McKinsey suspends all SA SOE work
BUSINESS management consultancy firm McKinsey yesterday fell short of admitting to wrongdoing in its relations with Gupta-linked Trillian as the firm suspended all work with state-owned enterprises (SOEs) until further notice.
In a move eerily similar to beleaguered KPMG, McKinsey’s global managing partner Dominic Barton said the firm became aware of a potential professional standards issue, unrelated to Eskom which it was in the process of investigating.
“We will commit, as a condition of engaging with SOEs in the future, to greater transparency with the National Treasury and relevant shareholder departments, so that they have a full understanding of the work we are undertaking, the value we will bring, and our contracting arrangements,” Barton said.
“We will ask SOEs for detailed documentary evidence that they have all the appropriate approvals in place before we begin work.”
Investigations have not unearthed any illegal intentions or wrongdoing by its employees.
The firm also admitted that it should not have started working alongside Trillian in December 2015 before it had completed its due diligence and had answers to its questions.
McKinsey said It had found violations of its professional standards in the Trillian and Eskom saga and had ring-fenced the full fee it earned on Eskom’s Turnaround Programme and would repay it if the courts determined it was unlawful payment as Eskom has claimed.
However, the firm failed to accept full responsibility for the Eskom saga and said it believed Trillian withheld information from it about its connections to a Gupta family associate. And that its investigations found that it has never made payments directly or indirectly to secure contracts, nor has it aided others in doing so.
“There are things we wish we had done differently and will do differently in the future, but we reject the notion that our firm was involved in any acts of bribery or corruption related to our work at Eskom and our interaction with Regiments or Trillian,” the company said.
Last month, KPMG also admitted that work it did on behalf of the Gupta-owned companies fell short of its standards, but said its investigations had not unearthed any illegal intentions or wrongdoing by its employees.
Eskom responded by demanding that McKinsey return R1 billion and Trillian R564 million in unlawful payments made to the two companies for services without contracts between 2016 and 2017.
McKinsey was adamant that its investigations showed that it did not introduce Trillian to Eskom nor vice versa and it had not made payments to Trillian. The firm also said that where it found violations of its professional standards it had disciplined individuals, including letting go of its South African partner, Vikas Sagar.
Trillian was the so-called supply development partner of McKinsey in an agreement it had to provide services to Eskom until the relationship between McKinsey and Trillian ended in March 2016.
In July, Trillian moved to rid itself of its Gupta links when Salim Essa sold his 60 percent stake in the group to chief executive Eric Wood.
Anti state-capture movement Save South Africa yesterday said that McKinsey investigations outcomes fell short of the truth and said only a full independent investigation will get to the bottom of the corrupt relationship between Eskom, McKinsey, and Trillian.
“McKinsey defines its participation in the R1.9-billion looting spree as “an error of judgment” – a huge understatement,” the organisation said.