Home South African McKinsey agrees to pay back R650m earned from SAA, Transnet work

McKinsey agrees to pay back R650m earned from SAA, Transnet work

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Witnesses from management consulting firm McKinsey will be testifying on Thursday and be questioned by evidence leaders of the state capture commission.

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MANAGEMENT consulting firm McKinsey and Co has agreed to pay back all the money it received from SAA and Transnet for work undertaken with Regiments Capital, the state capture commission said on Wednesday.

The amount covered by McKinsey’s undertaking, given on November 21, has not yet been fixed with Transnet and SAA, but is likely to be about R650 million, the commission said in a statement.

Witnesses from McKinsey will be testifying on Thursday and will be questioned by evidence leaders of the commission, it added.

“The commission recently initiated discussions with McKinsey and is now pleased to announce that McKinsey has undertaken to repay all of the fees paid to it for work it performed on the Transnet and SAA contracts alongside Regiments.

“The amount covered by McKinsey’s undertaking has not yet been fixed with Transnet and SAA, but is likely to be around R650 million.

“Two years ago, McKinsey repaid the full amount of the fees that it had earned on its Top Engineers MSA contract with Eskom, for work on an Eskom project on which Trillian had also invoiced Eskom. McKinsey did not work alongside either Regiments or Trillian at any state-owned enterprises (’SOEs’) other than Eskom, Transnet, or SAA.

“In the course of its engagements with McKinsey in advance of the testimony of McKinsey witnesses, the commission showed McKinsey certain evidence relevant to its contracts alongside Regiments at Transnet and SAA.

’’This evidence suggested irregularities in the contracts of McKinsey alongside Regiments at Transnet and SAA but did not implicate any current employees or partners of McKinsey in any corruption or impropriety in relation to these contracts.’’

In light of that evidence, the commission suggested to McKinsey it should repay the fees that it had earned on the Transnet and SAA contracts as an act of responsible corporate citizenship.

“In voluntarily repaying the fees it earned at Eskom in 2018 and by now returning the fees from the Transnet and SAA projects where it worked alongside Regiments, McKinsey has conducted itself as a responsible corporate citizen.

“The commission urges other companies to follow its lead and do the same in all cases where evidence shows that they have benefited from contracts tainted by corruption, even if they were not party to that corruption,” the statement said.

“The proceedings of the commission are replete with examples which ought to move other multinational and domestic companies to follow McKinsey’s lead.

“The commission will be watching closely to see which of these companies do so and which choose not to conduct themselves as responsible corporate citizens.’’

Last year, the commission heard how former Transnet CFO and Gupta ally Anoj Singh irregularly appointed Regiments as transaction advisers in the scandal-riddled deal for 1,064 locomotives. Regiments was paid R305 million for its role in structuring the deal, which was worth R32 billion.