Deciding on McKinsey’s services

OLD MUTUAL’S Nedbank Group yesterday said that it was talking to US-based consultancy McKinsey about allegations levelled against the firm regarding its involvement in disputed government contracts. “We have been engaging with McKinsey within our formal governance processes, which need to be followed when accusations are levelled against service providers,” the lender said. Nedbank uses McKinsey’s services for consulting work and will wait for the results of the US company’s investigations before making a decision on whether or not to terminate the firm’s services, the bank said. Steve John, a McKinsey London-based partner and its global director of communications, declined to comment. McKinsey was contracted by state-owned power utility Eskom to carry out consulting work. An interim report by Eskom and G9 Forensic this year found McKinsey and Trillian, a company linked to the politically connected Gupta family, made R1.6 billion in fees from Eskom, according to the power utility. The firm has said it did not engage in corruption or pay bribes and that the fees it made from Eskom were in line with similar projects. McKinsey said in July that it’s reviewing thousands of documents related to work done for Eskom. The controversies around the Gupta family have also spread to companies including auditors KPMG and public relations firm Bell Pottinger. The UK PR firm collapsed last month after it was found to have stoked racial tensions in South Africa on behalf of the Guptas, and so far four companies in South Africa have said they have stopped using KPMG. To start making amends the auditing firm has apologised, eight senior executives have quit and it’s undergoing an independent investigation into its work for the Gupta family. – Bloomberg PPC Nedbank’s offices in Sandton.