McKinsey ignored staff warnings in S. Africa scandal, ex-employees say
JOHANNESBURG: Global consultancy McKinsey, facing parliamentary hearings in South Africa over payments to a firm controlled by a billionaire family, ignored suspicions raised over several years by local senior staff that companies it worked with were set up to steer state contracts, two former employees said.
Since July, when new information emerged about McKinsey’s flagship South African contract, the consultancy has been under increasing scrutiny in a widening corruption scandal over the influence of the Gupta family, businessman friends of President Jacob Zuma.
South Africa’s parliamentary committee on public enterprises is investigating whether McKinsey knowingly let funds from state utility Eskom be diverted to a Gupta company as a way of securing a US$78mil contract to advise Eskom.
McKinsey denies wrongdoing and says it intends to cooperate with the authorities if evidence of any impropriety emerges.
“We hold ourselves to the highest professional standards wherever we work and stand firmly against corruption. We are committed to ascertaining the facts and swiftly taking any and all appropriate action,” spokesman Steve John told Reuters. McKinsey has hired law firm Norton Rose Fullbright to assist in an internal investigation. Norton Rose said it would not comment while its probe is under way.
The accounts by the two former employees, who spoke to Reuters separately on condition of anonymity because their present jobs do not permit them to speak to the media, could provide fodder for lawmakers who say they have questions about the timeline McKinsey has given of when it learned of potential problems.
McKinsey says it carried out a due diligence review on its partner in the Eskom deal beginning in January 2016, and cut all ties with the local firm two months later after it concluded the company was unfit.
“We carry out checks on suppliers and partners when we work with them and address issues and concerns when they arise. When concerns were raised we undertook due diligence,” spokesman John said in a written response to questions.
But the ex-employees said they had attended meetings in Johannesburg where problems with that firm and a precursor company employing the same principal staff had been discussed much earlier: as far back as 2013.