populism, BCG’s place among the global managerial elite has naturally come into sharper focus as its priorities are juxtaposed against that of MAGA 2.0.

All the while, artificial intelligence is reshaping the business landscape, threatening to displace the kind of high-prestige, low-agency white-collar work that defines much of the consulting industry. As legacy managerial institutions weaken, new possibilities emerge, with technological alternatives to bureaucratic processes providing more direct control to high-agency executives. If this happens, owners can expect more scrutiny over how their work serves the national interest. The Gaza relocation plan will do significant damage to BCG, but it could provide a useful lesson in nudging political and business leaders towards a more ethical future.

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Nathan Halberstadt is Chief of Staff at New Founding, a venture firm focused on critical civilisational problems.

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